Why US utility bills could be set to rise

Good morning and welcome back to Energy Source, coming to you from New York.

Oil prices fell to multi-year lows earlier this week as investors grew jittery over weaker growth in China and the US. Brent crude, the international benchmark, has fallen 13 percent since the end of August and fell below $70 on Tuesday for the first time in three years.

Fatih Birol, head of the International Energy Agency, warned that crude oil prices will continue to fall as demand falls.

“Given the current weak demand and a lot of oil coming from non-OPEC countries. . . we may see downward pressure on the price,” Birol said in an interview with the Financial Times this morning on the release of the monthly oil report.

Oil demand forecasts have never been more controversial. The IEA’s warning of a “staggering” oil glut by the end of the decade has angered many in the oil industry, who accuse the agency of playing politics. ExxonMobil’s global outlook, which was published last month and warned of a future energy price shock if investment in fossil fuels were to be scaled back, prompted an equally angry response from climate advocates.

Today we look at a report from consultancy ICF on what expectations for rising energy demand in the US will mean for prices.

We also have an opinion piece on Exxon’s forecast by climatologist Michael Mann. We invited Exxon to comment on this matter, but the company declined.

Thanks for reading,

Amanda

US electricity prices could be set to rise

Expected growth in electricity demand from electrification and AI data centers risks pushing up US energy prices, ICF warns.

The consultancy has published a report today forecasting a 19% increase in wholesale electricity prices from 2025 to 2028 due to increased energy demand. While households don’t typically buy energy from the wholesale market, the wholesale price of electricity influences the rate they ultimately see on their utility bills.

“The whole notion of clean, affordable and reliable (power) has complicated incredibly, monumentally in a very quick period of time,” said Patty Cook, ICF’s senior vice president of market development. “All of this has huge implications for how much utilities will pay for energy, how much customers will pay for energy, and how all these cost allocation decisions are balanced and made transparent to all stakeholders.”

The consultancy expects a “major shift” in US energy demand, with electricity consumption expected to grow 8.3% by 2028, up from annual growth of less than 1% for most years of 2010.

Michael Mann: Exxon’s forecast is a ‘recipe for climate disaster’

The writer is a professor in the Department of Earth and Environmental Sciences at the University of Pennsylvania and the author of “Our fragile moment‘.

ExxonMobil’s annual outlook, published late last month, projects a world in which global CO₂ emissions fall by just 25% by 2050 and oil and gas make up 54% of the energy mix by mid-century. In no uncertain terms, this would be disastrous for mankind.

Exxon’s 2050 projection would likely see average global temperatures rise by more than 2.4°C above pre-industrial levels. At about 1.2°C of warming, we’ve begun to witness what that future might look like. In 2022, severe flooding in Pakistan killed more than 1,000 people, displaced nearly 8 million, and caused more than $30 billion in economic damage. This year, India suffered a weeks-long heat wave in which temperatures frequently exceeded 50°C, resulting in hundreds of deaths.

The cost of extreme weather and climate disasters was nearly $100 billion in the US alone in 2023. The global cost of climate damage is expected to reach tens of trillions by 2050. These events and related costs are directly attributable to burning fossil fuels which generate greenhouse gas emissions.

Exxon is not simply projecting a future in which millions of people are at risk, but is actively working—as it has for decades—to achieve that outcome. The company is not in the business of allowing the external environment to shape its future – it lies, lobbies and obstructs to ensure that government policies do not erode demand for oil and gas. His opposition to electric vehicles and the ban on single-use plastics are the most recent examples of this. Exxon’s “big lie” was denying the reality of human-caused warming when scientists had secretly established it.

Exxon stands to make an enormous amount of money if it can successfully disrupt the transition to clean energy. It has posted more than $120 billion in profits over the past five years, including $59 billion in profits in 2022 after a spike in energy prices following Russia’s full-scale invasion of Ukraine. A rapid transition away from fossil fuels – which is absolutely necessary if we are to limit global warming to safe levels – is not in ExxonMobil’s interest.

Exxon puts a lot of emphasis on energy equity, arguing that continued extraction of fossil fuels is the only way to meet the UN’s development goals. His outlook conveniently omits any reference to the UN’s climate goals set by the Paris Agreement or the COP28 agreement to transition away from fossil fuels. Exxon would have us believe that if drilling stops, energy prices will rise, leading to economic recession and widespread unemployment. However, the cost of climate action already far exceeds the investment costs of the action.

Even the traditionally conservative International Energy Agency has said that if we want to limit global warming below a catastrophic 1.5°C, there can be no new fossil fuel projects. There is a viable path to a safe climate future, it’s just not one that’s in Exxon’s best interest.

Exxon envisions a world where 4 billion people with inadequate access to energy become hooked on oil and gas, as is the case in the developed world. That would be a recipe for climate disaster, and ironically, those in the developing world would be hardest hit by the projected impacts of business-as-usual warming.

Exxon’s bogus charity appeal is one of the industry’s favorite delaying tactics. Millions of people suffer from energy poverty, not fossil fuel poverty, and that means there are much safer and more resilient development paths than the dirty path Exxon wants to force on them.

Exxon’s outlook is nothing more than a signaling exercise. The company is signaling to governments that it doesn’t care about their net zero policies and will continue business as usual for as long as possible.

His insight should be presented for what it is: a window into a dangerous version of our planet, where Exxon puts profit over people.

The job is moving

• Developer of renewable sources Advance called Cliff Graham as executive director. Graham joins from 174 Power Globalwhere he held the position of director of development.

• James Fitzgerald joined The capital of Marathona clean energy investment bank as head of institutional sales. Fitzgerald joins from Tudor, Pickering, Holt & Co.

• Board of Directors at ConocoPhillips he chose Nelda Connors as a member of the council. Connors is the founder Pine Grove Holdingsan investment firm.

• True green capital managementa renewable energy investment firm called Gareth Miller at the council of Clean energy capital. Miller recently drove Cornwall Insighta research firm.

Power points

• Vladimir Putin has asked Russian officials to consider restrictions on uranium, a move to retaliate against sanctions that could affect nuclear reactors in the West.

• Abu Dhabi’s state oil company Adnoc is expected to make a formal offer of around €14.4 billion to acquire chemicals firm Covestro, in what would mark the biggest European deal this year.

Energy Source is written and edited by Jamie Smyth, Myles McCormick, Amanda Chu, Tom Wilson and Malcolm Moore, with support from the FT’s global reporting team. It reaches us at [email protected] and follow us on X at @FTEnergy. Keep up to date with previous editions of the newsletter Here.