In 2016 Americans will continue to reap the windfall from energy prices that will remain well below their historic highs. But those prices won't be quite as low as they were last year, according to the U.S. Energy Information Administration.
EIA modeling projects a gallon of gasoline will average $2.36 in 2016, above the $2.04 per gallon average for the end of 2015 but substantially lower than the average $3.28 in December 2013. Analysts figure that every 1 cent reduction in the cost of gasoline puts about a billion dollars in consumers' pockets.
At the same time, oil prices' failure to rebound, thanks in large part to OPEC's strategy of maintaining its production, has forced some U.S. energy companies into default on their debt and prompted the layoff of tens of thousands of workers. Oil revenue-dependent Alaska may have to impose an income tax for the first time in 35 years to make up for lost income that came with the collapse of energy prices.
Yet experts say the explosion in U.S. oil and gas production, sparked by controversial fracking technology, will continue to redefine the global energy market for years to come. American oil production spiked from 5 million barrels a day in 2005 to over 9 million in 2015.
The EIA projects U.S. oil production will drop from a high of 9.3 million barrels per day in 2015 to 8.8 million barrels per day in 2016.
And when it comes to heating their homes, American consumers will benefit from a warmer winter and a continued softness in the international energy market. The half of U.S. households that rely on natural gas to stay warm will spend on average 13 percent less this winter.
Families that use heating oil are expected to pay an average of $2.40 cents a gallon this winter, 64 cents a gallon lower than last winter. The average household is now expected to spend $1,282 for heating oil this winter, $570 less than last winter. The EIA projects the price of heating oil will fall in the coming year, going from $2.67 a gallon in 2015 to $2.52 in 2016.
"In the last four years, we have gone through an absolute revolution when it comes to energy," said Peter Kenny, independent market strategist. "This is the biggest game change since the formation of OPEC, and it isn't a short-term change."
"American shale producers fired the first shot, and it destabilized the global pricing structure," Kenny said. "Those years of exorbitant prices paid by U.S. consumers have effectively come to an end."
Even as U.S. energy producers dial back production some for 2016, the The New York Times reports companies like Anadarko (APC), EOG Resources (EOG) and Continental Resources (CLR) are sitting on more than 4,000 oil and gas wells that have been drilled but are being kept off-line pending a better global oil price. "If it ever gets back to $50 a barrel, so much supply will come on line that it won't stay at $50 for long," said Kenny.
"People realize that oil at any price is not cheap when you factor in the cost to our environment," said Bob Deans, director of strategic engagement for the Natural Resources Defense Council.
The EIA says renewable power sources like solar, wind and biomass accounted for 11 percent of energy produced in the U.S. in 2014.
The Obama administration is aiming for all federal agencies to get 20 percent of their electricity from renewables by 2020.
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