oil market outlook - stb.gov
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Rayola Dougher
API Senior Economic Advisor, dougherr@api.org
Energy Market Update
Oil Market Outlook
and Energy Policy Issues
0
20
40
60
80
100
120
140
160
Iran/Iraq war
Gulf War OPEC
cuts 4.2
million
9/11
Low spare
capacity
Recession
Libyan
Uprising
Supply
surplus
The price of oil has fluctuated sharply before
Inflation-adjusted 2014 $/barrel
Sources: Inflation-adjusted average refiners acquisition price for crude oil
PDVSA strike
Iraq War
Asian Growth
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13 Apr-14 Apr-15
Crude Oil $1.20 Gasoline $2.40 Diesel $2.80
Changes in gasoline and diesel prices closely
track changes in crude oil prices
Average prices as of April 8, 2015
Sources: NYMEX (WTI crude oil) and AAA (gasoline and diesel)
Many factors affect the price of oil, but in the end
it comes down to supply and demand
Source: EIA
U.S. oil production is increasing as a result of
technological innovations
4
5
6
7
8
9
10
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
73% growth
2008-2014
(mill
ion
s o
f b
arr
els
pe
r d
ay)
Note: Bars in red show EIA’s Short-term Energy Outlook forecast.
Source: Energy Information Administration.
0
5000
10000
15000
20000
25000
30000
35000
40000
Jan-2010 Jan-2011 Jan-2012 Jan-2013 Jan-2014 Jan-2015
U.S. movements of crude by rail
Thousands of barrels
Source: EIA
SHALE ENERGY PROVIDES A NATIONAL OPPORTUNITY
Current and prospective resources and basins in the continental US
Source: EIA based on data from various published studies – updated May 9, 2011
Current Shale Resources
Prospective Shale Resources
Basins
Shallowest/ Youngest
Mid-Depth/ Mid-Age
Deepest/Oldest
Shale Resources, Lower 48 States
Stacked Resources
Shale production is offsetting declining production
from other U.S. oil and natural gas resources
0
1
2
3
4
5
6
7
8
9
10
1990 2000 2010 2020 2030 2040
Alaska
Lower 48 Offshore
Lower 48 Onshore
Conventional
Tight Oil
0
5
10
15
20
25
30
35
40
1990 2000 2010 2020 2030 2040
Tight Gas
Coalbed methane
Shale
Gas
Lower 48 Onshore Conventional
Lower 48 Offshore
Alaska
U.S. Crude Oil Production by Source (millions of barrels per day)
U.S. Natural Gas Production by Source (trillion cubic feet per year)
Source: EIA, Annual Energy Outlook 2014
Growth in Global Oil Supply
Disruptions (mmb/d)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Ma
r 201
2
Sep
20
12
Ma
r 201
3
Sep
20
13
Ma
r 201
4
Sep
20
14
Ma
r 201
5
OPEC
Non-
OPEC
Growth in U.S. Crude Oil
Production* (mmb/d)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
Ma
r-20
12
Sep
-20
12
Ma
r-20
13
Sep
-20
13
Ma
r-20
14
Sep
-20
14
Ma
r-20
15
Growth in U.S. oil production has largely offset
the growth in global oil supply disruptions
Source: EIA * Includes hydrocarbon gas liquids, biofuels, and refinery processing gains.
0%
10%
20%
30%
40%
50%
60%
70%
Crude oil and petroleum product imports have
declined as a share of consumption
Source: EIA
-0.5
0
0.5
1
1.5
2
2014 2015 2016OPEC North America
Russia and Caspaian Sea Latin America
North Sea Other Non-OPEC
World crude oil and liquid fuels production growth
Mill
ion
ba
rre
ls p
er
da
y
Source: EIA, Short-term Energy Outlook, April 2015
-1
0
1
2
3
United
Sta
tes
Bra
zil
Cana
da
Ma
laysia
Chin
a
Kaza
khsta
n
Om
an
Austr
alia
Ind
ia
Norw
ay
Sud
an
/S.
Sud
an
Azerb
aija
n
Oth
er
Nort
h S
ea
Vie
tnam
Gab
on
Co
lom
bia
Syria
Egyp
t
Russia
Mexic
o
Un
ited
Kin
gd
om
2016
2015
2014
Non-OPEC crude oil and liquid fuels production
growth
(mill
ion
ba
rre
ls p
er
da
y)
Source: EIA, Short-term Energy Outlook, April 2015
0
0.5
1
1.5
2
2.5
2014 2015 2016
Production
Consumption
World growth in crude oil production surged
ahead of growth in consumption in 2014
Source: EIA, Short-term Energy Outlook, April 2015
(mill
ion
ba
rre
ls p
er
da
y)
2013
2014
2015
Projected
2016
Projected
WTI Crudea
($/barrel) 97.91 93.26 52.48 70.00
Brent Crude
($/barrel) 108.60 99.00 59.32 75.03
Gasolineb
($/gallon) 3.51 3.36 2.40 2.73
Dieselc
($/gallon) 3.92 3.83 2.86 3.24
Heating Oil
($/gallon) 3.78 3.72 2.81 3.04
Natural Gasd
($/mcf) 10.30 10.94 10.33 10.61
Electricity
(cents/kwh) 12.12 12.50 12.68 12.90
EIA price forecast
a West Texas Intermediate b Average regular pump price c On-highway retail d Residential average
Source: EIA, Short-term Energy Outlook, April 2015.
Refineries and Fuels
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
0
50
100
150
200
250
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Operable Capacity* Number of Refineries
U.S. refining capacity continues to expand even
as the number of refineries contracts
*Operable as of January 1st of each year. Source: EIA
-5000
-4000
-3000
-2000
-1000
0
1000
2000
3000
4000
For the first time since 1949, the U.S. became a
net exporter of petroleum products in 2011
Source: EIA
(thousa
nds o
f barr
els
per
day)
Asia and Pacific -92 -311 Asia and Pacific
Canada 301 25 Canada
Caribbean 341 -94 Caribbean
Central America -115 -405 Central America
Europe 805 102 Europe
Mexico -218 -494 Mexico
Middle East, North Africa 266 -58 Middle East, North Africa
South America 2 -682 South America
Sub-Sahara Africa 66 -36 Sub-Sahara Africa
The U.S. balance of petroleum products traded has
shifted significantly (thousands of barrels per day)
WORLD 1,356
Non-OPEC 871
-1,953
-1,935
OPEC 485 -18
2008 2014
Source: EIA
Net Imports (+) and Exports (-) of Petroleum Products by Region
Expanding alternative fuels for transportation:
current laws
The Congressional
Budget Office
predicts the price
of diesel could rise
by up to 51 cents
per gallon and
gasoline by up to
26 cents per
gallon by 2017.
Power and Politics
Save consumers up
to $5.8 billion a year
in lower fuel costs
Add 300,000 jobs to
U.S. economy in
2020
Reduce America’s
trade deficit by $22
billion in 2020
Why export crude oil?
Crude oil exports yield economic benefit across all 50 states
Source: ICF International and EnSys Energy,
87% of federal offshore acreage is off-limits to
development
Development of Canadian oil sands would
benefit the U.S. economy
Filling America’s tank Within 10 years Canada and U.S. can provide all our liquid fuel needs
U.S. Oil
Production
Oil from Canada
Biofuels
Oil from
Rest of World
Sources of liquid
fuel supply
in 10 years
53%
13%
10%
24%
72%
18%
10%
EIA Forecast Potential Sources: EIA; Wood Mackenzie
Source: Wood Mackenzie,” “U.S. Supply Forecasts and Potential Jobs and Economic Impacts,” September 7, 2011.
90% 86% 86% 85%
83%
72% 70%
65%
Lead to morejobs
Helpstrengthen
energysecurity
Helpstimulateeconomy
Help lowerenergy costs
SupportO&NG
development
SupportKeystone XL
pipeline
Supportoffshore
development
Increasingenergy taxes
may hurtconsumers
Harris Poll Results on Increased U.S. Oil and Natural Gas Development
Voters voice strong support for increased
domestic oil and natural gas development
Source: Harris Interactive telephone poll, November 5, 2014
For more information visit: www.api.org
www.energytomorrow.org
www.energycitizens.org
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