Energy use in Michigan is expected to be on an upward trajectory when compared to last year for all energy sources including; propane, gasoline, distillates, electricity, and natural gas.
That generally reflects continued economic strength following the Great Recession, growth in Michigan’s population after several years of decline, and state unemployment rates at their lowest levels since 2000. Large year-over-year differences in temperature patterns have also contributed significantly to demand projections. Since 2010, the state has seen an emerging era of historically anomalous weather which has included the polar vortex of 2014, the warmest December (2015), the wettest year (2017), and second coldest April (2018) followed by the fifth warmest May (2018)..
Some key report findings for Michigan energy sectors:
- Consumption of natural gas for all sectors is expected to see a 12.4 percent increase this year on the heels of a warmer summer than normal and the additional natural gas use from a slightly cooler than normal end to the 2017/18 winter heating season. Approximately 15 percent of Michigan's electricity generated by independent power producers and utilities is produced using natural gas. Production from Michigan’s aging natural gas wells (projected at 88.3Bcf) continues to decline by about 8 percent as some begin to show signs they have reached the end of their economic life.
- Propane consumption is projected to increase by 18.2 percent for 2018. This substantial growth considers warmer-than-average temperatures to end the 2017 heating season, as well as abnormally cold temperatures this past April (39 percent cooler than normal). Propane stocks in Michigan remain adequate, however; strong Gulf Coast export demand over the past few years has tightened national stock levels, helping to put upward pressure on prices. Residential propane prices to begin October averaged $2.01/gallon, an increase of 13 cents compared to last year.
- Demand for distillates - the majority of which is diesel fuel – is projected to rise for the third consecutive year by 3.4 percent to 1.22 billion gallons for 2018. Michigan's industrial production index, an economic indicator used to measure output from the industrial sector, is expected to grow by 3 percent and continue pushing sales of distillates higher. No. 2 heating oil prices started the 2018/19 heating season 51 cents higher than last year at an average of $2.94/gallon.
- A rise in cooling demand sees electricity demand increase about 3 percent in 2018. The largest increase is expected in the residential sector (5.7 percent), with the commercial (1.8 percent) and industrial (1.4 percent) sectors expected to rise as well. Residential electric rates generally were lower, as customers of investor-owned utilities saw a median rate decrease of 7.1 percent between October 2017 and October 2018.
- Demand for motor gasoline continues its six-year upward climb, increasing 1.4 percent to 4.70 billion gallons in 2018. Midwest gasoline prices through the first half of 2019 are projected to be 3 percent higher than they were in 2018.
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This report was produced by the Michigan Agency for Energy, Lansing, MI on Oct. 18, 2018. E-mail questions or comments to email@example.com