OPEC – a cartel of countries that join together to make decisions regarding the supply of oil in the world market

GDP – the dollar market value of all the goods and services produced in a given economy in a given time period (a barometer of a country’s economic health)

Value of the dollar – the international value of the U.S. currency

Oil is refined and processed into gasoline. The gasoline market has demand and supply

Production Weather Wars Politics Exploration

OPEC, supplier of more than 40 percent of the world’s oil, lowered its forecast for 2009 oil demand to 87.66 million barrels a day due to the global economic slowdown.

The OPEC governor said that OPEC needs to study the effects of its production cuts before considering an emergency meeting by at least reviewing the data from September and October.

OPEC agreed to a limit for 11 members of 28.8 million barrels a day, 500,000 barrels lower than their July output. They meet again on Dec. 17.

1  Saudi Arabia:9,475,000   2  Russia:9,400,000 3  United States:7,610,000 4  Iran:3,979,000 5  China:3,631,000 6  Mexico:3,420,000 7  Norway:3,220,000 8  Canada:3,135,000 9  Venezuela:3,081,000 10  United Arab Emirates:2,540,000 11  Nigeria:2,451,000 12  Kuwait:2,418,000 13  Iraq:2,130,000 14  United Kingdom:2,075,000 15  Libya:1,720,000 16  Angola:1,600,000 17  Brazil:1,590,000 bbl/day  

Total U.S. marketed natural gas production is expected to increase by 7.8 percent in 2008 and by 3.8 percent in 2009.  Strong year-over-year production growth has been led by the development of onshore fields, particularly in Texas and Wyoming, where production increased by 16 and 12 percent, respectively, during the first 6 months of 2008 relative to year-ago levels. 

How much oil does the U.S. consume each day? 20.7 million barrels

How much oil does the U.S. produce each day? 7.6 million barrels

How much oil does the U.S. import each day? 9.7 million barrels

How much does the U.S. import each day in other petroleum products? 3.4 million barrels Petroleum products include unfinished oils,

liquefied petroleum gases, pentanes plus, aviation gasoline, motor gasoline, etc.

Country YTD 2008 YTD 2007 CANADA 2,459 2,458 SAUDI ARABIA 1,558 1,435 VENEZUELA 1,196 1,363 MEXICO 1,302 1,593 NIGERIA 1,052 1,054 IRAQ 677 473 ANGOLA 527 554 RUSSIA 486 419 ALGERIA 524 722 VIRGIN ISLANDS 329 327 BRAZIL 250 204

Alternative fuels Worldwide Economic Growth

China Conservation Income Changing taste and preference

Total U.S. petroleum and other liquids consumption is projected to decline by 610,000 bbl/d, or about 3 percent, in 2008

World 80,290,000 United States 20,800,000 European Union 14,550,000 China 6,930,000 Japan 5,353,000 Russia 2,916,000 Germany 2,618,000 India 2,438,000 Canada 2,290,000 Korea, South 2,130,000

Total natural gas consumption is expected to increase by 2.7 percent in 2008 and by 2.2 percent in 2009

Price Quantity supplied (QS) $2.30 300 million gallons per day $2.90 340 $3.20 380 $3.50 400 $4.10 500 Price Quantity demanded by all U.S. consumers of

gasoline (QD) $4.70 300 million gallons per day $4.10 350 $3.50 400 $2.90 425 $2.30 470

Is the market efficient? Price gouging – pricing above the market price

when no alternative retailer is available

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

1998 1.131 1.082 1.041 1.052 1.092 1.094 1.079 1.052 1.033 1.042 1.028 0.986

1999 0.972 0.955 0.991 1.177 1.178 1.148 1.189 1.255 1.28 1.274 1.264 1.298

2000 1.301 1.369 1.541 1.506 1.498 1.617 1.593 1.51 1.582 1.559 1.555 1.489

2001 1.472 1.484 1.447 1.564 1.729 1.64 1.482 1.427 1.531 1.362 1.263 1.131

2002 1.139 1.13 1.241 1.407 1.421 1.404 1.412 1.423 1.422 1.449 1.448 1.394

2003 1.473 1.641 1.748 1.659 1.542 1.514 1.524 1.628 1.728 1.603 1.535 1.494

2004 1.592 1.672 1.766 1.833 2.009 2.041 1.939 1.898 1.891 2.029 2.01 1.882

2005 1.823 1.918 2.065 2.283 2.216 2.176 2.316 2.506 2.927 2.785 2.343 2.186

2006 2.315 2.31 2.401 2.757 2.947 2.917 2.999 2.985 2.589 2.272 2.241 2.334

2007 2.274 2.285 2.592 2.86 3.13 3.052 2.961 2.782 2.789 2.793 3.069 3.02

2008 3.047 3.033 3.258 3.441 3.764 4.065 4.09 3.786