For summer and beyond, US oil outlook is good
Despite intensifying conflict in the Persian Gulf, the near-term outlook for United States energy supplies and prices remains upbeat, government energy experts contend.
Unless hostilities spread well beyond the Iran-Iraq conflict, ''we don't see a substantial impact on world oil prices and hence on petroleum products such as heating oil and gasoline in the US in the foreseeable future,'' says J. Erich Evered, administrator of the Energy Information Administration.
The EIA, the independent statistical and analytical arm of the Energy Department, released a report Wednesday on energy use in 1983 and projections for supplies and prices through 1995.
''The outlook is for stable prices, ample energy supplies, and continued gains in the efficiency with which energy is used in the US economy,'' Mr. Evered explained.
But in the event of a major disruption of world oil traffic, the price consequences could be severe, the EIA notes. A drop of 10 million barrels a day in world supply throughout 1985 - an amount larger than the total current output of the entire Persian Gulf region - would force up oil prices between $10 and $ 50 a barrel. The current European spot (or cash) market price of Saudi Arabian light crude is $28.40 a barrel.
The favorable energy situation the EIA expects should be felt at the gasoline pump, where this summer's seasonal rise in prices will be less than last year's, the EIA says.
''Gasoline prices will rise about 4 cents a gallon between the first and third quarters of 1984,'' Evered says. The increase will be smaller than in the summer of 1983 because of larger stocks of gasoline and the fact that part of last year's bump in gasoline prices was due to the effects of a 5-cent-a-gallon hike in federal gasoline taxes.
Even though more people are taking to the road as the economic recovery continues, peak gasoline consumption is expected to remain at last year's level of 6.8 million barrels a day. A growing number of more fuel-efficient cars will offset the increase in miles driven, analysts say.
The gasoline price forecast reflects EIA's expectation of ''no material price impact of the Persian Gulf hostilities in the US,'' Evered says. He notes that the US now only imports about 3 percent of its total petroleum supply from the Gulf.
In fact, last year US petroleum consumption reached its lowest point since 1971. As a result, oil imports fell to their lowest point in 12 years. With US petroleum production expected to stabilize, imports should grow over the next several years as the economy expands.
But imports are still expected to account for a smaller share of total US supply than they did in the late 1970s, when the Organization of Petroleum Exporting Countries (OPEC) alone supplied 30.5 percent of US needs.
There are several reasons, in addition to reduced US dependence on imports, that the government does not expect a major price or supply impact from the Iran-Iraq war.
For one thing, Evered says, ''there is a tremendous amount of excess productive capacity'' outside Iran. Roughly 8 million to 10 million barrels of oil a day normally come out the Gulf. But any cutoff of oil moving through the Strait of Hormuz would not necessarily mean a reduction in world supplies of that amount, he notes. There is excess capacity elsewhere in the world of 3 million barrels a day. And an additional 1.5 million barrels a day of Saudi Arabian crude could move by pipeline to the Red Sea.
Finally, the US has been filling its Strategic Petroleum Reserve and now has 400 million barrels of oil in storage, Evered notes. ''We are much better (able) to withstand a supply interruption than in 1979,'' he says.
That is not to say that the effects of a supply interruption could not be significant.
The precise effects of such a disruption would depend on a variety of factors , the EIA says, including the response of energy consumption to higher prices, the availability of replacement oil, and inventory levels.
If companies built up inventories in expectation of higher prices in the future, current prices would be pushed up. If companies and governments drew down inventories, the effect on prices would be minimized.
The EIA stresses that conservation has been a major force in shaping US energy markets.
As a result of increased efficiency - and the effects of the recession - total energy use has declined in the US since 1979. Usage is expected to grow in 1984, but at only about half the rate of projected economic growth, the EIA says.
From now until 1995, demand for OPEC oil will increase, the EIA predicts. ''Higher utilization of production capacity is expected to lead to price increases,'' Evered says.
After dropping to about $26 a barrel in 1986, world prices should rise to about $50 a barrel (in 1983 dollars) by 1995, the EIA predicts. Top 10 sources of US oil imports (First two months of 1984; as percent of total US petroleum product consumption) Mexico 4.4% Canada 3.5 Venezuela 3.2 Saudi Arabia 2.3 United Kingdom 2.2 Algeria 1.8 Indonsia 1.7 Netherlands Antilles 1.7 Virgin Islands 1.7 1.5
Source: US Energy Department