1. J. P. Harris Senior Vice President ExxonMobil Chemical Will There be Demand Growth in US Petrochemicals ?

2. 2 Topics US Domestic Demand » Impact of manufacturing moving out of the US US Global Competitiveness » US Ethylene Global Cost Position » Global trade of ethylene derivatives Conclusions and Thoughts on Response

3. 3 US Domestic Demand

4. 4 US GDP And US Petrochemical Demand Data Sources: US Bureau of Econ Anal, APC, CMAI and ExxonMobil estimates GDP Petrochemicals

5. 5 US GDP and US Industrial Production Data Sources: US Bureau of Economic Analysis GDP Industrial Production

6. 6 Produced Goods and Services - Percentage of US GDP Data Sources: US Bureau of Economic Analysis Service Industries (Information, Finance, Insurance, Education, Health Care, etc.) Producing Goods Industries (Agriculture, Construction, Manufacturing, Mining, Oil and Gas, etc.)

7. 7 Global Manufacturing Labor Rates - 2004 Data Source: CMAI

8. 8 PE Example - Commodity Shopping Bag Delivered Cost (2003) Data Source: ICIS and ExxonMobil Sources

9. 9 PE Example - Commodity Shopping Bag Delivered Cost (2004)

10. 10 Imported Finished Goods Impact on Domestic HD Film Supply Data Source: APC and USITC

11. 11 Potential US Scenarios Recent trends continue = 0.9% growth Linear Historical Trend Extended = 2.3% Growth

12. 12 US Global Competitiveness

13. 13 US Natural Gas Compared to Crude on a BTU Basis Data Source: CMAI

14. 14 Global Ethylene Cash Costs - 1997 Data Source: CMAI US Gas to Crude BTU Ratio - 70% Cumulative Ethylene Capacity (Million Tons) Dollars per Ton 50 100 150 200 250 300 350 400 450 500 0 102030405060708090 West Europe Northeast Asia Southeast Asia Middle East NA Ethane NA Naphtha

15. 15 50 150 250 350 450 550 650 750 020406080100120 Cumulative Ethylene Capacity (Million Tons) West Europe Northeast Asia Southeast Asia Middle East US $ Per Ton Global Ethylene Cash Costs - 2004 NA Ethane NA Naphtha Global C2= Demand - 2004 Data Source: CMAI US Gas to Crude BTU Ratio - 90%

16. 16 Global Net Trade of C2= Derivatives Data Sources: APC, FDIS, US ITC and ExxonMobil estimates

17. 17 Conclusions and Thoughts on Response

18. 18 Conclusions on US Demand Low growth in US Domestic Demand for Petrochemicals » From 4 to 5 % historical growth to 1 to 2% » Lower cost finished goods will continue to be imported US Exports Likely to Decline » US defensive to Middle East exports » US ethylene chain last increment of supply to the world + Not just a natural gas phenomenon

19. 19 What macro events might mitigate these trends ? Improved US global competitiveness in manufacturing Lower crude prices easing Middle East feedstock advantage Slower growth in Middle East capacity additions

20. 20 How could we respond to this changing environment ? Food for Thought Improve Operational Excellence Support our customers likely move to higher value products via Technology and Innovation Reduce logistics costs by removing inefficiencies Avoid gas allocation systems Promote development of new oil and gas reserves