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The Energy Information Administration (EIA) in its Annual Energy Outlook (AEO) reports has tended to underestimate natural gas production and consequently overestimate net gas imports, according to the agency's Annual Energy Outlook Retrospective Review. In addition, natural gas has been the fuel with the largest absolute percentage difference between AEO projections and historical consumption. "This can be partially traced to the performance of natural gas price projections," EIA said. "In earlier projections, the natural gas price was influenced by the changes in the world oil price, but this relationship has decoupled since 2000. Through AEO2005 [see Daily GPIDec. 10, 2004], the reference case has generally overestimated natural gas consumption, in part due to the tendency for significant underestimates of the natural gas price. In addition, industrial natural gas usage is highly sensitive to business cycles, leading to greater volatility in overall natural gas consumption." EIA's AEO2014 concluded that abundant supply and low prices would drive consumption of gas in the industrial and electric power sectors to new levels in 2040 (see Daily GPIMay 8, 2014Dec. 16, 2013).

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