1. Energy Information Administration Official Energy Statistics from the U.S. Government Annual Energy Outlook 2009 Early Release Energy Information Administration December 17, 2008 www.eia.doe.gov

2. 2 EIA Annual Energy Outlook 2009 Reference Case Presentation -- December 17, 2008 The economy, oil prices, resources, policies, and behavior drive the AEO2009 reference case Long-term economic growth averages about 2.5 percent per year between 2007 and 2030 World crude oil prices recover from a near-term decline and reach $130 per barrel (in 2007 dollars) by 2030 A robust domestic natural gas resource base allows for a steady expansion of production given projected growth in demand and prices Recently-enacted policies and concerns over greenhouse gas (GHG) emissions, combined with high energy prices, moderate projected growth in energy consumption and emissions

3. 3 EIA Annual Energy Outlook 2009 Reference Case Presentation -- December 17, 2008 Reference High Price Low Price ProjectionsHistory Oil prices in the reference case rise steadily; the full AEO includes a wide range of price cases 2007 dollars per barrel

4. 4 EIA Annual Energy Outlook 2009 Reference Case Presentation -- December 17, 2008 Nuclear Natural Gas Liquid Fuels Coal Renewables (excl liquid biofuels) Non-fossil energy use grows rapidly, but fossil fuels still provide 79 percent of total energy use in 2030 HistoryProjection Liquid Biofuels quadrillion Btu

5. 5 EIA Annual Energy Outlook 2009 Reference Case Presentation -- December 17, 2008 HistoryProjections Energy use per dollar of GDP continues to decline; per capita energy use also declines index, 1990=1.0 Per capita Per dollar

6. 6 EIA Annual Energy Outlook 2009 Reference Case Presentation -- December 17, 2008 Net dependence on imported liquids declines dramatically over the next 20 years Consumption Domestic supply Net Imports HistoryProjections AEO2009 reference case AEO2008 reference case 58% 41%54% 60% million barrels per day

7. 7 EIA Annual Energy Outlook 2009 Reference Case Presentation -- December 17, 2008 Industrial Transportation Residential and Commercial Electric Power Petroleum-based liquids consumption is projected to be flat as biofuels use grows Biofuels million barrels per day HistoryProjections

8. 8 EIA Annual Energy Outlook 2009 Reference Case Presentation -- December 17, 2008 New light-duty vehicle sales shift from light trucks back to cars percent of total sales

9. 9 EIA Annual Energy Outlook 2009 Reference Case Presentation -- December 17, 2008 Mild and full hybrid systems dominate new light-duty vehicle sales by 2030 millions of sales HistoryProjection

10. 10 EIA Annual Energy Outlook 2009 Reference Case Presentation -- December 17, 2008 Corn Ethanol Legislated RFS Cellulose Ethanol Biofuels use falls short of the 36 billion gallon RFS target in 2022, but exceeds it by 2030 Net Ethanol Imports Biodiesel Biomass to Liquids (BTL) RFS with Paragraph 7 Adjustments Ethanol from Other Feedstocks Renewable Diesel billion credits

11. 11 EIA Annual Energy Outlook 2009 Reference Case Presentation -- December 17, 2008 The import share of natural gas supply declines sharply as domestic supply grows Consumption Domestic supply Net Imports HistoryProjections AEO2008 reference case 16% 3% 14% trillion cubic feet AEO2009 reference case

12. 12 EIA Annual Energy Outlook 2009 Reference Case Presentation -- December 17, 2008 Unconventional production meets most growth in natural gas demand and offsets the decline in conventional production and imports Unconventional Alaska Net imports Associated-dissolved Non-associated offshore Non-associated conventional HistoryProjections trillion cubic feet

13. 13 EIA Annual Energy Outlook 2009 Reference Case Presentation -- December 17, 2008 Period Annual Growth 1950s 9.0 1960s 7.3 1970s 4.2 1980s 3.1 1990s 2.4 2000-2007 1.1 2007-2030 1.0 Structural Change in Economy - Higher prices - Standards - Improved efficiency Growth in electricity use continues to slow 3-year rolling average percent growth History Projections

14. 14 EIA Annual Energy Outlook 2009 Reference Case Presentation -- December 17, 2008 Nominal Real 2007 Electricity prices rise with higher capital and fuel costs and growing demand cents per kilowatthour Projections History

15. 15 EIA Annual Energy Outlook 2009 Reference Case Presentation -- December 17, 2008 Coal Natural Gas Nuclear Renewable Oil & Other Generation mix gradually shifts to lower carbon options billion kilowatthours Projections History

16. 16 EIA Annual Energy Outlook 2009 Reference Case Presentation -- December 17, 2008 Biomass Wind Solar Waste Geothermal Nonhydropower renewable power meets 33% of total generation growth between 2007 and 2030 billion kilowatthours HistoryProjections

17. 17 EIA Annual Energy Outlook 2009 Reference Case Presentation -- December 17, 2008 gigawatts Natural gas and renewables provide most of the generating capacity added between 2007 and 2030

18. 18 EIA Annual Energy Outlook 2009 Reference Case Presentation -- December 17, 2008 Growth in energy-related CO 2 emissions slows with slowing growth in energy use and a shift to less carbon-intensive fuels HistoryProjections million metric tons AEO2008 reference case AEO2009 reference case

19. 19 EIA Annual Energy Outlook 2009 Reference Case Presentation -- December 17, 2008 AEO2009 2030 AEO2008 2030 2007 Electricity generation is the dominant source of CO 2 emissions growth Delivered, including losses in electricity generation million metric tons

20. 20 EIA Annual Energy Outlook 2009 Reference Case Presentation -- December 17, 2008 Key results from AEO2009 reference case World oil prices rise to higher levels due to growth in world demand and more limited access to resources U.S. oil use remains near its present level through 2030 as modest growth in overall liquids demand is met by biofuels U.S. dependence on imported oil, measured as a share of U.S. liquids use, is expected to decline sharply over the next 25 years Natural gas import share of total supply also declines sharply due to increased domestic production with higher prices Unconventional natural gas production, lead by gas shales, is expected to provide the majority of growth in gas supply Energy-related CO 2 emissions grow at 0.3 percent per year, absent any new policy to control emissions

21. Howard Gruenspecht howard.gruenspecht@eia.doe.gov Periodic Reports Petroleum Status and Natural Gas Storage Reports, weekly Short-Term Energy Outlook, monthly Annual Energy Outlook 2009, December 2008/ February 2009 International Energy Outlook 2008, August 2008 U.S. Crude Oil, Natural Gas, and Natural Gas Liquids Reserves 2007, October 2008 (Advance Summary), January 2009 (Full Report) Examples of Special Analyses Analysis of Crude Oil Production in the Arctic National Wildlife Refuge, May 2008 Energy Market and Economic Impacts of S.2191, the Lieberman-Warner Climate Security Act of 2007, April 2008 “Impacts of Increased Access to Oil and Natural Gas Resources in the Lower 48 Federal Outer Continental Shelf,” Annual Energy Outlook 2007 The Global Liquefied Natural Gas Market: Status and Outlook, December 2003 www.eia.doe.gov

22. 22 EIA Annual Energy Outlook 2009 Reference Case Presentation -- December 17, 2008 GHG regulatory uncertainty in the AEO2009 Although no Federal legislation has been passed, regional groups and State regulators are enacting regulations and the financial community is behaving as if they anticipate regulations Energy companies are being encouraged to shift investments towards less GHG-intensive technologies To represent this behavior in the AEO2009 reference case, a 3-percentage-point cost of capital penalty has been added when evaluating investments in GHG- intensive technologies This penalty is meant to represent the implicit cost being added to GHG-intensive projects to account for the risk that they may have to purchase allowances or make other investments in the future to offset GHG emissions

23. 23 EIA Annual Energy Outlook 2009 Reference Case Presentation -- December 17, 2008 U.S. Gross Domestic Product (billion 2000 chain-weighted dollars) Economic growth returns to trend after near term slow down

24. 24 EIA Annual Energy Outlook 2009 Reference Case Presentation -- December 17, 2008 Peak to Trough Change in Real GDP (Percent) Reference Case Assumes Current Recession is Worse than Past Two Recessions

25. 25 EIA Annual Energy Outlook 2009 Reference Case Presentation -- December 17, 2008 Growth In Liquids Supply And Price (Average Percent Per Year) Demand for Liquid Fuels Grew More Rapidly than Non-OPEC Supply over the Last Four Years PriceVolume

26. 26 EIA Annual Energy Outlook 2009 Reference Case Presentation -- December 17, 2008 ProjectionHistory New Light Duty Vehicle Fuel Economy (miles per gallon, based on CAFE test) Car Combined Light Truck Newly enacted CAFE standards in EISA will require significant increases in light duty vehicle fuel economy

27. 27 EIA Annual Energy Outlook 2009 Reference Case Presentation -- December 17, 2008 ProjectionHistory New Alternative Light Vehicle Sales (percent of total sales) Electric Drive Alternative Fuel Capable Diesel Alternative light duty vehicle sales increase from 10 percent in 2007 to 63 percent by 2030

28. 28 EIA Annual Energy Outlook 2009 Reference Case Presentation -- December 17, 2008 Components of Liquid Fuels (million barrels per day) 200720152030 Petroleum Based Biofuels Higher world oil prices and technology dampen liquids consumption through 2015 while the Renewable Fuel Standard increases supply of a variety of biofuels. After 2015, the majority of supply growth is met with biofuels.

29. 29 EIA Annual Energy Outlook 2009 Reference Case Presentation -- December 17, 2008 Commercial Industrial Commercial electricity sales drive growth billion kilowatthours Residential