Government Fleet Top News

Fuel Prices Will Drive Market Toward Alt Fuels

December 13, 2006

NEW YORK, NY – A Department of Energy recently released report suggests that energy markets will shift further toward alternative sources in the coming years, driven primarily by higher prices for traditional fossil fuels and recently enacted public policy, reports Associated Press. Even so, the department’s Energy Information Administration (EIA) predicted in its annual energy outlook that oil, coal, and natural gas will still account for the same 86 percent share of the U.S. energy market in 2030 that they did in 2005.

Total energy demand is anticipated to grow 1.1 percent annually between now and 2030; and even though oil prices are forecast to fall from present levels over the next decade as new supplies come to market, they’re expected to reach $95 a barrel in nominal dollars by 2030. U.S. ethanol use is expected to grow to 11.2 billion gallons in 2012 from 4 billion gallons in 2005. By 2030, ethanol use could reach 14.6 billion gallons, or about eight percent of the nation’s total gasoline consumption, exceeding the 7.5 billion requirement of the Renewable Fuel Standard enacted as part of the Energy Policy Act of 2005, according to the Associated Press.

The administration forecasts a seven-percent increase in the use of alternative sources for distillate fuels by 2030, mostly biodiesel. Natural gas and coal should command more of the market. Including diesel vehicles and those running on unconventional technology such as hydrogen or fuel cells, EIA sees alternate-fuel vehicles accounting about 28 percent of light-duty vehicle sales in 2030 versus just over eight percent in 2005. Sales of flex-fuel vehicles could reach 2 million vehicles annually by 2030, with similar sales of hybrid electric vehicles projected.

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