Preface The Annual Energy Outlook 2000 (AEO2000) presents midterm forecasts of energy supply, demand, and prices through 2020 prepared by the Energy Information Administration (EIA). The projections are based on results from EIAs National Energy Modeling System (NEMS). The report begins with an Overview summarizing the AEO2000 reference case. The next section, Legislation and Regulations, describes the assumptions made with regard to laws that affect energy markets and discusses evolving legislative and regulatory issues. Issues in Focus discusses current energy issuesappliance standards, gasoline and diesel fuel standards, natural gas industry expansion, competitive electricity pricing, renewable portfolio standards, and carbon emissions. It is followed by the analysis of energy market trends. The analysis in AEO2000 focuses primarily on a reference case and four other cases that assume higher and lower economic growth and higher and lower world oil prices than in the reference case. Forecast tables for these cases are provided in Appendixes A through C. Appendixes D and E present a summary of the reference case forecasts in units of oil equivalence and household energy expenditures. Other cases explore the impacts of varying key assumptions in NEMSgenerally, technology penetration. The major results are shown in Appendix F. Appendix G briefly describes NEMS and the AEO2000 assumptions, with a summary table of the cases. Appendix H provides tables of energy and metric conversion factors. AEO2000, the detailed assumptions, and supplementary tables will be available on the EIA web site at www.eia.doe.gov/oiaf/aeo/index.html. The AEO2000 projections are based on Federal, State, and local laws and regulations in effect on July 1, 1999. Pending legislation and sections of existing legislation for which funds have not been appropriated are not reflected in the forecasts. Historical data used for the AEO2000 projections were the most current available as of July 31, 1999, when most 1998 data but only partial 1999 data were available. Historical data are presented in this report for comparative purposes; documents referenced in the source notes should be consulted for official values. The AEO2000 projections for 1999 and 2000 incorporate the short-term projections from EIAs September 1999 Short-Term Energy Outlook. The AEO2000 projections are used by Federal, State, and local governments, trade associations, and other planners and decisionmakers in the public and private sectors. They are published in accordance with Section 205c of the Department of Energy Organization Act of 1977 (Public Law 95­91), which requires the Administrator of EIA to prepare an annual report that contains trends and projections of energy consumption and supply. The projections in AEO2000 are not statements of what will happen but of what might happen, given the assumptions and methodologies used. The projections are business-as-usual trend forecasts, given known technology, technological and demographic trends, and current laws and regulations. Thus, they provide a policy-neutral reference case that can be used to analyze policy initiatives. EIA does not propose, advocate, or speculate on future legislative and regulatory changes. All laws are assumed to remain as currently enacted; however, the impacts of emerging regulatory changes, when defined, are reflected. Because energy markets are complex, models are simplified representations of energy production and consumption, regulations, and producer and consumer behavior. Projections are highly dependent on the data, methodologies, model structures, and assumptions used in their development. Behavioral characteristics are indicative of real-world tendencies rather than representations of specific outcomes. Energy market projections are subject to much uncertainty. Many of the events that shape energy markets are random and cannot be anticipated, including severe weather, political disruptions, strikes, and technological breakthroughs. In addition, future developments in technologies, demographics, and resources cannot be foreseen with any degree of certainty. Many key uncertainties in the AEO2000 projections are addressed through alternative cases. EIA has endeavored to make these projections as objective, reliable, and useful as possible; however, they should serve as an adjunct to, not a substitute for, analytical processes in the examination of policy initiatives.
In its August 10 edition, ''The Economist'' magazine asserts that Saudi Arabia can continue producing oil at its current production levels for 70 years, without having to look for another drop. Further, the magazine claims that the nation could find ''"plenty more if they look"'', calling for privatisation of national oil companies to help increase oil production.

The language is provocative - the world has plenty of oil, and only requires sufficient investment and exploration to find it. This is a line that ''The Economist'' has held for some time, certainly since before its now infamous March 1999 issue proclaiming that we were "drowning in oil" and featuring a prediction of US$5 per barrel. That issue was followed by an embarrassing retraction in December of that year, as oil started its steady climb. It now sits above US$70 per barrel.

However, petroleum geologists and energy investment specialists maintain a different view of oil reserves. They say that there is a limit to what is in the ground, and further to that, a limit to how much of it we can retrieve even with advancing technology. Just how much is down there can't be said with any certainty, for a variety of reasons. A big one is the suspicious reserves figures given by producers in the Middle East, including Saudi Arabia. Since OPEC starting using a quota system based on reserves, the estimated reserves for member nations has magically risen, and even continued rising in the face of increased extraction from those reserves.

Amongst those who deal with the physical realities of oil fields, forecasts of a peak in production vary between 30 years, as the USA's Energy Information Administration suggest, and now, as suggested by the Association for the Study of Peak Oil and Gas and other more pessimistic forecasters. A peak in production would then be followed by decline. Certainly, in the petroleum world, there is no serious suggestion of sustaining the current level of oil production for 70 years.