The EIA has forecast a paltry 0.9% annul growth rate for electricity generation through 2040.
It is a dismal forecast, where it assumes minuscule growth in industrial output.
While the usage of electricity has grown in the residential sector by 1.7% over the past decade, the major laggard has been the industrial sector where usage has declined.
There’s no reason to believe that residential usage will decline from 1.7%, even with the outlawing of incandescent bulbs, where lighting is a major residential usage of electricity: Population growth will offset these reductions.
The same can be said for the commercial sector where the recent growth rate has been 1.0%.
There is an obvious discrepancy between the EIA’s forecast and the effect the shale revolution will have on the cost of energy.
Low energy costs will make American industry more competitive in the world market.
The shift to natural gas from coal has resulted in maintaining the low cost of electricity, in spite of the higher cost of electricity from wind and solar. This is especially true in the industrial states; except for California, where energy costs are high and industry is leaving the state.
Electricity accounts for roughly 25% of industrial energy costs, while roughly 30% of natural gas is used by industry.
Low-cost electricity and low-cost natural gas is a winning combination.
With low-cost natural gas, the cost of electricity will remain low when compared with Europe and other areas of the world.
Low cost natural gas will also lead to growth in the chemical industry.
The energy revolution is bound to increase industrial activity in the United States, providing the government adopts pro-growth energy policies.
Industrial demand for electricity will grow concomitantly, rather than decline as it did over the past decade.
With a pro-growth energy policy, unencumbered with attempts to cut CO2 emissions, electricity demand is likely to grow at an annual rate that’s closer to 2% than 1%.
This would be good: It would mean more demand for investment in new power plants, more drilling, and more industrial investment … a benign cycle that creates jobs.
Encouraging the use of energy is pro-growth.
America’s future is bright with pro-growth energy policies.
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