ENERGIZING AMERICA:

FACTS FOR ADDRESSING

ENERGY POLICYDrew P. Cobbs

API Eastern Region Director

0

1

2

3

4

5

Crude Oil $2.08 Gasoline $3.36 Diesel $3.66

Dolla

rs p

er

ga

llon

Average Prices as of July 5, 2012

Changes in gasoline and diesel prices mirror

changes in crude oil prices

Sources: NYMEX (WTI crude oil) and AAA (gasoline and diesel)

Many factors affect the price of oil, but it

comes down to supply and demand

Source: EIA

66% 13% 11%

Crude Oil Excise

Taxes

Retailing

What Consumers are Paying for at the

Gasoline Pump(as of May 2012)

Sources: EIA, based on average May price of $3.73 per gallon

Refining

10%

Gasoline prices can vary by state because of

the difference in state taxes

Combined Local, State and Federal Gasoline Taxes (cents per

gallon), April 2012

Refiners produce 15 different formulations of

gasoline to meet state and local fuel standards

U.S. refining capacity continues to expand

even as the number of refineries contracts

Source: EIA, Petroleum Supply Annual

Net Imports of Total Petroleum

Products

-2,000

-1,000

0

1,000

2,000

3,000

4,000

5,000

Ma

r-93

Ma

r-94

Ma

r-95

Ma

r-96

Ma

r-97

Ma

r-98

Ma

r-99

Ma

r-00

Ma

r-01

Ma

r-02

Ma

r-03

Ma

r-04

Ma

r-05

Ma

r-06

Ma

r-07

Ma

r-08

Ma

r-09

Ma

r-10

Ma

r-11

Ma

r-12

Mo

nth

ly T

ho

usa

nds B

arr

els

pe

r

Source: EIA

Last year the U.S. became a net exporter of

petroleum products for the first time since

1949

Refineries face tsunami of EPA regulations

Cellulosic Mandate

E-10 “Blend Wall”

E15 Partial Waiver

Tier 3 proposal

1980 1990 2000 2010 2020 2030 2035

43.8%

25.9%

19.7%

3.5%3.7%

3.3%

36.8%

25.2%

21.1%

8.6%5.5%

2.6%

31.5%

25.1%

20.0%

8.7%

11.7%

2.8%

OIL

Natural

Coal

NuclearBiomass &

Hydroelectric

The U.S. will require 10% more energy in 2035

than in 2010 with more than half of it to be met by

oil and gas

U.S. oil and natural gas production is

increasing as a result of technological

innovation

U.S. Crude Oil Production(Thousands of barrels per day)

U.S. Natural Gas Production

(Dry)(trillion cubic feet)

4,000

5,000

6,000

7,000

8,000

9,000

10,000

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

10

12

14

16

18

20

22

24

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

Source: Energy Information Administration

Shale plays are widely dispersed across the U.S.

Shale gas production is offsetting declines in

other U.S. natural gas sources

Ultimately recoverable oil resources dwarf

current proven reserves

Source: CRS, “U.S. Fossil Fuel Resources: Terminology, Reporting, and Summary,” March 25, 2011

Resource

Pyramid for

U.S. Oil

Offshore Undiscovered Technically Recoverable Federal Oil (Bbl) and Natural Gas (Tcf)

Resources

87% of federal offshore acreage is off

limits to development

How many leases do I need to ensure a 90

percent change of making a discovery?

Development of Canadian oil sands would

benefit the U.S. economy

For every two jobs

supported in Canada, one

job will be supported in the

U.S

Canada’s oil sands can

support 600,000 U.S. jobs

by 2035.

For every US dollar

spent on Canadian exports

(i.e. crude oil) up to 90

cents is spent on imports

of US goods and services

to Canada.

$775 billion dollars added

to our GDP over next 25

years.

FILLING AMERICA’S GAS TANKWithin 12 years Canada & U.S. can provide all our liquid fuel needs

Oil from rest of world

Biofuels

Oil from Canada

US oil production

24%

10%

13%

53%

10%

18%

72%

EIA forecast Potential

Sources: EIA; Wood Mackenzie

Sources of liquid

fuel supply: 2024

Lost capital investment from rig movements

outside of the U.S. Gulf of Mexico

$21.4 billion in

investments

lost

91,000 jobs

lost

Gulf

production

down more than

21% in 2012

over 2010.

Estimated $5

billion in lost

government

revenue

Oil and natural gas production are down on

federal lands and waters

Where is the commitment to American-made

energy?

Permitting slowdowns in the Gulf of Mexico

and in western states

A five-year plans that raises royalty rates

and places most of our offshore resources

off-limits

Ten federal agencies now regulating or

considering regulations on hydraulic

fracturing

Denying the Keystone pipeline development

Proposed additional taxes of $85 billion or

more

3.03.53.84.24.9

6.77.58.18.98.9

11.114.8

19.622.5

33

Iron & SteelTextiles

FurnitureFood

Motor VehiclesAerospace

Oil and Natural GasApparel & LeatherAll Manufacturing

MachineryElectrical Equipment

ChemicalsBeverages & Tobacco

PharmaceuticalsComputers

Oil and natural gas earnings are typically in line

with the average for other major U.S. manufacturing

industries

Source: Based on company filings with the federal government as reported by U.S. Census Bureau and Standard & Poor’s Research Insight.

First Quarter 2012 Earnings by Industry (net

income/sales)

Who owns U.S. oil and natural gas

companies? Answer: tens of millions of

Americans

Pension

Funds

Source: Who Owns America’s Oil and Natural Gas Companies, SONECON, October 2011

40.6%

25.1%

Oil and Natural Gas CompaniesS& P Industrials Excluding Oil and Natual Gas Companies

Income Tax Expenses as a Share of Net Income before Income

Taxes(2011)

Source: Compustat North America Database, April 2011 update.

The oil and natural gas industry is one of the

most heavily taxed industries in America

The oil and gas industry’s high effective tax rate

is a function of the nature of the business

Source: S&P Research Insight; S&P 1500 GICS Industry Code

Effective Tax Rates Among Industries (Averaged over 2006-2011)

Harris Poll Results on Increased U.S. Oil and Natural Gas

Development

87%83% 82%

72%

Lead to more American jobsReduce energy costsIncrease energy securityDeliver more revenue to government

Source: Harris Interactive telephone poll, January 2012

A large majority of Americans support

increased domestic oil and natural gas

development

For more information visit:

www.api.org

www.energytomorrow.org

www.energycitizens.org

www.vote4energy.org

Thank You