Last month, the Energy Information Agency (EIA), an independent federal agency that collects, analyzes and disseminates impartial energy data, released its Annual Energy Outlook report for 2014, which includes energy pricing and consumption projections to 2040.

Fortunately, EIA’s report spells good news for the U.S. economy and, in turn, energy consumers. Among the report’s key findings are that ongoing advancements in technologies for crude oil and natural gas production will continue to render increases in domestic supply — reshaping the U.S. energy economy and reducing the nation’s “net dependence on imported oil.”

Here’s a breakdown of the EIA’s key findings and their implications on the economy and energy consumers:

Domestic production of oil and natural gas will continue to grow. This is a welcome prediction for the U.S. energy economy, as more domestic resources have become available for consumers to use here at home.

Increased production makes it possible for the U.S. to decrease its net dependence on foreign sources of energy, keep investment dollars at home, and support domestic job growth in the oil and gas industries. For energy consumers, this increased domestic production translates directly into greater supplies of affordable and stable energy – whether it is cheaper prices at the pump, more affordable prices for home heating in the winter or reduced electricity prices in consumers’ monthly utility bills.

According to the EIA report, U.S. crude oil production is expected to “increase sharply” and will approach a record by 2016 — reaching its highest level in 46 years as rising output from shale formations boosts domestic supplies, thereby diminishing the nation’s need to import foreign oil.

Low natural gas prices boost natural gas-intensive industries. This is a positive sign for the manufacturing sector of the economy, which continues to pull its weight in speeding the nation’s economic recovery and already supports approximately 17 million jobs in the U.S.Domestic output will grow annually by about 800,000 barrels a day and will reach 9.5 million barrels in 2016, nearly matching the record level produced in 1970, according to the report. In addition, natural gas production is projected to grow steadily, with a 56% increase between 2012 and 2040, when production reaches 37.6 trillion cubic feet (Tcf).

In fact, EIA predicts that industrial natural gas consumption is projected to grow by 22 percent between 2012 and 2025.  According to the Agency, bulk chemicals and metals-based durables account for much of the increased growth in industrial shipments. Industrial shipments of bulk chemicals, which benefit from an increased supply of natural gas liquids, are projected to grow by 3.4% per year from 2012 to 2025.

As the voice of the energy consumer, Consumer Energy Alliance (CEA) is encouraged by the EIA’s Annual Energy Outlook, and we look forward reviewing to the full report in spring 2014. We will continue to post on various energy trends and news, so be sure to visit The Energy Voice often for updates and additional information.

In the meantime, please feel free to visit our consumers page for tips on staying warm and saving energy costs this winter.

Pipeline critics contend building the Keystone XL Pipeline will lead to a carbon Armageddon.  We disagree.  A Consumer Energy Alliance analysis conducted for Build KXL Now plays out a real world scenario based on three undeniable facts.

1. The Canadian oil sands will be developed.
2. The United States will continue to utilize crude oil for gasoline, diesel, home heating and dozens of other products.
3. Crude oil is sold on a global market driven by supply and demand.

The U.S. State Department assessment examines GHG emissions from the construction and operation of Keystone XL Pipeline.  But, it does not compare those outcomes to the market driven realities which would unfold if the pipeline is not built. (See the list of facts above.)

To find our answer we break down the GHG effect from transporting crude with the Keystone XL Pipeline and without.

Operating the Keystone X Pipeline

Pretty straight forward. U.S. State Department estimates, when operating, the Keystone XL Pipeline will generate 3.19 million metric tons of CO2E annually or 10.529 kg CO2E per barrel shipped.

How did the State Department make this estimate? The estimate is based off the average carbon density of power generators in the region, which are heavily reliant on coal-fired power.

Under the President’s Climate Action Plan greenhouse gas emissions from coal and natural-gas fired power plants would be capped.  This point should not go unnoticed. The 3.1 million metric ton average would decline in forthcoming years as coal-fired power plants, which feed the KXL pump stations, close.

Crude oil shuffle 

What happens next we like to call the crude oil shuffle. 

For the foreseeable future, the United States will utilize crude oil to make gasoline, diesel, jet fuel and home heating oil.  If the U.S. cannot import crude oil from Canada via pipeline then Gulf Coast refiners would turn to crude imports from the Middle East.  Venezuela and Mexico would be an option if not for a decline in production exported to the U.S.  Shipping by train is an option, but statistically it is not as safe as shipping crude by pipeline.  Pipelines are by far the safest mode of shipping for crude oil.

Where will the U.S. turn?  Middle East oil producers provide the heavier crude oil sought by Gulf Coast refiners, in particular, Kuwait, Iraq and Saudi Arabia.   

Carbon Footprint from Seaborne Imports

Here is the math.  The carbon impact of seaborne versus pipeline transport of crude oil is dramatic. The Keystone XL Pipeline would produce half the greenhouse gas per barrel compared to a barrel imported by sea from the Middle East.

What will Canada do? 

The U.S. State Department draft environmental evaluation correctly notes development of the Canadian oil sands will move ahead notwithstanding construction of a new cross-border pipeline.  (This is a view shared by President Obama’s EPA Administrator)

Remembering crude oil is sold on a global market, then what is the next viable option for Canada?  Asia.  Canadian producers will transport their product by the just approved east to west pipeline from Alberta to British Columbia to be then shipped by tanker to Asia.  

Our estimate is based on Barr Engineering’s carbon emission equivalent estimates for oil transport from British Columbia to China.  Something to keep in mind Keystone XL is predicted to ship 730,000 barrels of Canadian crude and 100,000 barrels of U.S. crude. Therefore, the estimates to China only include the 730,000 diverted barrels of Canadian crude.

A oil tanker traveling the 5,673 miles between Kitimat, B.C. to Ningbo, China will generate 20.76 kg CO₂e/bbl.  Compared to the 10.529 kg CO₂E/barrel.generated by the Keystone XL Pipeline, we are looking at 97% spike in carbon intensity.

The crude oil shuffle now has Canada exporting oil to Asia generating 20.76 average kg CO₂e/bbl and the U.S. importing oil from the Middle East 15.6 Average kg CO₂E/barrel.

Let’s review.

Contrary to claims of critics, evaluating the numbers in a real world scenario shows the Keystone XL Pipeline is by far the best option.