September 5-7, 2007 Loews Ventana Canyon Resort Tuscon, AZ

Spot, Rack and Retail Prices and News -- The Undisputed U.S. Petroleum Fuel Benchmark http://www.opisnet.com • (301) 287-2525 • Toll Free (888)301-2645

September 5-7, 2007

Loews Ventana Canyon Resort

Tuscon, AZ


IT’S NOT YOUR FATHER’S OILIT’S NOT YOUR FATHER’S OILMARKET ANY MORE!MARKET ANY MORE!

Presented byPresented by Tom KlozaTom Kloza

Chief Oil Analyst, OPISChief Oil Analyst, OPIS


A DisclaimerA Disclaimer


This presentation was prepared exclusively for the benefit and internal use of the client, in order to indicate on a preliminary basis, the feasibility of the third party of the first part, and is not intended to provide forward looking statements that might be construed as beneficial to any transactions that might obstruct or otherwise harm or inform the endoplasmic reticulum. The information and materials provided herein reflect management forecasts within the organization, and as such, are fatally flawed, and could represent stuff that you might get into major deep doo-doo with. In the event that things do indeed hit the fan, you must absolve those responsible for this presentation and recognize that this represented prevailing views and subjects that might change as capriciously as a post menopausal woman's viewpoint. This presentation may or may not be accurate, depending on what the market does in the next 3-300 weeks. We also note that this document includes forward looking statements, as opposed to backward or sideways looking statements and should qualify for safe harbor from liability established by the Private Securities Litigation Reform Act of 1995, as well as the Stamp Act of 1765. Forward looking statements can generally be identified by phrases such as "believes", "expects", "anticipates", "is", "forecasts", "may", or other words of similar import, including the term "frankincense". Similarly, statements in this forecast may describe a business strategy, hobby, predilection, perversion, or fascination with Joey Buttafucco. We urge you to carefully consider the important factors that could cause your actual results to differ materially from these forward looking statements and cause you to lose money, or file for bankruptcy.

Disclaimer -- Safe HarborDisclaimer -- Safe Harbor


"Oil prices are at record highs, but are still significantly lower than the inflation-adjusted record highs of

1980."


What Precisely Has Changed What Precisely Has Changed in the Oil Businessin the Oil Business


The Tao of Oil The Tao of Oil


Three ViewpointsThree Viewpoints

►"The entire world assumes Saudi Arabia can carry everyone's energy needs on its back cheaply. If this turns out not to work there is no 'plan B.' Conventional wisdom says 'don't worry. Trust today, but if conventional wisdom is wrong, the world faces a giant energy crisis.“

►"There will be a large, unprecedented buildup of oil supply in the next few years. Between 2004 and 2010, capacity to produce oil (not actual production) could grow by 16-million bbls a day- - from 85-million barrels per day to 101 million b/d - - a 20% increase. Such growth over the next few years would relieve the current pressure on supply and demand.


Invisible HandsInvisible Hands

• There has been a huge shift in the balance of participation.

CommodityIndex Funds

Macro Hedge Funds

CTAs/Trend Players

Financial Institutions

Consumers

Producers

Activity vs 3 Years Ago

ShortLongPassiveActiveNewOldParticipant


Product 2001 2002 2003 2004 2005 CurrentWTI 406,620 472,398 475,093 709,196 803,325 1,517,000Heating Oil 128,683 133,953 112,588 181,055 175,838 218,000Unl(RBOB) 116,316 122,618 106,729 150,998 151,918 188,129

Points: The last six years have seen a doubling in the positions in NYMEX benchmark contracts alone. When ICE contracts are added for WTI, there are crude oil positions representing well over 2-billion bbl of WTI sweet crude alone!

Money Chasing Money?Money Chasing Money?(Growth in NYMEX futures' open interest)(Growth in NYMEX futures' open interest)


A Look at "Passive" Investment A Look at "Passive" Investment (The Goldman Sachs Commodities Index)(The Goldman Sachs Commodities Index)

$100 BillionCASH

Goldman SachsCommodities Index (GSCI)

Industrial & PreciousMetals 13.59%

Agriculture & Livestock16.94%

Energy 69.47%

Crude 30.49%48,400 contracts

Natural Gas 9.24%$10.16 Billion

Heating Oil & Gasoil 27.44%

35,600 contracts

Gasoline (RBOB) 2.3%

28,000 contracts

*I pulled these numbers out of my ass!


The Oil Price-Inflation Paradox The Oil Price-Inflation Paradox

• These are free markets and there is nothing wrong with the sentiment that drives free markets. This cycle has been happening for decades with gold, silver and other commodities.

• But most people do not have to purchase gold or silver every week... With one notable exception…

Money managers are worried about 21st

century inflation.

Oil has replaced gold as an instrument that money managers believe is a wonderful hedge against inflation.

As more money flows into oil, it drives prices

dramatically higher.

As oil prices move higher, inflation fears

increase. Money managers move more money into oil.

Higher oil prices fuel more

inflation, etc. etc.


Refinery CreepRefinery Creep

LocationTotal Crude

CapacityGasoline Output

IncreasesMiddle Distillates Output Increases

US PADD I 0 10 5

US PADD II 484 184 183

US PADD III 786 312 310

US PADD IV 33 17 15

US PADD V 161 117 77

Total US 1,464 640 590

Europe 209 70 145

Asia Pacific 4,504 1,530 1,763

Other North America 500 225 177

Central and South America 1,231 562 398

Former Soviet Union 412 191 242

Middle East 3,441 1,105 1,441

Africa 567 122 182

Total Rest of the World 6,151 2,205 2,440

World Total 12,328 4,445 4,938

Refinery Construction Outlook Through 2014

Crude and Product Capacity Increases

(Unit Capacities in Thousands of Barrels per Day)


Inventory to 2010Inventory to 2010(in millions) Gasoline

1993 (Aug 27) 1998 (Aug 28) 2007 (Aug 10) 2010 PredictionsNationwide Population 257.78 270.25 299.41 308.94 Stocks 200.39 212.02 201.90 204.40 Barrels (per person) 0.78 0.79 0.67 0.66 Gallons (per person) 32.76 33.18 28.14 27.79East Coast Population 96.94 100.61 111.89 115.58 Stocks 55.91 60.38 53.60 52.90 Barrels (per person) 0.58 0.60 0.48 0.46 Gallons (per person) 24.36 25.20 20.16 19.22 New England Population 13.23 13.43 14.30 14.74 Stocks 4.48 4.51 4.30 4.30 Barrels (per person) 0.34 0.34 0.30 0.29 Gallons (per person) 14.28 14.28 12.60 12.25 Central Atlantic Population 44.26 44.65 47.52 48.37 Stocks 28.71 30.13 27.00 25.30 Barrels (per person) 0.65 0.68 0.57 0.52 Gallons (per person) 27.30 28.56 23.94 21.97 Lower Atlantic Population 39.47 42.53 50.10 52.47 Stocks 22.72 25.74 22.20 23.30 Barrels (per person) 0.58 0.61 0.44 0.44 Gallons (per person) 24.36 25.62 18.48 18.65Midwest Population 73.28 75.66 80.04 81.48 Stocks 53.63 56.04 47.80 49.10 Barrels (per person) 0.73 0.74 0.60 0.60 Gallons (per person) 30.66 31.08 25.20 25.31Gulf Coast Population 33.15 35.45 40.07 41.69 Stocks 59.42 61.01 64.00 65.80 Barrels (per person) 1.79 1.72 1.60 1.58 Gallons (per person) 75.18 72.24 67.20 66.29Rockies Population 7.85 8.66 10.23 10.43 Stocks 5.03 5.72 6.00 6.10 Barrels (per person) 0.64 0.66 0.59 0.59 Gallons (per person) 26.88 27.42 24.78 24.56West Coast Population 46.56 49.87 57.17 59.76 Stocks 26.41 28.87 30.50 30600.00 Barrels (per person) 0.57 0.58 0.53 0.51 Gallons (per person) 23.94 24.36 22.26 21.51


Inventory to 2010Inventory to 2010(in millions) Distillate

1993 (Jul. 16) 1998 (May 15) 2007 (Aug 10) 2010 PredictionsNationwide Population 257.78 270.25 299.41 308.94 Stocks 124.57 145.51 127.70 121.60 Barrels (per person) 0.48 0.54 0.43 0.39 Gallons (per person) 20.16 22.68 18.06 16.53East Coast Population 96.94 100.61 111.89 115.58 Stocks 57.26 69.75 52.00 44.40 Barrels (per person) 0.59 0.69 0.47 0.38 Gallons (per person) 24.78 28.98 19.74 16.13 New England Population 10.28 14.94 14.30 14.74 Stocks 7.81 10.21 9.50 7.40 Barrels (per person) 0.76 0.68 0.66 0.50 Gallons (per person) 31.92 28.56 27.72 21.09 Central Atlantic Population 44.26 44.65 47.52 48.37 Stocks 35.85 40.97 28.90 23.70 Barrels (per person) 0.81 0.92 0.61 0.49 Gallons (per person) 34.02 38.64 25.62 20.58 Lower Atlantic Population 39.47 42.53 50.10 52.47 Stocks 11.13 13.84 13.60 13.30 Barrels (per person) 0.28 0.33 0.27 0.25 Gallons (per person) 11.76 13.86 11.34 10.65Midwest Population 73.28 75.66 80.04 81.48 Stocks 26.23 31.99 27.50 29.70 Barrels (per person) 0.36 0.42 0.34 0.37 Gallons (per person) 15.12 17.64 14.28 15.31Gulf Coast Population 33.15 35.45 40.07 41.69 Stocks 28.07 30.16 33.50 32.60 Barrels (per person) 0.85 0.85 0.84 0.78 Gallons (per person) 35.70 35.70 35.28 32.84Rockies Population 7.85 8.66 10.23 10.43 Stocks 2.23 2.85 3.00 2.90 Barrels (per person) 0.28 0.33 0.29 0.28 Gallons (per person) 11.76 4.13 12.18 11.68West Coast Population 46.56 49.87 57.17 59.76 Stocks 10.78 10.75 11.70 12.10 Barrels (per person) 0.23 0.22 0.21 0.20 Gallons (per person) 9.66 9.24 8.82 8.50


The Long, Long TermThe Long, Long Term

Selected Crude Prices/Spreads 2007 2010 2015 2020 2025LLS 69.00 60.00 62.78 69.32 76.53WTI 65.45 58.15 60.90 67.37 74.51Brent 66.66 57.95 60.89 67.23 74.23WCS 47.98 42.70 44.60 49.30 54.48ANS 64.77 56.73 59.40 65.67 72.60

Selected Product Margins 2007 2010 2015 2020 2025USGC Conventional Gasoline 13.80 9.36 8.48 9.36 10.33USGC ULSD 14.82 11.25 10.43 11.52 12.72NYH RBOB 16.07 12.04 11.03 12.18 13.44NYH ULSD 16.27 13.29 12.34 13.62 15.04US Mid-continent RBOB 39.22 30.59 30.78 33.93 37.41US West Coast CARBOB 29.44 22.19 21.67 23.84 26.23

Price Outlook - Summary(Current US dollars per barrel)


Potential Tipping PointsPotential Tipping Points• At what level, do retail prices curb U.S. Demand

Economic forecasts ($ bn, nominal): 2006E 2007E 2008E ’80-’81 AvgUS GDP $13,184 $13,948 $14,757US Consumer expenditures $ 9,159 $ 9,599 $10,031US personal disposable income $ 9,684 $10,149 $10,605

Estimated gasoline spending as a % of 2006E 2007E 2008E ’80-’81 AvgUS GDP 2.9% 3.6% 4.3% 4.5%US Consumer expenditures 4.2% 5.3% 6.3% 7.2%US personal disposable income 4.0% 5.0% 6.0% 6.2%

Estimated gasoline spending ($ bn) $387 $507 $636

Gasoline Demand (thous. b/d) 9,353 9,503 9,655

Estimated US retail gasoline price ($/g) $2.70 $3.48 $4.30Estimated US retail gasoline price ($/bbl) $113.47 $146.30 $180.57Gasoline taxes ($/bbl) $ 18.45 $ 18.45 $ 18.45Estimated R&M spread ($/bbl) $ 21.00 $ 24.00 $ 27.00Estimated WTI oil Price ($/bbl) $ 74.02 $103.85 $135.12

A sensitivity table of when gasoline spending may begin to negatively impact oil demand growth looking at the experience of the late 1970s/early 1980s.


Believe it or not, 2007 was supposed to be a bearish year for crude Across all grades we have seen crude vary from $35-$82 bbl. Both the Bulls and the Bears have had their days.Hurricanes can still wreak absolute havoc. The West Coast and Rockies do not need storms for price spikes.Ethanol output in second half of 2007 and beyond should temper gasoline price spikes. Spec changes in 2008 may help even more.Threshold for changed behavior is about $3.25 gal at the pump.Diesel will be the highest growth product through the rest of the decade, both here and abroad. Watch out for problems.More depth in U.S. storage is forthcoming, particularly for crude oil.

Predictions…Predictions…


The Silver LiningsThe Silver Linings

• More Storage is coming

• More Refining capacity is coming

• Greater Need to use OPIS data


If you can keep your head when all about you are losing theirs…

…Yours is the earth and everything that is in it…

…And -- which is more -- you’ll be a man my son.

Rudyard Kipling


This one-of-a-kind conference brings together hundreds of professionals from all segments of the supply chain, including refining executives, transportation professionals, shippers, schedulers, economists, marketers and end users.

SPECIAL DISCOUNT FOR TODAY’SATTENDEES! SAVE $200!

How To Prepare For Turbulence In North American Fuels Markets.

Honored Keynote SpeakerBRUCE A. SMITHChairman, President and CEO, Tesoro Corporation

Summit Highlights:

• Learn about Tesoro’s mega-success and its designs for future growth.

• Find out the impact on prices, supply and volatility from the tremendous inflows of capital and the proliferation of new financial players.

• Discover if refining troubles represent bad luck or good sense?

• Learn more on the changing dynamics in storage and shipping.

• Get detailed pricing forecasts for gasoline and distillates for the next 18 months.

The Ritz-CarltonLake Las Vegas HotelOctober 29-30, 2007

This premier summit has sold out 8 years straight. Register early to make sure you have a seat.


All Refined Products Prices All 7 U.S. Spot Markets

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and large bulk buyers intoday’s volatile market.

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The OPIS Time Series database allows you instant access to over 20 years of spot pricing for gasoline, diesel, and LP prices for all key U.S. markets and more than 10 years of gasoline and diesel rack prices for over 360 racks. Anytime. Anywhere. 24/7.

Get daily, weekly, monthly, quarterly and annual historical prices and averages in minutes. This high-speed system performs the calculations for you. Scan trends over days, weeks, months and years across the U.S. right from your computer.OPIS Time Series has invaluable benefits that you can put to use immediately! Use it to:

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September 5-7, 2007 Loews Ventana Canyon Resort Tuscon, AZ

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