November 2011

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America’s Oil and Natural Gas Industry

Energizing America

Facts for Addressing Energy Policy

Energizing America: Facts for Addressing Energy Policy|November 2011

The United States is at an historic turning point for thecountry and its energy policies. But many Americanslack a full understanding of the oil and natural gasindustry. API has assembled this oil and gasoline primerto encourage a constructive public policy debate thatleads to a new fact-based comprehensive energy policy.

Factors Affecting Price

Gasoline, Diesel and Crude Oil PricesPage 1Oil Prices Relate to Many Uncertain FactorsPage 2World Liquid Fuel ConsumptionPage 3Growth in World Liquid Fuel ConsumptionPage 4OPEC Surplus Production CapacityPage 5Commodity PerformancePage 6WTI in Dollars and Euros/YenPage 7EIA Price ForecastPage 8

Where the Money is Going

What Consumers Are PayingPage 9Earnings by IndustryPage 10Earnings Compared to ManufacturingPage 11Return on InvestmentPage 12Who Owns the Oil CompaniesPage 13Taxes Paid by the Oil and Natural Gas IndustryPage 14Profits Alone: An Incomplete PicturePage 15Effective Tax Rates Among IndustriesPage 16Economic Consequences of Higher TaxesPage 17Capital Spending for U.S. ProjectsPage 18U.S. Environmental ExpendituresPage 19

Carbon Mitigation

Climate Change PolicyPage 20Investments to Reduce EmissionsPage 21Investments by Technology and Investor GroupPage 22Greenhouse Gas Emission ReductionsPage 23

Refineries and Fuels

Refining Capacity ExpandsPage 24Expanding Alternative FuelsPage 25U.S. Corn UsePage 26

U.S. Energy Needs

Energy EfficiencyPage 27Future U.S. Energy DemandPage 28Renewable Energy ConsumptionPage 29Energy Consumption by SectorPage 30

Untapped Potential of Domestic Resources

U.S. Crude Oil and Natural Gas ResourcesPage 31Offshore Undiscovered Technically Recoverable ResourcesPage 32Benefits to Access to Domestic SourcesPage 33

The Global Energy Framework

Future Global Energy DemandPage 34Accumulating Risks to the Development of Oil and Natural GasPage 35The Myth of “Big Oil”Page 36Largest Oil and Gas CompaniesPage 37Sources of SupplyPage 38

Energy Policy

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Table of Contents

Page 1Energizing America: Facts for Addressing Energy Policy|November 2011

Changes in gasoline anddiesel prices mirrorchanges in crude oil prices.

The roller coaster rise and fall in gasolineand diesel prices over the last few yearstracks changes in the cost of crude oil.Those changes are determined in theglobal crude oil market by the worldwidedemand for and supply of crude oil. Weakeconomic conditions in the U.S. andaround the world in 2008 and into 2009led to less demand which helped pushprices down.With the worldwide economic recoveryunderway, demand is on the rise againbut unrest in the Mideast and North Africahas put supplies at risk. This combinationof rising demand and reduced supplyhelped to push prices higher earlier thisyear. Recently, slower than expectedeconomic growth pulled prices downward.

Gasoline, Diesel and Crude Oil Prices

Source: NYMEX (WTI crude oil) and AAA (gasoline and diesel).