Fuel Price Projections by End-Use Sector for Illinois and the Midwest Region

摘要

A systematic method devised to translate national energy price projections by fuel type and sector into regional and state-level prices is documented. The Argonne Regional Energy Price Simulator (AREPS) prepares regional and state-level projections of delivered energy prices by fuel and end-use sector starting in 1980. The AREPS system forecasts energy prices to the year 2030. Using national price levels by fuel type and sector, AREPS transforms these values into regional or state prices with an expected weighted average price differential (state-to-nation or region-to-nation, depending on the application) specific to each fuel and sector. The initial price differential is based on a three-year weighted average of historical price differentials. This differential is scaled over time to reflect a tendency for the expected value of projected prices to generally regress toward the national mean. This convergence is consistent with recent trends discovered through empirical examination. The scale factors applied to the price differentials account for these phenomena, although they do not cause complete convergence with national prices, even in the long run. Some spatial price differentiation is preserved. Section 2 describes the methodological and basic design features of AREPS; the algorithm is delineated in Section 3. Fuel prices by end-use sector of the Midwest in 1973 and 1980 are then projected to 2010 in Sections 4 and 5. An informal survey of fuel price forecasts available from state energy offices in included as well as conclusions. (ERA citation 11:008997)