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Michigan Energy Expenditures Total $ 19.8 Billion

Michigan Petroleum and Energy Supply Update David Svanda , Commissioner Michigan Public Service Commission & President, National Association of Regulatory Utility Commissioners Jeffrey Pillon , Manager, Energy Data & Security Michigan Public Service Commission March 21, 2003.

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Michigan Energy Expenditures Total $ 19.8 Billion

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  1. Michigan Petroleum and Energy Supply UpdateDavid Svanda, Commissioner Michigan Public Service Commission & President, National Association of Regulatory Utility CommissionersJeffrey Pillon, Manager, Energy Data & Security Michigan Public Service CommissionMarch 21, 2003

  2. Michigan Energy ExpendituresTotal $19.8Billion Source: EIA State Energy Price and Expenditure Report

  3. Michigan Energy Use by Type and Sector By Sector By Fuel Source: State Energy Data Reports

  4. Michigan Electricity Generation by Source of Energy, 1999 Source Megawatt hours Coal 70,501,323 Nuclear 14,590,711 Natural Gas 13,411,817 Petroleum 1,486791 Hydroelectric 525,859 Other 2,833,877 Michigan Electricity Generation Capacity by Source 1999 Source Megawatts Coal 12,556 Natural Gas 4,332 Nuclear 3,921 Petroleum 2,641 Hydroelectric 2,141 Pet/Gas Combine 80 Other 417

  5. Residential Space Heating by Fuel Type in Michigan • Number of Homes and % of Total • Natural Gas - 2,961,000 78% • Propane - 358,000 9.4% • Electric - 251,000 7% • Fuel Oil - 131,000 3% • Other - 85,000 2% Source: 2000 Census of Housing

  6. Michigan Petroleum Overview • Petroleum Supply (Upstream) • Crude Oil Production: 20,000 barrels per day (2001), ranked 17th (18th including Federal Offshore). Accounts for about 3% of U.S. crude oil production. • Total Producing Oil Wells: 3,700 (2001) • Major Pipelines: • Crude Oil - Lakehead, Shell, Marathon • Product - Buckeye, Marathon, Wolverine, BP Amoco • Liquefied Petroleum Gas - Cochin, Shell, Lakehead

  7. Michigan Petroleum Overview Cont. • Ports & Waterway Systems • Detroit (Port), Trenton (Port), Wyandotte (Port), Ecorse (Port), River Rouge (Port), Dearborn (Port), Essexville (Port), Bay City (Port), Ludington (Port), Muskegon (Port), Escanaba (Port) • Refining & Marketing (Downstream) • Refineries: Marathon Ashland Petro LLC Detroit @ 74,000 barrels per calendar day • Gasoline Stations: 5,193 outlets (2002), or about 3% of U.S. total Sources and notes: Energy Information Administration, Bureau of Census, and National Petroleum News "Market Facts 2001." Rankings include the District of Columbia.

  8. Michigan Total Petroleum Use and Crude Oil Production Total Petroleum Use Michigan Crude Oil Production

  9. Michigan Petroleum Use by Fuel Type207,214 thousands barrels consumed in 1999 Source: State Energy Data Reports

  10. Michigan Petroleum Product Pipelines

  11. Sources of World Oil Supply, 2001Venezuela – 2.9 m/b/d or 3.8% of world suppliesIraq – 2.4 m/b/d or 3.2% of world supplies Total World Oil Production 76.7 m/b/d Source: Energy Information Administration

  12. Source of U.S. Oil Supply19.7 million barrels per day 2001

  13. Positive World Oil Supply Factors • Venezuelan production is now up to at least 2.4 million barrels per day (m/b/d), from 614,000 barrels per day in January. • Saudi production up to 9.2 m/b/d in March, from 8.7 m/b/d in January • Saudi Arabia has stockpiled nearly 50-mil bbl of oil which it will use if war disrupts Iraqi exports, the New York Times reported Tuesday. • Global Seasonal decline in oil demand is in the range of 2-3 m/b/d • Strategic Petroleum Reserve at nearly 600 million barrels, and is capable of being drawn down at a maximum rate of 4.3 m/b/d Million of Barrels per day Spare Capacity Production levels first nine months of 2002 Previous oil supply disruptions

  14. Risk Factors • Uncertainty of War • Loss of Iraqi oil exports of 2 million barrels per day • Potential for disruptions to Kuwaiti oil production • Political turmoil in Venezuela and civil unrest in Nigeria • Al Qaeda threats to Saudi oil export facilities • Availability of oil tankers to transit the Persian Gulf • Very low U.S. crude oil and refined product inventories

  15. Inventories are Low As of March 14, 2003

  16. Crude Oil Prices WTI– Daily Spot PriceThrough March 19, 2003 WTI -- West Texas Intermediate Source: Energy Information Administration

  17. Michigan Population Weighted Heating Degree Days

  18. Heating Degree Days -- Lansing Through March 9, 2003 Through March 2, 2003

  19. Weekly Crude Oil and Home Heating Fuel Prices 2002-03 Heating Season 2001-02 Heating Season Source: Michigan Public Service Commission and Energy Information Administration

  20. Residential Heating Oil PricesWeekly Average Prices, $/gallons excluding sales tax National Michigan $1.59 3/17 Midwest Source: Michigan Public Service Commission and Energy Information Administration

  21. Residential Propane PricesWeekly Average Prices, $/gallons, excluding sales tax Michigan $1.62 3/17 National Midwest Source: Michigan Public Service Commission and Energy Information Administration

  22. Propane Daily Wholesales PricesU.S. Mid-continent -- through March 19, 2003 Source: Energy Information Administration

  23. Residential Propane PricesHeating Seasons 1995 to 2003 Source: Michigan Public Service Commission and Energy Information Administration

  24. Michigan Gasoline Demand • 2002 consumption is estimated to be 4.8 billion gallons • Average daily demand is 13 million gallons • Michigan consumption is projected to increase 11.1 million gallons through the first half of 2003, or 0.5%. Given higher prices, this growth could be depressed. • Michigan has nearly 8.5 million registered motor vehicles. • Total 2002 expenditures for gasoline were about $6.7 billion. Based on current prices and projected demand, expenditures through the first half of the year could increase by $2 million per day.

  25. Michigan Monthly Gasoline ConsumptionUsage has a seasonal pattern

  26. Michigan Primary Gasoline InventoriesThe trend has been to operate with less in storage

  27. U.S. refinery capacity has become increasingly concentrated

  28. Gasoline prices typically follow crude oil prices

  29. Detroit Area Unleaded Regular Gasoline Retail Prices Prices through March 17, 2003 Source: AAA Michigan

  30. Michigan Unleaded Gasoline Prices Real Prices (Today’s $) Actual Prices (Nominal $) Source: AAA Michigan, U.S. Census Bureau

  31. Michigan

  32. Michigan

  33. Cost Component ComparisonStatewide Regular Unleaded Gasoline $1.77 8.8% $1.39 18.9% 9.3% 18.0% 26.2% 31.9% 46.1% 40.9% Source: AAA Michigan, Energy Information Administration

  34. Cost Components of GasolineStatewide Regular Unleaded Gasoline January 2000 to February 2003 Gross Markup Crude Oil to Wholesale Gross Retail Markup Crude Oil Costs State and Federal Taxes

  35. Petroleum Price Impacts in Michigan • Direct Consumer Impacts • Motorists pay higher gasoline bills • Higher heating costs for heating oil and propane users • Higher business operating costs passed on to consumers • Durable Goods Manufacturing • Tourism • Agriculture

  36. Petroleum Price Impacts on Michigan HouseholdsCold weather and higher prices have increased bills

  37. Critical Infrastructure Protection • The MPSC is working with the private sector to reduce risk and vulnerabilities at key energy facilities. • Participating on Michigan Homeland Security Task Force to assure a coordinated State Government response.

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