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Michigan energy users should find more favorable costs this summer than in 2022, with average seasonal gasoline prices projected to be 86 cents lower per gallon and slightly higher electricity costs offset by an expected decline in residential home energy demand, according to the Michigan Public Service Commission’s Summer Energy Outlook for 2023.
While home electricity demand is expected to decline a bit, demand for natural gas is projected to increase 2.2% overall, particularly for power generation as more electric providers switch from coal to natural gas, the energy appraisal released today found.
Here are the expectations from the MPSC’s Energy Security Section for energy supply and demand in Michigan for summer 2023.
ELECTRICITY
- If typical weather patterns hold, total electric sales are expected to decrease 1.3% to 99,100 gigawatt hours (GWh), down from 100,370 GWh in 2022, driven primarily by a 1.3% decrease in residential demand and a 3.4% decrease in the commercial sector. Summer 2022 was slightly warmer than average, with 4% more cooling degree days than historical averages. Industrial demand, more closely linked to economic factors rather than the weather, is expected to grow by 1.6%.
- The combined coincident peak electrical demand for Consumers Energy and DTE Electric Co. service areas last summer was 17,711 megawatts (MW) on June 21. Consumers Energy’s bundled peak electric demand was 7,529 MW, and DTE Electric’s was 10,182 MW. The two largest Michigan utilities provide electric service to about 85% of Michigan customers.
- Residential electric rates rose slightly, with a median rate increase of 2.8% for customers of investor-owned utilities between May 2022 and May 2023.
NATURAL GAS
- Natural gas demand is expected to rise 2.2% in 2023, with growing demand from the electric generation sector outstripping declining demand in the residential (-5.4%), commercial (-7.4%) and industrial (-7%) sectors. Federal forecasts call for a 2.3% warmer summer than historical averages, which would increase demand for electricity generation while utilities increasingly are switching plant fuel sources to natural gas from coal.
- The Energy Information Administration expects 2023 Henry Hub natural gas prices to average $3.02 per thousand cubic feet (Mcf) for 2023, a 55% decline year over year, and then rise to an average of $3.86/Mcf in 2024.
- Natural gas storage levels in Michigan are projected to be about 476 billion cubic feet at the end of 2023, a 3.5% increase from the previous year.
GASOLINE
- According to AAA Michigan, the average price statewide for a gallon of regular unleaded gasoline on June 5, 2023, was $3.53, down from $5.04 a year earlier.
- The U.S. Energy Information Administration projects Midwest regular-grade gasoline prices will average $3.30 per gallon during the April-September driving season, down from $4.16/gallon in 2022. Midwest regular-grade gasoline prices are forecasted to average $3.19/gallon for all of 2023. Unforeseen refinery outages, international political unrest, adverse weather conditions or other disruptions to supply could lead to higher product prices.
- National gasoline inventories remain near the bottom of the 5-year range for this time of year. For the week ending May 26, U.S. total gasoline inventories were at 216 million barrels (24 days of supply), down 2.9 million barrels from the same date in 2022. Midwest inventories were at 44.2 million barrels, about 800,000 million barrels lower than last year.
PETROLEUM
- U.S. crude oil production averaged 11.89 million barrels per day (b/d) in 2022 and is expected to increase to 12.53 million b/d for 2023 and up to 12.69 million b/d in 2024.
- U.S. crude oil stocks are currently 45 million barrels higher than a year ago as supply additions have outpaced demand. As of May 26, 2023, the U.S. had 460 million barrels in inventory, an 11% increase over 2022.
- The EIA projects petroleum will average $73.62 per barrel (bbl) for 2023 and $69.47/bbl in 2024 for West Texas Intermediate crude oil. The Brent (North Sea) crude spot price is forecast to average $78.65/bbl and $74.47/bbl, respectively.
DISTILLATE FUELS
- No. 2 heating oil prices ended the 2022-23 heating season at $3.58/gallon, 87 cents lower than the previous year.
- The EIA expects retail prices for on-highway diesel fuel will average $3.90 per gallon for 2023, down $1.12 from 2022. The EIA projects distillate prices will decline further for 2024, with prices estimated to average $3.62 per gallon.
- According to AAA Michigan, the average price of diesel in Michigan was $3.97 per gallon on June 5, 2023, $1.62 per gallon lower than this time last year.
- For the week ending June 10, national inventories of distillate oil were 106.7 million barrels, about 300,000 barrels higher year over year. Midwest inventories for the same week totaled 24.8 million barrels, 200,000 barrels lower than 2022.
Resources are available for Michigan families needing help with home energy costs. The MPSC’s one-stop webpage for utility help provides information in financial assistance, payment plans, consumer protections and other options. For information, go to www.michigan.gov/mpsc/gethelp. Those having trouble paying home energy costs also may contact their electric or natural gas utilities for information or contact Michigan 211 by calling 211 or going to www.mi211.org. Michigan 211 is a free, confidential service that connects Michiganders with a broad range of assistance programs and services and other resources, including help with food, housing, transportation and home energy bills.
Energy assistance information also is available through the MPSC’s energy assistance consumer tip sheet. Utility customers also can help reduce their costs by using energy efficiently. The MPSC's consumer tip on beating the heat has suggestions on reducing energy use. The U.S. Department of Energy has additional spring and summer tips for saving energy.
For information about the MPSC, visit www.michigan.gov/mpsc, sign up for its monthly newsletter or other listservs. Follow the Commission on Facebook, Twitter or LinkedIn.
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