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- 1. ENERGIZING AMERICA: FACTS FOR ADDRESSING ENERGY POLICY Drew P. Cobbs API Eastern Region Director
- 2. Changes in gasoline and diesel prices mirror changes in crude oil prices Average Prices as of July 5, 2012 Crude Oil $2.08 Gasoline $3.36 Diesel $3.66 5 4 Dollars per gallon 3 2 1 0 Sources: NYMEX (WTI crude oil) and AAA (gasoline and diesel)
- 3. Many factors affect the price of oil, but it comes down to supply and demand Source: EIA
- 4. What Consumers are Paying for at the Gasoline Pump (as of May 2012) 66% 13% 11% 10% Crude Oil Refining Excise Retailing Taxes Sources: EIA, based on average May price of $3.73 per gallon
- 5. Gasoline prices can vary by state because of the difference in state taxes Combined Local, State and Federal Gasoline Taxes (cents per gallon), April 2012
- 6. Refiners produce 15 different formulations of gasoline to meet state and local fuel standards
- 7. U.S. refining capacity continues to expand even as the number of refineries contracts Source: EIA, Petroleum Supply Annual
- 8. Last year the U.S. became a net exporter of petroleum products for the first time since 1949 Net Imports of Total Petroleum Products 5,000 4,000 Monthly Thousands Barrels per 3,000 2,000 1,000 0 -1,000 -2,000 Mar-11 Mar-93 Mar-94 Mar-95 Mar-96 Mar-97 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-12 Source: EIA
- 9. Refineries face tsunami of EPA regulations Cellulosic Mandate E-10 “Blend Wall” E15 Partial Waiver Tier 3 proposal
- 10. The U.S. will require 10% more energy in 2035 than in 2010 with more than half of it to be met by oil and gas 2.8% Hydroelectric 11.7% 2.6% Biomass & 8.7% 5.5% Nuclear 3.3% 8.6% 20.0% 3.7% Coal 3.5% 21.1% 19.7% Natural 25.1% 25.2% 25.9% 36.8% OIL 31.5% 43.8% 1980 1990 2000 2010 2020 2030 2035
- 11. U.S. oil and natural gas production is increasing as a result of technological innovation U.S. Natural Gas Production U.S. Crude Oil Production (Dry) (Thousands of barrels per day) (trillion cubic feet) 10,000 24 9,000 22 8,000 20 18 7,000 16 6,000 14 5,000 12 4,000 10 1999 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 2001 2003 2005 2007 2009 2011 Source: Energy Information Administration
- 12. Shale plays are widely dispersed across the U.S.
- 13. Shale gas production is offsetting declines in other U.S. natural gas sources
- 14. Ultimately recoverable oil resources dwarf current proven reserves Resource Pyramid for U.S. Oil Source: CRS, “U.S. Fossil Fuel Resources: Terminology, Reporting, and Summary,” March 25, 2011
- 15. 87% of federal offshore acreage is off limits to development Offshore Undiscovered Technically Recoverable Federal Oil (Bbl) and Natural Gas (Tcf) Resources
- 16. How many leases do I need to ensure a 90 percent change of making a discovery?
- 17. Development of Canadian oil sands would benefit the U.S. economy For every two jobs supported in Canada, one job will be supported in the U.S Canada’s oil sands can support 600,000 U.S. jobs by 2035. For every US dollar spent on Canadian exports (i.e. crude oil) up to 90 cents is spent on imports of US goods and services to Canada. $775 billion dollars added to our GDP over next 25
- 18. FILLING AMERICA’S GAS TANK Within 12 years Canada & U.S. can provide all our liquid fuel needs Sources of liquid fuel supply: 2024 24% Oil from rest of world 10% Biofuels 18% 10% Oil from Canada 13% US oil production 72% 53% EIA forecast Potential Sources: EIA; Wood Mackenzie
- 19. Lost capital investment from rig movements outside of the U.S. Gulf of Mexico $21.4 billion in investments lost 91,000 jobs lost Gulf production down more than 21% in 2012 over 2010. Estimated $5 billion in lost government revenue
- 20. Oil and natural gas production are down on federal lands and waters
- 21. Where is the commitment to American-made energy? Permitting slowdowns in the Gulf of Mexico and in western states A five-year plans that raises royalty rates and places most of our offshore resources off-limits Ten federal agencies now regulating or considering regulations on hydraulic fracturing Denying the Keystone pipeline development Proposed additional taxes of $85 billion or more
- 22. Oil and natural gas earnings are typically in line with the average for other major U.S. manufacturing industries First Quarter 2012 Earnings by Industry (net income/sales) Computers 33 Pharmaceuticals 22.5 Beverages & Tobacco 19.6 Chemicals 14.8 Electrical Equipment 11.1 Machinery 8.9 All Manufacturing 8.9 Apparel & Leather 8.1 Oil and Natural Gas 7.5 Aerospace 6.7 Motor Vehicles 4.9 Food 4.2 Furniture 3.8 Textiles 3.5 Iron & Steel 3.0 Source: Based on company filings with the federal government as reported by U.S. Census Bureau and Standard & Poor’s Research Insight.
- 23. Who owns U.S. oil and natural gas companies? Answer: tens of millions of Americans Pension Funds Source: Who Owns America’s Oil and Natural Gas Companies, SONECON, October 2011
- 24. The oil and natural gas industry is one of the most heavily taxed industries in America Income Tax Expenses as a Share of Net Income before Income Taxes(2011) 40.6% 25.1% Oil and Natural Gas CompaniesIndustrials Excluding Oil and Natual Gas Compa S& P Source: Compustat North America Database, April 2011 update.
- 25. The oil and gas industry’s high effective tax rate is a function of the nature of the business Effective Tax Rates Among Industries (Averaged over 2006-2011) Source: S&P Research Insight; S&P 1500 GICS Industry Code
- 28. A large majority of Americans support increased domestic oil and natural gas development Harris Poll Results on Increased U.S. Oil and Natural Gas Development 87% 83% 82% 72% Lead to more AmericanReduce energy costs jobs Increase energy security revenue to governm Deliver more Source: Harris Interactive telephone poll, January 2012
- 29. Thank You For more information visit: www.api.org www.energytomorrow.org www.energycitizens.org www.vote4energy.org
Editor's Notes
- Shale gas is gas that is trapped in rock pores that are sometimes 20,000 times thinner than a human hair.Although we’ve known for many years that natural gas was trapped in hard dense deposits of shale formed from ancient sea basins millions of years ago, we did not have the technology to access these resources until recently. Shale gas “Plays are found throughout the Mountain West, the South and throughout the Northeast’s Appalachian Basin. These plays are areas where companies are actively looking for natural gas in shale rock.
- Employment in the United States supported by new oil sands investments is expected to row to 465,000 jobs by 2035. For every two jobs supported in Canada, one job will be supported in the U.S. According to the Alberta government, for every US dollar spent on Canadian exports (e.e. crude oil) up to 90 cents is in fact spent on imports of US goods and services to Canada.The total economic impact over the next 25 years is estimate to reach over $521 billion dollars added to our GDP
- Besides jobs and revenue, the other big takeaway from our research is the benefit for energy security. More development under reasonable regulations would substantially increase how much energy we produce at home. Add to that more imports of oil from Canada, assuming the Keystone XL and other pipelines are built – and more use of biofuels based on DOE’s projections – and you are potentially at the point where all the nation’s liquid fuels could come from secure North American and mostly U.S. sources. Oil and natural gas companies want to operate here and produce more American energy. It’s a safe business environment. Substantial quantities of energy remain to be produced. And the U.S. market is the biggest in the world. A strategy to help our economy through more oil and natural gas development would work. With the right policy changes, we could be producing more energy, creating more jobs for Americans, and generating more revenue for our government.