Oil prices seen rising, cutting into growth

Government ups its price projections for crude by nearly 20 percent, says greenhouse gasses will rise by 25 percent unless policies are changed.

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By Steve Hargreves, CNNMoney.com staff writer

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Oil prices seen rising, curbing economic growth. Greenhouse gasses to soar.

NEW YORK (CNNMoney.com) -- The government increased its projection for oil prices Wednesday, and said those higher prices will chip away at economic growth.

Oil prices are expected to average about $67 dollars in 2010, according to the Energy Information Administration's 2008 long term energy outlook. That's almost 13 percent higher than last year's projection, when EIA said prices should average $59 in 2010.

The agency restated its long-held view that more production coming online in the next few years will help ease prices from their current level of over $90 a barrel.

By 2030 oil prices are expected to average $72 a barrel, in 2006 dollars. That's 18 percent higher than EIA projected last year.

Dearer oil will crimp economic growth. EIA projects the economy will grow by 2.6 percent per year between now and 2030, down from last year's projection of a 2.9 percent growth rate.

Under current policies, renewable energy use will continue to rise, nearly doubling by 2030. That's about 25 percent higher than EIA projected last year, which the agency attributed to more states enacting laws requiring utilities to buy a chunk of power from renewable resources. But by 2030, absent new policies, EIA said renewables will still account for just a few percentage points of the countries overall energy use.

Without a change in policies, the nation will emit 25 percent more carbon dioxide in 2030 than it did in 2006, EIA said.

Scientists say the world must reduce carbon dioxide emissions by 80 percent by 2050 if it is to avoid the most damaging effects of global warming.  To top of page

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