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ENERGY ECONOMICS

ENERGY ECONOMICS. Presented by Bob Joblin 15 May 2006. “The energy crisis has not yet overwhelmed us, but it will if we do not act quickly...”.

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ENERGY ECONOMICS

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  1. ENERGY ECONOMICS Presented by Bob Joblin 15 May 2006 JOBLIN+ASSOCIATES, INC.

  2. “The energy crisis has not yet overwhelmed us, but it will if we do not act quickly...” “It is a problem we will not solve in the next few years, and it is likely to get progressively worse...  We simply must balance our demand for energy with our rapidly shrinking resources.”                         -- President Jimmy Carter (April 18, 1977) JOBLIN+ASSOCIATES, INC.

  3. ENERGY COMPETITION “Simply put, the era of easy access to energy is over. In part, this is because we are experiencing the convergence of geological difficulty with geopolitical instability... [W]e are seeing the beginnings of a bidding war for Mideast supplies between East and West." -- David J. O'Reilly Chairman and CEO, ChevronTexaco Corporation (February 15, 2005) JOBLIN+ASSOCIATES, INC.

  4. ENERGY FACTS OF LIFE • The U.S. has less than 5% of the world’s population but uses about 25% of all energy produced. • China and India are now competing with the U.S. for every barrel of oil, every b.t.u of natural gas and every clump of coal. • There is a finite supply of fossil fuels. • Therefore, prices will continue to go up. JOBLIN+ASSOCIATES, INC.

  5. HOW HIGH IS UP? Natural gas prices for November 2005 delivery closed at $14.196 per thousand cubic feet… Natural gas now costs more than three times its average of $4.70 from 2000 to 2005 and seven times the 1990’s average price of $2 a thousand cubic feet. Source: AP (September 30, 2005) JOBLIN+ASSOCIATES, INC.

  6. NATURAL GAS PRICES IN AR (Dollars per Thousand Cubic Feet) 200020012002200320042005 • Residential 7.43 10.03 8.95 10.33 11.73 13.59 • Commercial 5.41 7.80 7.05 7.67 8.86 10.2 • Industrial 5.23 6.38 5.64 6.94 8.03 9.42 Source: Energy Information Agency, DOE JOBLIN+ASSOCIATES, INC.

  7. ENERGY FUTURES Oil analyst John Kilduff of Fimat USA in New York said there would be a "painful runup" in gasoline prices as summer approaches, and he said oil prices could rise as high as $80 by the end of June. Source: AP (April 19, 2006) JOBLIN+ASSOCIATES, INC.

  8. ENERGY SPECULATION • Oil could reach a “super-spike” of $105 a barrel. -- Goldman Sachs (March 31, 2005) • “Expect oil at $150 in a decade …no one has discovered a great oilfield in over 35 years.” -- Jim Rogers, Quantum Fund (April 28, 2005) • “Crude oil prices could touch $380 a barrel by 2015.” -- Patrick Artus and Moncef Kaabi, French investment bank Ixis-CIB (April 21, 2005) JOBLIN+ASSOCIATES, INC.

  9. ENERGY PRICING    “When gasoline prices peaked at $3.06 on Sept. 5, it was partly because the nation's refineries were getting about 99 cents on each gallon sold.  That was more than three times what they earned a year earlier when gas was $1.87.    “Oil companies produce a barrel of oil for about $20.  When the selling price goes above that, the increase is almost all profit.” Source: The Washington Post (September 27, 2005) JOBLIN+ASSOCIATES, INC.

  10. ENERGY REALITY • Natural gas drilling is at an all-time high, but demand continues to outpace supply. • Oil prices are at or near record highs, and refineries are operating at capacity. • Increasing foreign demand for coal puts pressure on its pricing. JOBLIN+ASSOCIATES, INC.

  11. WHAT TO DO? • Lower energy costs. • Use savings to pay for improvements. • Select capital improvements that will lower energy consumption and on-going operational & maintenance costs (not necessarily the cheapest front-end cost, which will almost always increases operational & maintenance costs). JOBLIN+ASSOCIATES, INC.

  12. VARIOUS WAYS • Cash • Bond issues • Leases • Performance Contracts • B.O.O.M (Build. Own. Operate. Maintain.) JOBLIN+ASSOCIATES, INC.

  13. THE HVAC FACTOR • 40% of all energy consumed in the U.S. is used to heat and cool buildings. • All buildings over ten years old are heated and cooled with inefficient equipment (by today’s standards). JOBLIN+ASSOCIATES, INC.

  14. Garrett Office BuildingsOklahoma City, OK JOBLIN+ASSOCIATES, INC.

  15. VAV (variable air volume)Building 15,000 Sq. Ft. JOBLIN+ASSOCIATES, INC.

  16. Geothermal Building 20,000 Sq. Ft. JOBLIN+ASSOCIATES, INC.

  17. Garrett Office Buildings 2000 Energy Consumption JOBLIN+ASSOCIATES, INC.

  18. SAMPLE ENERGY SAVINGS JOBLIN+ASSOCIATES, INC.

  19. SAMPLE CASH FLOW SAVINGS JOBLIN+ASSOCIATES, INC.

  20. POSTSCRIPT “AT PRESENT CONSUMPTION RATES, THE WORLD’S KNOWN RESERVES OF CRUDE OIL WILL BE EXHAUSTED IN A LITTLE MORE THAN 40 YEARS.” -- Congressman Roscoe Bartlett (R-MD) Member, House Science Committee – Subcommittee on Energy (March 14, 2005) JOBLIN+ASSOCIATES, INC.

  21. The Industry Agrees • Exxon Mobil President Rex Tillerson says the world “may still have” more than 3 Trillion barrels of oil available from all known sources. • The world now uses about 29 Billion barrels a year. • Oil consumption is growing at 3.4%/yr. • That’s works out to a 45-year supply. JOBLIN+ASSOCIATES, INC.

  22. WHAT’S NEXT? "I'd put my money on the sun and solar energy. What a source of power! I hope we don't have to wait 'til oil and coal run out before we tackle that." - Thomas Edison (The sunlight that intersects the earth in 24 hours contains more energy than all the conventional oil that has been or ever will be extracted from the earth.) JOBLIN+ASSOCIATES, INC.

  23. JOBLIN+ASSOCIATES Bob Joblin 501.868.6400 joblin@sbcglobal.net Little Rock, Arkansas JOBLIN+ASSOCIATES, INC.

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