1. John C. Felmy Chief Economist American Petroleum Institute Felmyj@api.org

2. Forecast of U.S. Energy Growth Nuclear Renewables Coal 26% Oil 40% 7% Gas 21% 7% Oil Nuclear Coal Renewables Gas 23% 8% 40% 6% 23% (100 quads) (131 quads) 2005 Actual 2030 Outlook 31% Growth (1.1%/yr.) Source: EIA, AEO2007 2

3. Future U.S. Energy Demand  The U.S. will consume 28 percent more oil and 19 percent more natural gas in 2030 than in 2005. Source: EIA, AEO 2007 Natural Gas Petroleum Nuclear Coal Nonhydro renewables Hydropower ProjectionsHistory quadrillion Btu 3

4. 20052030% Change Consumption (Quads) Liquid Fuels and Other Petroleum 40.6152.1728.5 Share 40.539.8 Natural Gas 22.6326.8918.8 22.620.5 Oil and Gas 63.2579.0625.0 63.160.3 Coal 22.8734.1449.3 22.826.0 Oil, Gas and Coal 86.12113.2031.4 86.086.3 Nuclear Power 8.139.3314.8 8.17.1 Hydropower 2.713.0913.8 2.72.4 Biomass 2.384.0670.5 2.43.1 Other Renewable Energy 0.761.4488.7 0.81.1 Other 0.080.04-48.3 0.10.0 Total 100.19131.1630.9 EIA, AEO 2007 4

5. Future Global Energy Demand  Global energy demand will increase by more than 50 percent between now and 2030. Source: IEA 5

6. Future U.S. Energy Demand  The U.S. will consume more energy even with efficiency improvements Source: US DOE 6

7. U.S. Supplies of Crude and Products EIA, Petroleum Supply Monthly, May 2007 7 Other countries include: United Kingdom, Kuwait, Ecuador, Brazil, Norway, Korea-South, Aruba, Trinidad and Tobago, Columbia, Libya, Argentina, Chad, Germany, Equatorial Guinea, France,Gabon, Belgium, Sweden, Indonesia, Finland, Vietnam, Estonia, Yemen, Brunei, Italy, Lithuania, Cameroon, Malaysia, Latvia, Portugal, China, Netherlands, Oman, United Arab Emirates,Denmark, India, and Bahrain.

8. World’s largest oil companies based on liquid reserves Source: Oil & Gas Journal Non-IOC IOC 8

9. Who owns “Big Oil”? (Holdings of oil stocks, 2004) 9

10. Capital Spending Source: Oil and Gas Journal, April 2, 2007 10

11. U.S. Crude Oil Resources (undiscovered technically recoverable federal resources) Atlantic offshore 3.8 Bbl Lower 48, onshore 7 Bbl Gulf offshore/deepwater 44.9 Bbl Alaska onshore 18 Bbl Alaska offshore 26.6 Bbl Pacific offshore 10.5 Bbl Lower 48, onshore 7 Bbl Atlantic offshore 3.8 Bbl 112 billion barrels is enough oil to power over 60 million cars for 60 years AND heat over 25 million homes for 60 years. 11 Source: MMS, USGS, and API Calculations

12. U.S. Natural Gas Resources (undiscovered technically recoverable federal resources) Atlantic offshore 37 Tcf Gulf offshore 232.5 Tcf Alaska onshore 69 Tcf Alaska offshore 132 Tcf Pacific offshore 18.3 Tcf Lower 48, onshore 167 Tcf 656 trillion cubic feet is enough natural gas to heat 60 million homes for 160 years. 12 Source: MMS, USGS, and API Calculations

13. Number of refineries declines but capacity expands 13 Source: DOE

14. Environmental Expenditures since 1990 Source: API Statistics

15. Highway and Non-road Diesel Timelines * 2006: Refinery – June 1; Terminal – September 1; Retail – October 15 15

16. Oil & Gas Companies $98 billion (73%) Other Private Federal Government Frontier Hydrocarbons End Use Non Hydrocarbons $32 billion (23%) $89 billion (66%) $31 billion (23%) $15 billion (11%) $5 billion (4%) By Technology By Investor $135 Billion Technology – Our Industry’s Investments (2000-2005) 16 Source: IER and CEE

17. Leading emerging energy investments by U.S. firms (2000-2005) 17

18. U.S. Corn Use 2006-2007 Source: USDA 18

19. Fuel Demand (MBD) Ethanol Gasoline Brazilian Ethanol (Sugar Cane Derived) - Ethanol meets 45% of Brazil’s Gasoline Demand - Lowest ethanol production costs in the world - Climate, Geography, Labor costs conducive to sugar production - Brazilian model not applicable to US in terms of scale/cost - U.S. Tariff to imported ethanol is $0.54/gallon Ethanol in Brazil 19

20. Our Priorities  Efficiency – improve our own and encourage efficiency in other industries and among consumers.  Technology – increase investments in and use of advanced energy technologies to develop all sources of energy cleanly and responsibly.  Diversity – increase access to oil and natural gas supplies both here at home and around the world. 20

21. Energy Policy Perspectives  Encourage energy efficiency  Encourage investment in long-term energy initiatives and advanced technologies.  Reduce barriers to increasing domestic supplies  Rely on market forces to allocate products.  Refrain from new taxes that make it more expensive to develop our domestic supplies.  Support our need to participate actively in global energy markets rather than isolate the U.S. 21