UNDERSTANDING TODAY’S CRUDE OIL AND PRODUCT MARKETSRayola DougherAPI Senior Economic Advisor, dougherr@api.org

Prices are determined by supply and demand factors on a worldwide basis.

Crude oil and petroleum products are global commodities

Refiner Acquisition Price of Crude Oil

Source: EIA

Source: EIA

Changes in Gasoline Prices Mirror Changes in Crude Oil Prices

Relationship between Retail Gasoline, WTI and Brendt Crude Oil Prices

Source: EIA

Oil Prices Relate to Many Uncertain Factors

Source: EIA

Oil Price Growth Mirrors World GDP Growth

Changes in the price of oil have closely tracked changes in the world’s gross domestic product growth.

Source: Dallas Fed

Relationship between OPEC’s Spare Capacity and Oil Prices

Reduced OPEC excess capacity helped tighten the oil market. In mid-2008 when oil prices reached record highs, OPEC excess capacity was down to 1 million barrels per day.

Source: Dallas Fed

Trends in WTI Prices Mirror Trends in Commodities Without Futures Markets

Prices for Illinois Basin coal, tallow and cobalt increased as fast as oil, if not faster, in 2008 and fell just as quickly when the economy crumbled. Source: Dallas Fed

What Consumers are Paying for at the Gasoline Pump

Average of gasoline components for January – November, 2011 as reported by EIA

U.S. Gasoline Requirements

Components of Annual Average Gasoline Prices Adjusted for Inflation

Source: EIA

Components of Monthly Gasoline Prices Adjusted for Inflation

Source: EIA

Monthly Refiner Margins Adjusted for Inflation

Source: EIA

Components of Gasoline Prices in 2011

Source: EIA

Refiner Margins in 2011

Source: EIA

Earnings

Source: Based on company fourth quarter 2011 financial reports.

Western States’ Gasoline Prices

Source: AAA Fuel Gauge report

Components of Gasoline Prices on January 26, 2012

Source: AAA Fuel Gauge report, NYMEX WTI crude, API gasoline tax estimates

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