Transcript Petroleum and Natural Gas Situation John C. Felmy Chief Economist and Director Statistics Department American Petroleum Institute [email protected] www.api.org www.gasolineandyou.org www.naturalgasfacts.org.

Petroleum and Natural Gas Situation
John C. Felmy
Chief Economist and Director
Statistics Department
American Petroleum Institute
[email protected]
www.api.org
www.gasolineandyou.org
www.naturalgasfacts.org
1
What is needed in a National Energy Policy?
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•
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Conservation and energy efficiency are important but are insufficient
alone.
Renewable energy is an important but small source of energy. Until it’s
cost is reduced, it will continue to be a small source.
Even with improved efficiency and more renewable energy, we will still
need more conventional energy – oil, coal, natural gas and nuclear.
Robustness, Redundancy and Diversity
2
EIA Forecast of Winter Fuel Costs – October 2004
3
NOAA Winter Outlook
4
Déjà vu, All Over Again
2004
2003
Early 2003
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•
Cold winter
Venezuela shutdown
Nigerian strikes
Iraq
High crude oil prices
California MTBE ban transition start
Summer 2003
• Blackout
• Pipeline problems
• Strong demand
• Japanese nuclear outages
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OPEC cuts
Cold winter
Japanese nuclear outages
Venezuela uncertainty
Iraq uncertainty
Nigerian uncertainty
Terrorist attacks
Norwegian Strikes
Yukos
Strong economic growth
Dollar depreciation
High crude oil prices
High natural gas prices
Lower sulfur gasoline
California finishes MTBE ban transition
Mississippi river accident
Refinery outages
Strong gasoline demand
NY/CT MTBE bans
Hurricanes
5
Crude oil futures prices - NYMEX
Crude Oil Prices 2004, 2003, 2002 - NYMEX
1.4000
1.3000
1.3079 $54.93
2004
1.3076 $54.92
1.2000
1.1595 $48.70
1.0079
1.0000
1.0029
0.9000
2002
2003
2003
0.8490 $35.66
0.8000
2004
0.7000
0.6000
0.5000
2002
0.4000
1Ja
15 n
-J
a
29 n
-J
a
12 n
-F
e
26 b
-F
e
12 b
-M
26 ar
-M
a
9- r
Ap
23 r
-A
pr
7M
21 ay
-M
ay
4Ju
18 n
-J
un
2Ju
16 l
-J
u
30 l
-J
13 u l
-A
u
27 g
-A
u
10 g
-S
e
24 p
-S
ep
8O
c
22 t
-O
c
5- t
N
19 ov
-N
ov
3D
17 ec
-D
31 ec
-D
ec
$ per gallon
1.1000
Crude Oil - NYMEX - quotes.ino.com
6
Gasoline - Retail
Regular Gasoline Prices 2003 versus 2002
Source: AAA
2.000
2.054
2004
2.019
1.920
1.884
1.600
1.859
1.837
2002
2003
2003
2004
1.400
2002
1.200
1.000
1Ja
15 n
-J
a
29 n
-J
a
12 n
-F
e
26 b
-F
e
12 b
-M
26 ar
-M
ar
9A
23 pr
-A
pr
7M
21 ay
-M
ay
4Ju
18 n
-J
un
2Ju
16 l
-J
u
30 l
-J
13 u l
-A
u
27 g
-A
u
10 g
-S
e
24 p
-S
ep
8O
22 c t
-O
c
5- t
N
o
19 v
-N
o
3- v
D
e
17 c
-D
31 ec
-D
ec
$ per gallon
1.800
1.879
Source: Retail Gasoline - AAA -w w w .fuelgaugereport.com
7
Gasoline and crude oil prices
Gasoline Prices
$2.000 Retail Regular - AAA
5/26/04 $2.054
8/29/03 $1.737
3/17/03 $1.722
10/20/04 $2.019
9/7/04 $1.837
10/20/04 $1.3076 ($54.92 per bbl)
6/2/03 $1.475
12/13/02 $1.371
3/12/03 $0.9007 ($37.83 per bbl)
$1.000
8/26/04 $1.1595 ($48.70 per bbl)
12/16/03 $1.470
6/1/04 $1.0079 ($42.33 per bbl)
3/17/04 $0.9090 ($38.18 per bbl)
6/29/04 $0.8490 ($35.66 per bbl)
$0.500
4/29/03 $0.6010 ($25.24 per bbl)
9/22/03 $0.6419 ($26.96 per bbl)
10/1/2004
Source: Retail Gasoline - AAA -w w w .fuelgaugereport.com , Crude Oil - NYMEX - quotes.ino.com
9/1/2004
8/1/2004
7/1/2004
6/1/2004
5/1/2004
4/1/2004
3/1/2004
2/1/2004
1/1/2004
12/1/2003
11/1/2003
10/1/2003
9/1/2003
8/1/2003
7/1/2003
6/1/2003
5/1/2003
4/1/2003
3/1/2003
2/1/2003
1/1/2003
12/1/2002
NYMEX WTI
$0.000
11/1/2002
Dollars per Gallon
$1.500
8
Crude oil and gasoline prices – from lows to highs
$2.50
May 24, 2004
$2.06
$2.00
Mar 14, 2003
$1.73
May 28, 2001
$1.70
$1.50
Aug 25, 2003
$1.75
$1.308
Oct 15, 2004
Jun 2, 2003
Dec 15, 2003
$1.47
$1.47
$1.00
Mar 6, 2000
$34.13/Barrel
Feb 22, 1999
$0.91
Sep 18, 2000
$37.20/Barrel
Dec 17, 2001
$1.06
Mar 14, 2003
$37.83/Barrel
May 5, 2003
$25.24/Barrel
$0.50
Nov 19, 2001
$17.45/Barrel
Feb 22, 1999
$11.76/Barrel
Crude Oil (NYMEX)
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Oct-99
Jul-99
Apr-99
$0.00
Jan-99
Price per Gallon
Jun 19, 2000
$1.68
Regular Gasoline (EIA)
9
Diesel and crude oil prices
10
Natural gas prices have been above year ago levels
Natural Gas Prices 2004, 2003, 2002 - NYMEX
2002
9.800
2003
2004
9.577
8.800
7.800
7.623
7.287
$ per mmbtu
2004
6.800
5.800
4.800
2003
3.800
2.800
2002
31-Dec
17-Dec
3-Dec
19-Nov
5-Nov
22-Oct
8-Oct
24-Sep
10-Sep
27-Aug
13-Aug
30-Jul
16-Jul
2-Jul
18-Jun
4-Jun
21-May
7-May
23-Apr
9-Apr
26-Mar
12-Mar
26-Feb
12-Feb
29-Jan
15-Jan
1-Jan
1.800
11
NYMEX propane futures prices are at or near record levels
Propane Prices 2004, 2003, 2002 - NYMEX
2002
2003
2004
1.0000
0.8790
0.9000
0.9225
0.8000
2004
$ per mmbtu
0.7000
0.6000
0.5000
2003
0.4000
2002
0.3000
31-Dec
17-Dec
3-Dec
19-Nov
5-Nov
22-Oct
8-Oct
24-Sep
10-Sep
27-Aug
13-Aug
30-Jul
16-Jul
2-Jul
18-Jun
4-Jun
21-May
7-May
23-Apr
9-Apr
26-Mar
12-Mar
26-Feb
12-Feb
29-Jan
15-Jan
1-Jan
0.2000
12
NYMEX heating oil prices are at record levels
NYMEX Heating Oil Prices 2004, 2003 and 2002
2002
2003
2004
1.5604
1.5000
2004
1.2655
1.2559
1.1000
1.1106
2003
0.9611
0.9000
0.7000
2002
31-Dec
17-Dec
3-Dec
19-Nov
5-Nov
22-Oct
8-Oct
24-Sep
10-Sep
27-Aug
13-Aug
30-Jul
16-Jul
2-Jul
18-Jun
4-Jun
21-May
7-May
23-Apr
9-Apr
26-Mar
12-Mar
26-Feb
12-Feb
29-Jan
15-Jan
0.5000
1-Jan
$ per gallon
1.3000
13
NYMEX coal prices
14
OPEC Capacity - EIA
Table 3a. OPEC Oil Production
(Energy Information Administration\Short-Term Energy Outlook --October 2004)
Algeria
Indonesia
Iran
Kuwait
Libya
Nigeria
Qatar
Saudi Arabia
UAE
Venezuela
OPEC 10
Iraq
Crude Oil Total
Other Liquids
Total OPEC Supply
8/1/2004
OPEC 10
Quota
830
1,348
3,817
2,087
1,392
2,142
674
8,451
2,269
2,992
26,000
9/1/2004
OPEC 10
Quota
830
1,348
3,817
2,087
1,392
2,142
674
8,451
2,269
2,992
26,000
Aug-04
Production Production Capacity
1,250
1,250
1,250
945
940
940
3,900
3,900
3,900
2,400
2,400
2,400
1,550
1,550
1,550
2,400
2,300
2,300
850
850
850
9,500
9,500 10,000
2,500
2,500
2,500
2,500
2,500
2,500
27,795
27,690 28,190
1,800
2,300
2,300
25,595
29,990 30,490
3,904
3,904
33,499
33,894
September-04
Surplus
High Range Capacity High Range
0
0
0
0
0
0
0
10,500
500
1,000
0
0
28,690
500
1,000
0
30,990
500
1,000
15
EIA Crude Oil Forecast
16
EIA Natural Gas Forecast
17
U.S. Energy Consumption Shares – 2003 - EIA
Energy Consumption Shares
0.105
0.077
0.349
0.223
Residential
Commercial
Industrial
Transportation
Electric Utility
0.247
18
U.S. Energy Consumption Shares – 2003 - EIA
Energy Consumption Shares 2003
0.062
0.081
Petroleum Products
Natural Gas
0.395
Coal
Nuclear Power
0.230
Renewable Energy
0.231
19
U.S. Energy Consumption Shares – 2003 - EIA
Energy Shares - 2003
0.0287
0.0194
0.0812
Petroleum Products .3950
Natural Gas .2311
0.3950
Coal .2303
Nuclear Power .0812
Hydroelectric .0287
Geothermal .0030
Wood .0042
0.2303
Solar .0006
Wind .0018
Biomass .0194
Municipal Solid Waste .0037
Ethanol .0024
0.2311
20
U.S. Energy Consumption Shares – 2025 - EIA
Energy Shares - 2025
0.0233
0.0226
0.0625
Petroleum Products .4029
Natural Gas .2360
0.4029
Coal .2325
Nuclear Power .0625
Hydroelectric .0233
Geothermal .0100
0.2325
Wood .0030
Solar .0006
Wind .0040
Biomass .0226
Municipal Solid Waste .0029
Ethanol .0022
0.2360
21
U.S. Residential Energy Consumption Shares – 2003 - EIA
Residential Energy Consumption - 2003
Shares
0.131
0.380
Petroleum
Natural Gas
Coal
Renewable Energy
Electricity
0.453
0.036
0.001
22
U.S. Industrial Energy Consumption Shares – 2003 - EIA
Industrial Energy Consumption
0.136
0.068
0.366
Petroleum
Natural Gas
0.086
Coal
Renewable Energy
Electricity
0.344
23
U.S. Electricity Energy Consumption Shares – 2003 - EIA
Electricity Generation - 2003
Shares
0.099
0.026
0.132
0.208
Petroleum
Natural Gas
Steam Coal
Nuclear Power
Renewable Energy, Other
0.531
24
Transportation Fuel Shares – 2003 - EIA
Transportation Fuel Shares - EIA - 2003
Petroleum - .97142
Pipeline Fuel Natural Gas - .02491
Compressed Natural Gas - .00079
Renewable Energy (E85) - .00003
Liquid Hydrogen
Electricity - .00284
25
Petroleum Product Use Shares – 2003 - EIA
Petroleum Product Use Shares 2003
0.022
0.064
0.240
Residential and Commercial
Industrial
Transportation
Electric Generators
0.674
26
Petroleum Product Usage – 2003 - EIA
Petroleum Product Uses 2003
Million barrels per day
0.44
1.28
4.77
Residential and Commercial
Industrial
Transportation
Electric Generators
13.40
27
Petroleum Product Shares – 2003 - EIA
Petroleum Product Shares 2003
0.235
0.454
Motor Gasoline
Jet Fuel
Distillate Fuel
0.042
Residual Fuel
Other
0.189
0.079
28
Natural Gas Shares – 2003 - EIA
Natural Gas Consumption - 2003
Shares
0.030
0.045
0.001
0.230
0.225
Residential - .230
Commercial - .143
Industrial - .326
Electric Generators - .225
Transportation - .001
0.143
Pipeline Fuel - .030
Lease and Plant Fuel - .045
0.326
29
U.S. Energy Consumption – Quadrillion Btus
AEO 2004 - EIA
Fuel
Petroleum
Share
Natural Gas
Share
Coal
Share
Nuclear
Share
Other
Share
Total
2003
2025
38.7
39.5%
22.7
23.1%
22.6
23.0%
8.0
8.1%
6.1
6.2%
98.1
55.0
40.3%
32.2
23.6%
31.7
23.2%
8.5
6.2%
9.0
6.6%
136.5
Percent
Change
41.9
42.1
40.4
7.1
47.5
39.2
30
EIA Forecast to 2003 to 2025
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•
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•
•
•
•
Real Gross Domestic Product is projected to increase by 92 percent
Population is projected to increase by 19 percent
Renewable energy supply is projected to increase by 50 percent
Energy efficiency (output per unit of energy) is projected to improve by 27
percent
Net petroleum imports are projected to increase, providing 70 percent of U.S.
demand in 2025.
Growth in petroleum demand is led by transportation, where efficiency
improvements are more than offset by growing travel demand and
petroleum’s market share increases slightly.
Crude oil production falls by 19 percent.
Imports of crude oil grow by 65 percent.
Petroleum product imports increase by 80 percent.
Refinery capacity expands from 16.8 to 21.8 million barrels per day
Refinery utilization is projected to increase from 91 to 95 percent
31
World Energy Consumption – Quadrillion Btus - EIA
Fuel
Petroleum
Share
Natural Gas
Share
Coal
Share
Nuclear
Share
Other
Share
Total
2001
2025
156.5
38.7%
93.1
23.1%
95.9
23.7%
26.4
6.5%
32.2
8.0%
403.9
245.3
39.4%
156.5
25.1%
140.2
22.5%
30.4
4.9%
50.4
8.1%
622.9
Percent
Change
56.7
68.1
46.2
15.2
56.5
54.2
32
World Energy Demand
MBDOE
350
Total Energy
MBDOE
60
Other Energy
Growth Rate
2000-2020, %
300
MBDOE
1.2
Solar & Wind
Growth Rate
2000-2020, %
Growth Rate
2000-2020, %
50
Solar & Wind
0.9
1.2
250
40
Other
200
1.7
30
Coal
Biomass,
MSW
1.3
0.6
150
Gas
2.9
14.0
20
100
Nuclear
50
Oil
1.8
2000
2010
Source: ExxonMobil
2020
0.3
Wind
10
10.4
Hydro
0
1990
0.2
0
1990
2000
2010
Solar
2.4
0.0
1990
2020
2000
2010
2020
33
Forecast demand growth
35
140
30
120
ROW
Other
25
100
LA
ROW
80
20
LA
60
Other Asia
Pacific
15
10
40
OECD
20
Asia
Pacific
Transport
5
OECD
0
1990
0
2000
Source: ExxonMobil
2010
2020
Region
Sector
34
Massive supply growth needed
70
Non-OPEC
120
60
Total
100
NGL / Other
50
44
80
40
Non-OPEC Crude
Undeveloped /
Undiscovered
30
20
Other
NGL/
Condensate
OPEC Crude
40
Non-OPEC Crude
Developed
Non-OPEC Crude
20
10
0
1980
60
1990
Source: ExxonMobil
2000
2010
2020
0
1980
1990
2000
2010
2020
35
World Oil Balance: 2000 - 2020
Net Imports, MBD
Net Exports, MBD
FSU & Eastern Europe
Europe
2000 2010 2020
US/Canada
7.2
8.8
10.6
Asia Pacific
12.3 13.6
2000 2010 2020
Africa
5.3
7.2
8.1
Middle East
34.5
Latin America 2000 2010 2020
3.5
4.1
18.5
21.8
2.0
12.1
2000 2010 2020
30.1
2000 2010 2020
Source: ExxonMobil
6.8
2000 2010 2020
2000 2010 2020
10.6
6.2
3.1
12.6 18.2
27.2
Technology
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Can be expected to adapt over several generations
Markets work – they provide flexibility and discipline
Attempts to replace oil prematurely are likely to be costly
“Running out” is not likely
37
Developing additional supply will be challenging
•
•
•
Non-OPEC production shifting to new challenging frontiers
Gulf OPEC needs to double capacity
Capital needs are enormous
38
Policy
•
•
•
Promotion of free investment and trade is essential
Accurate depiction of impact of resource development is key
Opposition to oil development is a serious threat
39
One Word
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Hydrates
40
First – Do No Harm!
41
19
05
19
08
19
11
19
14
19
17
19
20
19
23
19
26
19
29
19
32
19
35
19
38
19
41
19
44
19
47
19
50
19
53
19
56
19
59
19
62
19
65
19
68
19
71
19
74
19
77
19
80
19
83
19
86
19
89
19
92
19
95
19
98
20
01
Sunspots - 50 year avg
80
Sunspots
70
-0.05
60
-0.10
-0.15
-0.20
50
-0.25
-0.30
40
30
Temp - 50 year avg - Celsius
Global Change – What is really happening?
Sunspots and Temperature
0.10
0.05
0.00
-0.35
-0.40
-0.45
42
2002
1995
1988
1981
1974
1967
1960
1953
1946
1939
1932
1925
1918
1911
1904
1897
1890
1883
1876
1869
1862
1855
1848
1841
1834
1827
1820
1813
1806
1799
1792
1785
1778
1771
1764
1757
1750
Sunspots (50yr avg)
80
70
-0.05
60
-0.1
-0.15
50
-0.2
40
30
Temperature (50yr avg)
History
0.15
0.1
0.05
0
-0.25
-0.3
-0.35
-0.4
43
1995
1992
1989
1986
1983
1980
1977
1974
1971
1968
1965
1962
1959
1956
1953
1950
1947
1944
1941
1938
1935
1932
1929
1926
1923
1920
1917
1914
1911
1908
1905
Carbon vs Solar
Data Indexed to 1856-1905=1.0
2.00
1.80
1.60
1.40
1.20
1.00
Solar
Temperature
Carbon
0.80
0.60
0.40
0.20
0.00
44
Second quarter 2004 industry profits were below average
Profit Margins (net income/sales)
All U.S. Industry
Oil & Natural Gas
7.6%
8.0%
7.1%
6.5% 6.4%
5.4%
6.0%
6.4%
5.4%
5.3%
4.0%
2.0%
0.0%
Last 5 Years
2003
Q2 03
Q2 04
Sources: Second quarter financial statements of major oil and natural gas companies; and "Corporate Scoreboard," Business Week, various
issues for all U.S. industries.
45
Industry profits in perspective
Profit Margins of Major Industries
( 2004:Q2 net income/sales)
Banks
22.4%
Pharmaceuticals & Biotechnology
19.4%
Semiconductors & Equipment
15.2%
Software & Services
14.4%
Insurance
11.6%
Household & Personal Products
11.6%
Communications Equipment
10.0%
Telecommunication Services
9.9%
Real Estate
9.7%
Hotels, Restaurants & Leisure
9.4%
Health Care
9.3%
Food, Beverage & Tobacco
9.3%
Media
8.8%
All Industry
7.6%
Commercial Services & Supplies
7.5%
Oil & Natural Gas
7.1%
Air Freight & Logistics
6.8%
Capital Goods
6.8%
Utilities
6.1%
Consumer Durables & Apparel
6.1%
Materials
5.9%
Consumer Staples
5.8%
Industrials
5.6%
Retailing
3.8%
2.9%
Automobiles
0%
5%
10%
15%
20%
25%
Sources: Second quarter financial statements of major oil and natural gas companies; and "Corporate Scoreboard," Business
Week, August 16, 2004 for all other industries.
46
Industry concentration
8 Firm Concentration - 1997
Source: U.S. Department of Commerce, Public Citizen
Flo o r Co verings
Glass co ntainers
A uto manufacturers
To bacco
B reakfast Cereals
B reweries
Tires
Syrup
P ho to graphic equipment
So ap
Cutlery, flatware
B utter
Glo ves
Co o kie and crackers
A nimal slaughtering
Refineries 2003
M en's fo o twear
Co ffee and tea
Snacks
Wineries
M ayo nnaise
P o ultry pro cessing
Ice cream
Refineries 1997
M anufacturing average
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
Share
47