Energy Outlook 2023
Part 1: Storm Clouds Gathering for Energy Prices
A reshuffling of global natural gas supply and increased renewable power generation will result in higher U.S. energy prices in the near term.
What's in this White Paper?
Robust Natural Gas Production Continues
Russian Invasion and Its Implications
LNG Shipments and US Exports
Prices for both natural gas and electricity in the U.S. will continue to trend up as natural gas exports increase and energy policies pull investments away.
Nonetheless, power markets that favor renewable power capacity over thermal generation sources will also experience higher prices and resiliency issues for the near future, until power storage is more abundant and market design (which rewards resources for investment and availability), generation, and grid management technologies are able to properly balance market resources. Both macro and micro trends support this.
Capital expenditures for oil and gas are declining relative to the past high-price environment and as a percentage of cash flows. According to Bloomberg, the oil and gas majors, including ExxonMobil, Chevron, BP, and Shell, are investing roughly half the level of capital they spent when prices for crude oil were around $100 per barrel¹. Instead, these companies are rewarding their shareholders for their patience during the last several years of poor performance.
Additionally, with government policies and shareholder activism oriented towards renewable energy and the energy transition, these companies are reluctant to invest capital in hydrocarbon development.