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Ten new refineries will be
<br />built by 2020, bringing the
<br />U.S. total to about 160 and
<br />refining capacity to 18.7
<br />million barrels of oil a day.
<br />The 2005 energy law
<br />streamlines permit proce-
<br />dures and adds tax incen-
<br />tives to spur construction,
<br />helping to end a 30-year
<br />stretch with no new
<br />refineries.
<br />More gasoline imports
<br />will still be needed to meet
<br />demand from motorists.
<br />Twenty years hence, gas
<br />consumption is likely to
<br />reach about 525 million
<br />gallons a day, up 100 mil-
<br />lion gallons a day from
<br />now. Although use of
<br />hybrids and other gas-sip-
<br />ping vehicles will expand
<br />quickly, steady population
<br />growth will generate lots
<br />mare drivers who will need
<br />to fill up.
<br />At least 15% of U.s.
<br />gasoline supply will come
<br />from abroad by 2025,
<br />versus 10% now. Why not
<br />build even more refiner-
<br />ies? It's still tough to over-
<br />come objections from
<br />communities. The energy
<br />law lessens the risks of
<br />drawn-out court battles
<br />but doesn't eliminate them
<br />entirely. Economics are a
<br />factor, too. Demand for
<br />gasoline can swing widely
<br />in any given year. Energy
<br />companies prefer to meet
<br />temporary demand swells
<br />with imports rather than
<br />risk overcapacity at multi-
<br />billion-dollar facilities when
<br />demand ebbs.
<br />They'll see brisk demand for pipes,
<br />drilling equipment, transportation equip-
<br />ment, sensors, gauges, meters, control
<br />devices and much more.
<br />A boom for the renewables industry,
<br />as well as for vendors of conservation
<br />technologies, is certain in the years ahead.
<br />Many companies are already positioning
<br />themselves to profit. GridPoint of
<br />Washington, D.C., markets its GridPoint
<br />Connect technology to seamlessly inte-
<br />grate delivery of energy from on-site
<br />renewable sources such as solar panels
<br />with utility-fed power for homes and
<br />firms. Southwest Windpower of Flagstaff,
<br />Ariz., has become one of the largest sup-
<br />pliers of wind energy by offering turnkey
<br />systems for both homes and businesses.
<br />Altergy Systems in Gold River, Calif.,
<br />makes fuel cells used to provide power
<br />for residences. Itron, based in Spokane
<br />Valley, Wash., manufactures smart elec-
<br />tricity meters that enable firms to better
<br />monitor their power usage and fluctuating
<br />utility rates.
<br />Tao l ...._.. _ _._.- - _ .m... .. _~_.. _
<br />U.S. Energy Consumption
<br />,,.
<br />f''~
<br />700 .. •~
<br />f Net Imports
<br />so ,.-,~ •~ "~. . .
<br />U.S. Energy Production
<br />60
<br />1980 7995 2004 2015 2030
<br />(In quaOrllllon Btu) Sources: Dept. of Energy, Mlplinger
<br />THE OUTLOOK FOR ENERGY POLICY
<br />ougher standards for fuel efficien-
<br />T cy in autos will be phased in over
<br />a decade or so. The goal by then is
<br />likely to be a 30% increase in average
<br />fuel efficiency for passenger cars to
<br />around 36 miles per gallon and a 60% rise
<br />to 36 mpg for light trucks.
<br />Expect tighter regs for buildings
<br />as well, notably more-stringent efficien-
<br />cy standards for residential and industrial
<br />systems that use fossil fuels or electricity.
<br />Lawmakers will probably offer generous
<br />incentives for builders to use more
<br />insulation, climate controls and other
<br />energy-saving equipment. Given the
<br />slow pace of building turnover, however,
<br />such measures won't have a big impact
<br />on energy use.
<br />Mass transit will get more funding
<br />at the expense of highways and other
<br />transportation infrastructure. Demand for
<br />public transportation will rise as fuel costs
<br />lead to higher concentrations of residential
<br />development near transit lines.
<br />Opposition to oil drilling will dwindle
<br />in the U.S. as concern mounts about grow-
<br />ing dependence on foreign sources of oil
<br />and natural gas. The opening of the Arctic
<br />National Wildlife Refuge to oil explo-
<br />ration is likely within five years. Drilling
<br />on the Outer Continental Shelf will proba-
<br />bly get under way within 10 years.
<br />Global oil politics will dominate
<br />Washington's foreign policy agenda as
<br />America's dependence on imported oil
<br />increases despite expanded drilling in the
<br />U.S. About 70°/D of U.S. oil supply will
<br />come from abroad in 2025, up from 55%
<br />now. What's more, the reserve-rich
<br />Middle East will become increasingly
<br />predominant among global oil producers,
<br />even though output in West Africa,
<br />Russia and other regions outside the
<br />Middle East is poised to gain in coming
<br />years. A handful of nations in the Middle
<br />East will produce about 50°/D of global
<br />oil output 20 years from now, compared
<br />with 40% currently, and these same
<br />countries are going to have the lion's
<br />share of petroleum reserves.
<br />User competition will intensify
<br />among the U.S., China, India, Europe,
<br />Japan and other countries as they try to
<br />secure exclusive supply deals with oil
<br />and natural gas producers around the
<br />world. China is already pursuing this
<br />strategy for energy products as well as
<br />other key raw materials, signing major
<br />long-term contracts with Middle Eastern
<br />and Latin American mining and extrac-
<br />tion companies.
<br />More military resources will be used
<br />to help secure energy supply lines from
<br />the Persian Gulf. The current tab, not
<br />including spending on Iraq, is about $20
<br />billion to $40 billion a year.
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<br />4 THE KIPLINGER LETTER KIPLINGERFORECASTS
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