Forecasting Processes and Methods

The Energy Information Administration (EIA) makes energy forecasts to help government, industry, and the public understand the direction and trends implied by current events and decisions. Most of EIA's forecasts focus on energy supply, demand, and price projections for the United States and for the world. EIA has two general projection periods -- the short term (next six-to-eight quarters) and the mid-term (approximately the next 20 years). The projections integrate all fuel types, using the British thermal unit (Btu) as a common unit of measure, for a comprehensive overview balancing energy supply with energy demand. EIA's short-term forecasts are updated monthly. Forecasts are released each month on the Internet (http://www.eia.doe.gov/emeu/steo/pub/contents.html) and quarterly (January, April, July, and October) in a hard-copy report titled the Short-Term Energy Outlook (STEO). The short-term projections primarily focus on the United States' demand, supply, and prices for petroleum, natural gas, coal, electricity, and renewable energy and the world's demand, supply, and prices for petroleum. The primary mechanism for EIA's short-term forecasts is the Short-Term Integrated Forecasting System (STIFS), a personal computer based model. The STIFS model is principally affected by macroeconomic variables, world oil price assumptions, and weather assumptions. Copies of the model are available on the Internet site (see above). Users can download the model and enter their own assumptions to produce alternative results. EIA's mid-term forecasts (national and international) are updated annually. Both forecasts are released on the Internet ( http://www.eia.doe.gov/oiaf/aeo/ and http://www.eia.doe.gov/oiaf/ieo/) and in hard copy reports titled the Annual Energy Outlook (AEO) and the International Energy Outlook (IEO). The mid-term projections primarily focus on energy market supply, demand, and prices and related economic and environmental issues. EIA's domestic forecasting capability relies primarily on the National Energy Modeling System (NEMS). NEMS contains computer modules that are designed to approximate the interactions of energy markets and provide insights into future changes in supply, demand, economic conditions, etc. NEMS is used for forecasting and also to analyze economic policies, technological changes, changes in legislation, and other energy topics. NEMS operates on three RS/6000 workstations and its documentation is available to the public. EIA's international forecasting capability makes use of modules of NEMS as well as the World Energy Projection System and other special purpose models. Documentation for these models is available to the public. A directory of all EIA models is located at http://www.eia.doe.gov/bookshelf/models2002/index.html

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