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Industrial Sector Woes Dragged U.S. Energy Use Down 2.3% in 2008

Total U.S. energy use in 2008 was an estimated 99.2 quadrillion Btu, down 2.3% from 101.5 quadrillion Btu in 2007, according to energy flow charts released last week by the Lawrence Livermore National Laboratory (LLNL).

Energy use in the commercial and residential sectors increased slightly in 2008, while industrial use declined by 1.17 quadrillion Btu and transportation use declined by 0.9 quadrillion Btu. The falling industrial and transportation numbers were due to a spike in oil prices last summer, LLNL said.

There was a slight increase in natural gas consumption in 2008 compared with 2007, according to LLNL, but there were larger increases in the use of solar, nuclear, biomass and wind energy. Coal and petroleum consumption was down and geothermal energy remained about the same.

The increase in wind energy was due primarily to large investments in wind turbine technologies over the past few years and better use of existing turbines, according to LLNL energy systems analyst A.J. Simon. The significant increase in biomass was a result of the recent push for the development of more biofuels, including ethanol, while the increase in nuclear (up to 8.45 quadrillion Btu in 2008 compared with 8.41 quadrillion Btu in 2007) was attributed to a decrease in downtime at existing nuclear plants.

"There's an incentive to operate as much as possible," Simon said. "It's a smart thing to do. You can't earn revenue by selling electricity when you're down."

With natural gas consumption expected to decline by 2.3% this year and inventories remaining well above five-year averages, the monthly average Henry Hub natural gas spot price is expected to remain below $4/Mcf until late in the year, the Energy Information Administration (EIA) said recently (see NGI, July 13). But in 2010, as expected economic growth increases industrial consumption, EIA projected an increase in the Henry Hub price to an average of $5.93/Mcf.

EIA has said worldwide natural gas consumption will increase 32% by 2030, jumping to 153 Tcf compared with 104 Tcf in 2006 (see NGI, June 1). The industrial sector, which consumes more natural gas than any other end-use sector, will continue to do so in 2030, according to EIA. According to the EIA forecast, total world energy use will increase to 552 quadrillion Btu in 2015 and to 678 quadrillion Btu in 2030 -- up from 472 quadrillion Btu in 2005. Those figures are down from predictions EIA made last year, when it said total world energy use would increase to 562 quadrillion Btu in 2015 and to 695 quadrillion Btu in 2030 (see NGI, June 30, 2008).

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