Crude oil prices R projected 2 decline from their recent peak above $80
Heating Oil. Only 7 percent of U.S. households depend on heating oil for winter fuel. Most of these households are in the Northeast, where 32 percent of households use heating oil as their primary heating fuel. In that region, the average household is projected to pay 22 percent more than last winter as a result of a 16-percent increase in prices and a 5-percent increase in consumption.
Propane. Propane-consuming households, which account for 5 percent of the U.S. total, are projected to see an average increase of 16 percent in propane expenditures this winter, but that increase varies widely by region. Western households are projected to see an average increase of 10 percent, while Northeastern homes are expected to experience an average increase of 21 percent.
Electricity. Thirty percent of all U.S. households rely on electricity as their primary heating fuel, with electricity serving as the primary heating fuel for 30 percent of households in the West, 52 percent in the South, and 11 percent each in the Northeast and the Midwest. On average, electricity expenditures during the winter are projected to rise by 4 percent due to increased consumption and prices. Households in the South are projected to pay 3 percent more this winter on electricity bills, while Northeastern households� expenditures are projected to rise 7 percent from last winter.
Global Petroleum Markets
The current world oil market is characterized by rising consumption, moderate non-OPEC supply growth, falling inventories, and rising demand for OPEC oil. However, the combination of OPEC�s recent announcement of increased supply and lower seasonal crude demand in the United States over the next 2 months points to crude prices easing slightly over the winter. Although some OPEC members, including Angola and Saudi Arabia, are expected to raise production capacity next year, spare capacity levels are expected to remain fairly low once demand growth is considered. As a result, if consumption growth continues at recent levels, as expected, tight global oil market conditions will likely persist through 2008.
Consumption. China, Brazil, the United States, and Middle East countries are expected to remain the main engines of oil consumption growth. World oil consumption in the fourth quarter of 2007 is projected to be 1.8 million barrels per day (bbl/d) above fourth-quarter 2006 levels. EIA projects that world oil consumption will increase by 1.4 million bbl/d in 2008, a reduction of 140,000 bbl/d from last month�s Outlook, due to the impact of higher prices and lower expectations for consumption growth in Organization for Economic Cooperation and Development (OECD) countries. The recent actions of some central banks have lessened, but not eliminated, the risk of lower world economic growth in 2008. In addition, the decline in the value of the dollar against other currencies means that many consuming countries will not experience the full effect of the rise in dollar-denominated oil prices.
Non-OPEC Supply. Non-OPEC production continues to grow, albeit at a slow rate. Non-OPEC supply in the fourth quarter of 2007 is projected to be about 480,000 bbl/d above year-earlier levels. Non-OPEC supply in 2008 is projected to rise by 860,000 bbl/d, led by production gains in Brazil, the United States, Russia, Canada, and Sudan. These gains will more than offset lower production in a number of countries, including Mexico, the United Kingdom, Norway, and Egypt. EIA�s forecast of growth in Russian oil production in 2008 is lower than the previous Outlook, due to delays in expected new projects such as the Prirazlomnoye field. However, the other countries of the former Soviet Union are still projected to account for nearly half of the gain in non-OPEC supplies in 2008.