western states petroleum association
TRANSCRIPT
WESTERN STATES PETROLEUM ASSOCIATION
Price at the Fuel Pump – Facts and Myths
Legislative Energy Horizon Institute
Catherine Reheis-Boyd
July 20, 2011
WESTERN STATES PETROLEUM ASSOCIATION
The energy conversation
It‟s complex, it‟s crucial, it‟s interconnected
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July 2011
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Myth:The world is running out of oil.
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July 2011
Source: ExxonMobil, U.S. Geological Survey
WESTERN STATES PETROLEUM ASSOCIATION
Fact: Estimates of global recoverable conventional
oil resources have grown over time
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July 2011
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Fact: USGS estimates global oil & gas
endowment is 5.2 trillion barrels 13% has been used; 87% remains to be used and/or found
Source: U.S. Geological Survey World Petroleum Assessment 20005
July 2011
WESTERN STATES PETROLEUM ASSOCIATION
Source: Strategic Significance of America‟s Oil Shale Resource, Office of
Naval Petroleum and Oil Shale Reserves, U.S. Department of Energy
Washington, D.C. March 2004
Fact: Unconventional sources of oil continue to grow
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July 2011
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Fact: Many of the constraints on oil
production are policy driven
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July 2011
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Fact: Many of the constraints on oil
production are policy driven
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July 2011
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“This is the fifth time that the world is said
to be running out of oil. Each time –
whether it was the „gasoline famine‟ at the
end of WWI or the „permanent shortage‟ of
the 1970s – technology and the opening
of new frontier areas has banished the
specter of decline. There‟s no reason to
think that technology is finished this time.”
Daniel Yergin, President, Cambridge
Energy Research Associates, author of
Pulitzer Prize-winning book on oil, The
Prize
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July 2011
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Myth: Oil companies control the world‟s supply of oil
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July 2011
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Source: API, PFC Energy
Fact: Oil companies control just 6% of world supply
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July 2011
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Myth:Oil companies determine the price of crude oil
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July 2011
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Fact: The price of crude oil is determined
by global commodity markets
New York Mercantile Exchange International Petroleum Exchange, London
Singapore International Monetary Exchange13
July 2011
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Fact: Oil prices are linked to many uncertain factors
Source: API, U.S. Energy Information Administration14
July 2011
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$80
$85
$90
$95
$100
$105
$110
$115
$120
$125
$130
Dec 01, 2010
Dec 08, 2010
Dec 15, 2010
Dec 22, 2010
Dec 29, 2010
Jan 05, 2011
Jan 12, 2011
Jan 19, 2011
Jan 26, 2011
Feb 02, 2011
Feb 09, 2011
Feb 16, 2011
Feb 23, 2011
Mar 02, 2011
Mar 09, 2011
Mar 16, 2011
Mar 23, 2011
Mar 30, 2011
Apr 06, 2011
Tunisia
AlgeriaJan. 7, 2011
LibyaFeb. 16, 2011
EgyptJan. 25, 2011
Saudi ArabiaMarch 2, 2011
Source: U.S. Energy Information Administration, Spot Price, Brent Crude Oil15
July 2011
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Myth: Oil companies set the price of
gasoline at the pump
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July 2011
WESTERN STATES PETROLEUM ASSOCIATION
Source: Lundberg Survey, Incorporated, all WSPA states, based on 2009 data
Integrated oil company owned
and operated 16%
Independent refiner owned and operated
6%
Oil company owned, operated
by leasee14%
Independent owners and/or
operators64%
Fact: Most gas stations are
independently owned and operated
Integrated oil company
owned/operated 2,877
Independent refiner
owned/operated 1,093
Refiner owned,
leasee operated 2,617
Independently
owned/operated 11,550
Total 18,137
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July 2011
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Myth: Gasoline prices go up like a
rocket but come down like a feather
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Fact: Retail gasoline prices follow wholesale
prices (which, in turn, are driven by crude oil prices
and other supply and demand factors) at virtually
the same speed upward as they do downward. US Energy Information Administration/ 2003 California Gasoline Price Study Final Report
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
$5.00
Jan 07, 2000
Jan 07, 2001
Jan 07, 2002
Jan 07, 2003
Jan 07, 2004
Jan 07, 2005
Jan 07, 2006
Jan 07, 2007
Jan 07, 2008
Jan 07, 2009
Jan 07, 2010
Jan 07, 2011
Crude Oil (WTI)
U.S. Gasoline
West Cost Gasoline (PADD 5)
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July 2011
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Myth: Oil companies make obscene profits
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July 2011
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Fact: Oil company earnings average less than
average manufacturing company earnings
Source: API, U.S. Census Bureau for U.S. manufacturing and Oil Daily for the oil and natural gas industry.21
July 2011
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Fact: Oil & gas stocks are top
performers in public pension funds
Large public employee pension funds
in 17 states have $1.1 trillion invested
in oil and gas stocks
Oil & gas investments returned an
average of $1.42 for every $1 invested
between 2005 and 2009
All other investments returned $1.06
for every $1 invested between 2005
and 2009
Source: API; The Financial Contribution of Oil and Natural Gas Company Investments To Major
Public Employee Pension Plans in Seventeen States, 2005 – 2009: Robert J. Shapiro and Nam D.
Pham , July 2011
July 2011
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Myth: High gas prices mean
big profits for oil companies
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July 2011
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Fact: Gasoline prices closely track crude oil costs
Source: U.S. Energy Information Administration, Spot Price, West Texas
Intermediate; Average weekly price U.S. gasoline and California gasoline
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
$5.00
Jan 07, 2000
Jan 07, 2001
Jan 07, 2002
Jan 07, 2003
Jan 07, 2004
Jan 07, 2005
Jan 07, 2006
Jan 07, 2007
Jan 07, 2008
Jan 07, 2009
Jan 07, 2010
Jan 07, 2011
Crude Oil (WTI)
U.S. Gasoline
West Cost Gasoline (PADD 5)
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July 2011
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What We Pay For In A Gallon of Regular Gasoline
May 2011
Fact: Crude oil and taxes are major
cost components in a gallon of gasoline
Source: U.S. Energy Information Administration, based on U.S. average cost for regular gasoline25
July 2011
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Fact: West Coast taxes are among
the highest in the nation
0
10
20
30
40
50
60
70
California Hawaii Washington U.S. Average Oregon
68.9 67.8
55.949.5 49.4
Cents
per
Gallo
n
Source: API26
July 2011
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Fact: Gasoline prices closely track crude oil costs
Recent historic highs are the result of
record crude oil prices and increasing
worldwide demand for oil products
Regional retail price differences are
explained in part by differences in
wholesale prices and to a larger
degree by differences in retail supply
costs and retail competition
Source: 2007-08 Gas Price Study, Final Report, Conducted By Dr. Keith Leffler,
Economist, University of Washington for the Washington State Attorney General
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Myth: Oil companies are preventing development
of alternative and renewable energy sources
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July 2011
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Source: API, T2 & Associates and CEE, June 2009.
Fact: Oil companies are major investors
in low and zero emission technologies
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July 2011
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Source: API, T2 & Associates and CEE, June 2009.
Fact: Oil companies are major investors
in low and zero emission technologies
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Myth: Oil companies are not interested
in a diversified energy portfolio
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Fact: Global energy demand is rising
Source: U.S. Energy Information Administration, Annual Energy Outlook 201132
July 2011
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Fact: EIA projects by 2035, fossil fuels will still
represent 81 percent of US energy supply
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July 2011
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Fact: Public policies pose major
challenges to energy supply
July 2011
Source: U.S. Energy Information Administration, Annual Energy Outlook 2011,
Renewable Energy Consumption by Sector and Source, Reference case
0
2
4
6
8
10
12
14
16
18
20
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
From Corn andOther Starch
From Cellulose
Net Imports
LCFS compliance period
Bill
ion
s o
f G
allo
ns
WESTERN STATES PETROLEUM ASSOCIATION
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Fact: Public policies pose major
challenges to energy supply
July 2011
Mill
ion
s o
f g
allo
ns
0
200
400
600
800
1,000
1,200
1,400
1,600
Total US
supply of low-
carbon biofuel
forecast for
2015
Volume of
low-
carbon
ethanol
needed to
meet
California
demand
in 2015
Cellulosic
ethanolImported
ethanol
WESTERN STATES PETROLEUM ASSOCIATION
Source: U.S. Energy Information Administration, Annual Energy Outlook 2011, Renewable Energy
Consumption by Sector and Source, Reference case; California Energy Commission,
Integrated Energy Policy Report , 200936
Fact: Public policies pose major
challenges to energy supply
July 2011
WESTERN STATES PETROLEUM ASSOCIATION
July 2011
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Fact: Public policies pose major
challenges to energy supply
WESTERN STATES PETROLEUM ASSOCIATION
July 2011
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Fact: It‟s complex, it‟s crucial, it‟s interconnected
WESTERN STATES PETROLEUM ASSOCIATION
July 2011
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Fact: It‟s complex, it‟s crucial, it‟s interconnected