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Collaborative Design & Development of Petroleum Sector Performance Indicators (PSI)

Collaborative Design & Development of Petroleum Sector Performance Indicators (PSI). A research project of the National Commission on Energy Policy (NCEP). (January 2007). Find common language for policy debate Create capacity for fact-based discourse

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Collaborative Design & Development of Petroleum Sector Performance Indicators (PSI)

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  1. Collaborative Design & Development of Petroleum Sector Performance Indicators (PSI) A research project of the National Commission on Energy Policy (NCEP) (January 2007)

  2. Find common language for policy debate Create capacity for fact-based discourse Integrate multiple and disparate data sources Reflect multiplicity of dimensions: supply, demand, efficiency, trade, prices, carbon emissions Find key measures of sector performance Provide perspective: For U.S. and World Reserves & production GDP and economics Structure of markets Track transportation sector performance: fuels & alternatives PSI Purpose & Objectives

  3. PSI Drivers • Undefined political terminology: • ‘energy independence” “oil addiction” • Inadequate measures of performance: • “reduce imports from volatile Middle-east” • Highly complex market structure • Physical trade a fraction of total trade • Dispersed and variably accessible data: • EIA, IEA, private industry • Fragmented and non-comparable data: • On global fuel economy, alternative vehicles and fuels

  4. Roots of Energy Independence Policies • “Let us unite in a major new endeavor that in this bicentennial era we can appropriately call ‘Project Independence.”Richard M. Nixon, 7 November 1973 • “We must wage a simultaneous three-front campaign against recession, inflation and energy dependence.” Gerald Ford, 13 January 1975 • “Our decision about energy will test the character of the American people, and the ability of the President to govern this nation. This effort will b the moral equivalent of war.” Jimmy Carter, 18 April 1977

  5. Supply • Over 100 nations produce oil • Over 80 nations export oil • Estimates of NOC-controlled proved reserves range from 60% to 90% • Surplus world production capacity in 2006 remains exclusive to Saudi Arabia

  6. World Energy Production 1% Other 400 6% Hydro 6% Nuclear 3% Natural Gas Liquids 300 36% Quadrillion BTU Crude Oil 200 24% Natural Gas 100 24% Coal 0 1945 1950 1955 1960 1965 1970 1980 1985 1990 1995 1975 2000 Source: U.S. Geological Survey, 2003

  7. Exxon/Mobil 1.0% Investor owned oil BP Europe NOCs 0.9% reserves are roughly 1.0% Chevron 4% of global total 0.9% ConocoPhillips Asia NOCs 0.6% 2.1% Shell Africa NOCs Saudi Arabia 0.5% 6.6% 25.0% Russia NOCs 6.8% Latin America NOCs 9.8% Iran Oman 13.1% 0.3% UAE Iraq Qatar 9.3% Kuwait 10.9% 1.4% 9.7% Global Proved Reserves (Top 30 = 1.2 Trillion Barrels) Source: BP Statistical Review of World Energy, 2006.http://www.bp.com/productlanding.do?categoryId=6842&contentId=7021390

  8. 90 80 Other 70 Russia 60 Asia South America 50 Canada/Mexico Million Barrels per Day 40 United States 30 Europe Africa 20 Persian Gulf 10 - 1970 1975 1980 1985 1990 1995 2000 2005 World Crude Oil Production Source: EIA International Petroleum Monthly, World Oil Production. http://www.eia.doe.gov/ipm/supply.html Note: Includes condensates.

  9. World Crude Oil Production(2005 World Total=78.3 MMB/D) Australia Egypt Ecuador India Colombia Syria 1% Gabon 1% 1% 1% 1% 0% 0% Other Argentina 8% Malaysia 1% Saudi Arabia 1% 12% Oman 1% Qatar 1% Russia Indonesia 12% 1% Angola 2% Libya 2% Brazil States 2% 7% UK 2% North Sea Algeria 6% Iraq 2% 2% UAE Iran 3% 5% Canada China Nigeria Norway Mexico 3% 5% 3% 3% Venezuela 4% Kuwait 3% 3% Note: Includes condensates. Source: EIA International Energy Outlook, 2006 http://www.eia.doe.gov/emeu/international/oilproduction.html

  10. 6.0 5.0 Other OPEC 4.0 Iran Million Barrels per Day Venezuela 3.0 Kuwait United Arab Emirates 2.0 Iraq Saudi Arabia 1.0 0.0 1998 1999 2000 2001 2002 2003 2004 2005 2006 1991-1997 World Oil Surplus Production Capacity Source: EIA Short-Term Energy Outlook, September 2006

  11. U.S. Crude Oil Production and Campbell’s Forecasts of Production 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 2002 2003 2004 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Actual 1996 Forecast Thousand Barrels/Day 1991 Forecast Source: USGS, McCabe, 2005

  12. 1189 1,200 949 1,000 800 Billion Barrels 600 U.S. World 400 155 68 29 200 21 0 1947 Reserves 1948-04 2005 Reserves Production World Crude Oil Replenishment Source: EIA Petroleum Navigator, Crude Oil Production and Crude Oil Proved Reserves; University of Texas-Austin, Center for Energy Economics.

  13. 90 80 China 70 India Asia & Oceania 60 Eurasia 50 Million Barrels per Day Middle East 40 Africa 30 Central & South America 20 Europe North America 10 0 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 World Crude Oil Distillation Capacity Source: EIA International Energy Annual, World Petroleum Data. http://www.eia.doe.gov/pub/international/iea2004/table36.xls

  14. Australia All Other 1% United States Thailand 18% 20% 1% Egypt Turkey 1% 1% United Arab Emirates 1% Belgium 1% China Ukraine 7% 1% Kuwait 1% Indonesia Russia 1% 6% Taiwan 1% Netherlands Japan 1% 5% Spain Korea, South 1% 3% Italy Venezuela India Germany 3% 2% 3% Singapore 3% 2% Mexico Brazil Saudi Arabia 2% Iran 2% 2% Canada 2% United Kingdom France 2% 2% 2% World Crude Oil Distillation Capacity (2006) Source: EIA International Energy Annual, World Petroleum Data. http://www.eia.doe.gov/pub/international/iea2004/table36.xls

  15. Oil Consumption • World consumption: 84 million barrels/day • U.S. consumption: 21 million barrels/day • U.S. oil expenditures: ~$800 billion/year • U.S. oil expenditures: 3% of GDP • Global trade in oil: ~50 million barrels/day • Value of U.S. imports: ~$250 billion/year • U.S. oil imports: ~34% of trade imbalance

  16. World Crude Oil Consumption India 90 80 China 70 Asia & Oceania Ex China, India 60 Africa 50 Eurasia Million Barrels per Day 40 Central & South 30 America Middle East 20 10 Europe 0 North America 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 Sources: 1970-1979: Energy Information Administration, International Energy Database; 1980-2004: EIA International Petroleum Monthly http://www.eia.doe.gov/pub/international/iealf/table12.xls

  17. 60 50 Rest of World 40 Europe USA Million Barrels per Day 30 Japan 20 10 0 1980 1985 1990 1995 2000 2005 Crude Oil Trade Movements (Imports) Source: BP Statistical Review of World Energy, 2006.http://www.bp.com/productlanding.do?categoryId=6842&contentId=7021390

  18. 60 USA 50 Rest of World Europe* 40 Mexico Canada Asia Pacific 30 Million Barrels per Day North Africa West Africa 20 South & Central America Former Soviet Union Middle East 10 0 1980 1985 1990 1995 2000 2005 Crude Oil Trade Movements(Exports) Source: BP Statistical Review of World Energy, 2006.http://www.bp.com/productlanding.do?categoryId=6842&contentId=7021390 * - European export data not available prior to 1993.

  19. Petroleum Imports • U.S. imports: 13.7 million barrels/day • U.S. imports rose by 2.2 million barrels/day between 2002 and 2005 • In same period, Chinese imports rose by 1.8 million barrels/day, and • Indian imports rose by 0.45 million barrels/day

  20. U.S. Dependence on Oil Imports(As Percentage of Total Oil Consumption) Nixon Administration (1974) 37% Ford Administration (1976) 42% Carter Administration (1980) 41% Reagan Administration (1988) 43% Bush Administration (1992) 46% Clinton Administration (2000) 58% Bush Administration (2005) 66% Sources: EIA Petroleum Navigator, U.S. Total Crude Oil and Products Imports: http://tonto.eia.doe.gov/dnav/pet/xls/pet_move_impcus_a2_nus_ep00_im0_mbblpd_a.xls; EIA Petroleum Navigator, U.S. Product Supplied for Crude Oil and Petroleum Products: http://tonto.eia.doe.gov/dnav/pet/xls/pet_cons_psup_dc_nus_mbblpd_a.xls.

  21. Indonesia Libya 0% All Other Non-OPEC Qatar UAE 0% 11% 0% 0% Argentina Canada Netherlands 1% 16% 1% Brazil Colombia 1% 1% Norway 2% Kuwait 2% Mexico Ecuador 12% 2% U.S. Virgin Islands 2% United Kingdom Russia 3% 3% Angola 3% Saudi Arabia 11% Algeria 3% Iraq 4% Nigeria Venezuela 8% 11% U.S. Oil Imports by Source(2005) Source: U.S. Imports by Country of Origin, EIA Petroleum Navigator

  22. 16.0 Eurasia 14.0 Asia & Oceania 12.0 10.0 Africa Million Barrels per Day 8.0 Middle East 6.0 Central & South 4.0 America 2.0 North America 0.0 Europe 1993 1995 1997 1999 2001 2003 2005 U.S. Oil Imports by Source Source: EIA Petroleum Navigator, U.S. Imports by Country of Origin, http://tonto.eia.doe.gov/dnav/pet/pet_move_impcus_a2_nus_ep00_im0_mbblpd_a.htm

  23. 4.0 3.5 Eurasia 3.0 Asia & Oceania 2.5 Europe Million Barrels per Day 2.0 North America Central & South America 1.5 Africa 1.0 Middle East 0.5 0.0 1993 1995 1997 1999 2001 2003 2005 U.S. Petroleum Product Imports by Source Source: EIA Petroleum Navigator, U.S. Petroleum Products Imports by Country of Origin, http://tonto.eia.doe.gov/dnav/pet/xls/pet_move_impcus_a2_nus_EPP0_im0_mbblpd_a.xls

  24. 4.0 Asphalt and Road Oil 3.5 Jet Fuel 3.0 Liquified Petroleum Gases 2.5 Other Products Million Barrels per Day 2.0 Residual Fuel Oil 1.5 Unfinished Oils 1.0 Motor Gasoline Blending Components 0.5 Motor Gasoline 0.0 Distillate Fuel Oil 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005P U.S. Imports of Petroleum Products by Type Source: EIA Annual Energy Review, Petroleum Imports by Type, http://www.eia.doe.gov/emeu/aer/txt/stb0503.xls

  25. Petroleum Trade Values • Global Trade in oil: ~50 million barrels/day • Value of global trade: ~$1 trillion/year • Value of U.S. oil trade: $250 billion • Oil share of U.S. trade imbalance: 34%

  26. 1,800 1,600 1,400 1,200 Petroleum Exports 1,000 Petroleum Imports Billion Nominal Dollars Total Merchandise Exports 800 Total Merchandise Imports 600 400 200 0 1974 1980 1986 1992 1998 2004 U.S. Import and Export Trade Values Source: EIA Monthly Energy Review, Merchandise Trade Value. http://www.eia.doe.gov/emeu/mer/overview.html Note: Petroleum includes crude oil, petroleum preparations, liquefied propane and butane, and other mineral fuels.

  27. 100 0 -100 -200 Petroleum Balance -300 Billion Nominal Dollars Non-Energy Balance -400 Total Merchandise Balance -500 -600 -700 -800 1974 1980 1986 1992 1998 2004 U.S. Trade Balances Note: Petroleum includes crude oil, petroleum preparations, liquefied propane and butane, and other mineral fuels. Source: EIA Monthly Energy Review, Merchandise Trade Value. http://www.eia.doe.gov/emeu/mer/overview.html

  28. U.S. Oil Expenditures 1.40 10% 9% 1.20 8% 1.00 7% 6% 0.80 Billion 2000$ / Day Percent of GDP 5% 0.60 4% 3% 0.40 2% 0.20 1% 0.00 0% 1970 1975 1980 1985 1990 1995 2000 Oil Expenditures Oil Expenditures as % of GDP Source: EIA Annual Energy Review 2005

  29. 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 1929 1933 1937 1941 1945 1949 1953 1957 1961 1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 Gasoline Share of Total U.S. Consumption Expenditures Source: NIPA

  30. Intensity of Oil Consumption • U.S. oil consumption per unit of GDP declined by 42% between 1980 and 2004 • EU-15 oil consumption/GDP declined by 39% in the same period • U.S. per capita oil consumption decreased by 5.5% between 1980 and 2004 • EU-15 per capital oil consumption decreased by 4.2% in the same period • Total U.S. oil consumption increased by 22% between 1980 and 2004

  31. 30 1.4 1.2 25 EU15 Per Capita Oil 1.0 20 Consumption U.S. Per Capita Oil 0.8 Consumption Barrels / Thousand 2000$ Barrels / Person 15 EU15 Oil Intensity 0.6 U.S. Oil Intensity 10 0.4 5 0.2 0 0.0 1980 1984 1988 1992 1996 2000 2004 U.S. and EU-15 Oil Consumption per unit GDP and per Capita Sources: EIA International Energy Annual 2004, http://www.eia.doe.gov/pub/international/iealf/table12.xls; U.S. Department of Commerce, Bureau of the Census, Population Division, International Programs Center, International Data Base, April 26, 2005; International Energy Agency, Energy Balances of OECD Countries, 2006 Edition.

  32. 1.4 25 1.2 20 1.0 15 0.8 Barrels / Thousand 2000$ Million Barrels per Day 0.6 10 0.4 5 0.2 0.0 0 1980 1988 1996 2004 U.S. Oil Intensity U.S. Crude Oil Consumption U.S. Oil Consumption and Oil Intensity per unit GDP Sources: EIA International Energy Annual 2004, http://www.eia.doe.gov/pub/international/iealf/table12.xls; U.S. Department of Commerce, Bureau of the Census, Population Division, International Programs Center, International Data Base, April 26, 2005; International Energy Agency, Energy Balances of OECD Countries, 2006 Edition; EIA International Petroleum Monthly http://www.eia.doe.gov/pub/international/iealf/table12.xls.

  33. Strategic & Commercial Stocks • OECD government-controlled emergency oil stocks: 1.5 billion barrels • OECD commercial stocks held for strategic purposes: 2.7 billion barrels • U.S. strategic petroleum reserve: 688 million barrels • U.S. heating oil reserve: 2.0 million barrels

  34. 4,500 4,000 3,500 Germany 3,000 Other OECD Europe 2,500 United States Millions of Barrels South Korea* 2,000 France 1,500 Japan 1,000 500 0 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006** World Crude Oil Strategic Stocks(Government Controlled) * Data prior to 1984 not available. ** As of July 2006. Source: EIA International Petroleum (Oil) Stocks Data http://tonto.eia.doe.gov/merquery/mer_data.asp?table=T11.03

  35. 2,000 1,800 1,600 1,400 1,200 Million Barrels 1,000 800 600 400 200 0 United France Germany Other Japan South China India States OECD Korea Europe Government-Controlled Industry Planned Capacity Expansion World Crude Oil Strategic Stocks Source: EIA International Petroleum (Oil) Stocks Data; Medley Global Advisors Oil Brief “China: Stealth SPR Build,” 10/26/2006; Alexander’s Gas and Oil Connections “India to Build up Storage of Crude Oil” 9/21/2004.

  36. 1,600 1,400 1,200 1,000 Million Barrels 800 600 400 200 0 1970 1975 1980 1985 1990 1995 2000 2005 Commercial Oil Stocks Strategic Petroleum Reserves Strategic Home Heating Oil Reserves U.S. Total Oil Stocks & Strategic Petroleum Reserves Source: EIA, Annual Energy Review 2005 and http://www.fe.doe.gov/programs/reserves/heatingoil/index.html

  37. Oil Markets & Prices • Trade in oil is global and integrated • Physical & financial markets: • Global transactions valued at ~$2.5 trillion/year • Physical transactions: ~$167 billion • Futures transactions: ~$299 billion • Over the Counter (OTC) transactions 3-5 fold larger than physical/futures trade

  38. World Petroleum Market Structure Definitions: ICE – Intercontinental Exchange; OTC – Over the counter; WTI – West Texas Intermediate; Partials – an artificial unit of 25,000 barrels of Oman and Dubai crude; Dated Brent – cargoes with specific loading dates; TAPIS – a crude oil field in Malaysia that serves the same trading purpose as WTI. Source: ESAI

  39. $2,500 $2,000 $1,500 Total physical crude $Billion Total futures WTI crude Notional OTC Trade $1,000 $500 $- 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 Physical and Financial Oil Markets(ESAI) Source: ESAI

  40. 60 50 40 Nominal Dollars per Barrel 30 2005 Dollars 20 10 0 1970 1975 1980 1985 1990 1995 2000 2005 U.S. Crude Oil Prices Source: EIA Annual Energy Review 2005, Crude Oil Domestic First Purchase Prices.

  41. $3.00 $2.50 $2.00 Ethanol Dollars per Gallon $1.50 No-Lead $1.00 $0.50 $0.00 Jan 2000 Jan 2001 Jan 2002 Jan 2003 Jan 2004 Jan 2005 Gasoline and Ethanol Wholesale Prices, January 2000 – September 2005 Source: Axxis/ACE

  42. Transportation sector • Oil consumption • U.S. per capita consumption tracks fuel economy • U.S. per capita consumption nearly double EU-15 per capita consumption • U.S. on-road fuel economy largely unchanged since 1981 • Alternative fuels capability • U.S. AFV fleet approaching 600,000 units • U.S. ethanol production capacity ~ 3.9 billion gallons

  43. 45,000 40,000 35,000 30,000 Transportation Industrial 25,000 Trillion BTU Commercial 20,000 Residential Electric Power 15,000 10,000 5,000 0 1970 1975 1980 1985 1990 1995 2000 2005P U.S. Energy Consumption by Sector Source: EIA Annual Energy Review, Energy Consumption by Sector

  44. Transport as Share of Oil Consumption(2003) Australia/New Zealand, 75% U.S., 67% OECD Europe, 56% Brazil, 53% Africa, 53% Canada, 51% Other Non-OECD Asia, 50% Mexico, 49% Other Central and South America, 47% Other Non-OECD Europe and Eurasia, 41% Russia, 40% South Korea, 40% Middle East, 39% Japan, 38% China, 36% India, 29% 0% 10% 20% 30% 40% 50% 60% 70% 80% Source: EIA, International Energy Outlook 2006 http://www.eia.doe.gov/oiaf/ieo/ieosector.html

  45. 35 35 30 30 U.S. Oil Consumption per 25 25 Capita (Barrels per Year) 20 20 EU-15 Oil Consumption Fuel Economy (MPG) Barrels / Person per Capita (Barrels per Year) 15 15 U.S. On Road Fuel Economy (MPG) 10 10 5 5 0 0 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 U.S. - EU-15 Actual On-Road New Vehicle Fuel Economy and Per Capita Oil Consumption Source: EIA

  46. 60 55 Japan EU 50 45 MPG - Converted to CAFÉ Test Cycle 40 Australia 35 China Canada 30 25 U.S. 20 2002 2004 2006 2008 2010 2012 2014 2016 Comparison of Projected Fuel Economy Standards Adapted from An and Sauer, Comparison of Passenger Vehicle Fuel Economy and Greenhouse Gas Emission Standards Around the World. Pew Center on Global Climate Change, December 2004.

  47. 900 800 700 600 500 Vehicle Gallons of Gasoline Consumed per 400 300 200 100 0 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 U.S. Annual Gasoline Consumption per Passenger Vehicle Note: Data includes gasoline consumed by Motorcycles, Passenger Vehicles, and Other 2-Axle 4-Tire Vehicles. 1960-94: U.S. Department of Transportation, Federal Highway Administration, Highway Statistics Summary to 1995, http://www.fhwa.dot.gov/ohim/summary95/index.html, as of July 28, 2000, table VM-201A. 1995-2004: BTS National Transportation Statistics, Fuel Consumption by Mode of Transportation in Physical Units, http://www.bts.gov/publications/national_transportation_statistics/html/table_04_05.html and http://www.bts.gov/publications/national_transportation_statistics/excel/table_01_11.xls.

  48. 600,000 500,000 LNG 400,000 M85 Electricity 300,000 Number of Vehicles E85 CNG 200,000 LPG 100,000 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 U.S. AFV Fleet Composition Source: Estimated Number of Alternative-Fueled Vehicles – EIA, http://www.eia.doe.gov/cneaf/alternate/page/datatables/aft1-13_03.html.

  49. 250 240 230 220 AFV Vehicles Millions of Vehicles Non-AFV Vehicles 210 200 190 180 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 P U.S. Vehicle Fleet and Fuel Flexible Vehicle Fleet Source: Estimated Number of Alternative-Fueled Vehicles – EIA, http://www.eia.doe.gov/cneaf/alternate/page/datatables/aft1-13_03.html; Total U.S. Fleet – USDOT BTS, http://www.bts.gov/publications/national_transportation_statistics/html/table_01_11.html.

  50. 4.5 4 3.5 3 2.5 Billion Gallons 2 1.5 1 0.5 0 1980 1985 1990 1995 2000 2005 Ethanol Production Capacity Source: Renewable Fuels Association, http://www.ethanolrfa.org/industry/statistics/#A

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