Session 1 SPE Training Exceptional Price Performance

Understanding Oil’s Exceptional Price Performance
with Economic Principles

SPE Online Training Course
r.aguilera@curtin.edu.au
Roberto F. Aguilera, Ph.D.

Curtin University Oil and Gas Innovation Centre (CUOGIC)
Perth, Australia, 23rd July 2021
Roberto F. Aguilera
 Currently: Energy Economist, Curtin University Oil & Gas
Innovation Centre; Consultant, Servipetrol Ltd, Canada
 2021 – 2023: Society of Petroleum Engineers (SPE) Asia Pacific

Regional Technical Advisory Committee
 2018 – 2019: SPE Distinguished Lecturer Program; delivered

lectures in ~30 cities worldwide
 2013 – 2017: Analyst at OPEC Secretariat, Vienna; Co-author of

annual World Oil Outlook
 2010 – 2013: Curtin University Research Fellow

Roberto F. Aguilera
 Participated in numerous energy-related activities, including:
- The Price of Oil, published by Cambridge University Press in English and Chinese
- Projects with German Institute for Economic Research (DIW Berlin)
- World Petroleum Council Guide to Unconventional Gas
- US National Petroleum Council “Facing the Hard Truths about Energy”
- United Nations Expert Group on Resource Management
- Australian Centre for Natural Gas Management, with Chinese partners
 Past affiliations: International Institute for Applied Systems Analysis

(IIASA); University of Vienna; Catholic University of Chile
 PhD & Master degrees, Colorado School of Mines;

Bachelor’s, Haskayne School of Business, University of Calgary
Program outline
• Session 1: Oil market demand
– Identification of main drivers of oil
consumption
• Session 2: Oil market supply
– Identification of main drivers of oil
production
• Session 3: Oil price formation and volatility

– Determination of equilibrium oil prices in short- and long-term future
• Session 4: Natural gas prices
– Price formation in the regional natural gas markets
Session 1: Oil market demand
World liquid fuels consumption
million barrels per day
 Determinants of oil demand 105
100
• Short run vs long run
95
 Oil demand function and curve 90
85
monthly history
 Elasticity of oil demand 80 monthly forecast
annual average
• How responsive is demand to price changes? 75
70
 Intensity of oil use 65
2019 2020 2021 2022
 Interactive time
Source: US EIA Short-term Energy Outlook, July 2021
• Session Q&A
• Case study: Unprecedented demand shock from COVID
Recent price developments
80
Averages (USD)
60
 2018: ~65-70
$/barrel
 2019: ~60-65
40
 2020: ~35-45
 Negative WTI Brent
20
 2021: ?? WTI
0
Jan 01, 2017
Jan 01, 2018
Jan 01, 2019
Jan 01, 2020
Jan 01, 2021

Jul 01, 2017
Jul 01, 2018
Jul 01, 2019
Jul 01, 2020
Jul 01, 2021

-20
-40
Source: US Energy Information Administration (EIA) Statistics
Recent price developments
80
Averages (USD)
60
 2018: ~65-70
$/barrel
 2019: ~60-65
40
 2020: ~35-45
 Negative WTI Brent
20
 2021: ?? WTI
0
Jan 01, 2017
Jan 01, 2018
Jan 01, 2019
Jan 01, 2020
Jan 01, 2021

Jul 01, 2017
Jul 01, 2018
Jul 01, 2019
Jul 01, 2020
Jul 01, 2021

-20
-40
Background
 Historical & projected energy

consumption mix
• Energy sources compete for
market share
• Relative prices, technology &
policies play key roles in
determining winners
• Fossil fuels still ahead
Primary energy mix (1850 - 2040)
 Past consumption
led initially by
wood & biomass,
followed by coal
and then oil
 Natural gas to
take over? Straight
to renewables?
 Source: Aguilera and Aguilera, Society of Petroleum Engineers 110215-MS (2007); updated in Mineral Economics (2018)
Primary Energy Mix (2000 - 2150)
 Natural gas
share peaks
near 2050
 Non-fossil
energy leads
market 2H
21st century
 Source: Aguilera and Aguilera, Mineral Economics (2019)

Energy demand growth; fuel type & region (2019 - 2045)
30
25  Demand led
20 by emerging
15
mboe / d
Asia
10
5
0  Renewables
-5 are fastest
-10 growing
-15
Oil Coal Gas Nuclear Hydro Biomass Other
renewables
OECD Non-OECD Total
 Source: OPEC World Oil Outlook (2020)

Energy by source with net zero emissions by 2050
 Source: International
Energy Agency (2021),
Net Zero by 2050
 Fossil fuels account for 80% in 2020; 20% in 2050

Historical & future oil consumption
BP statistical data GEM Reference forecast
GEM Sensitivity 1 GEM Sensitivity 2  Oil use growing
BP (2020), data since 2007 steadily since 1960
WORLD OIL CONSUMPTION, PAST & FORECAST 2030
1.2E+05  Forecast compares
THOUSAND BPD
1.0E+05
well with actual data
(red points 2007-2019)
8.0E+04
6.0E+04  Projected to keep

4.0E+04 rising in coming
2.0E+04 decades
0.0E+00
1960 1980 2000 2020
 Source: Aguilera and Aguilera, SPE 110215-MS (2007); updated in Mineral Economics (2018)
Historical & future oil consumption
BP statistical data GEM Reference forecast
GEM Sensitivity 1 GEM Sensitivity 2  Oil use growing
BP (2020), data since 2007 steadily since 1960
WORLD OIL CONSUMPTION, PAST & FORECAST 2030
1.2E+05  Forecast compares
THOUSAND BPD
1.0E+05
well with actual data
(red points 2007-2019)
8.0E+04
6.0E+04  Projected to keep

4.0E+04 rising in coming
2.0E+04 decades
0.0E+00
1960 1980 2000 2020
 Source: Aguilera and Aguilera, SPE 110215-MS (2007); updated in Mineral Economics (2018)
“Peak” demand prospects
 Wide range of views on future pace of oil

demand growth
 Slowing consumption due to oil-saving

technology, electric vehicles & climate
stabilization efforts
 So far, no large-scale substitute for oil in

transportation
Estimates from 2017; most now

predict peak within 10 years
Top 10: Oil consumers, 2020 Historic oil consumption by region
120,000
US
China
100,000
India
Saudi Arabia 80,000
Japan
Thousand b/d
60,000
Russian Federation
South Korea
40,000
Brazil
Canada 20,000
Germany
0
0 5,000 10,000 15,000 20,000 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
Thousand b/d North America S. & Cent. America Europe
CIS Middle East Africa
Asia Pacific
Source: BP Statistical Review of World Energy (2021)
 Top 10: Combo of large GDP/capita, population or oil production

 Historical oil use dominated by OECD (developed world)
Oil demand
 Oil market demand, along with
market supply, determines market
price & output
 Could distinguish among other types of
demand; e.g. demand from particular
company, industry, country etc.
 Oil universe is large & complex;

neither possible nor desirable to
include all possible determinants
 Important to consider the time

horizon (short- vs long-run)
Determinants of oil demand
 Income (economic growth) –
one of the most important
• Two types of income changes
are distinguished
 Short-term business cycle fluctuations Secular
GDP
 Longer-term secular growth, structural growth
change of economy
Business
• Oil is used in transportation & industry, cycle
sectors quickly affected by changes in GDP Time
 Thus, changes in economic activity (e.g. GDP) have direct

and rapid impact on oil use, at least in short term
 The oil price itself – also important

• Modest effect on demand in short term
(e.g. a few years)
 Takes time to reduce consumption (e.g. through
substitution, efficiency,…)
 Public is relatively insensitive to price in its major
end use (road transport)
 Crude oil accounts for just a fraction of total costs of
final product (e.g. petrol)
 Prices of oil substitutes & complements

• Oil demand affected by prices other than its own
 Substitutes: Prices of biofuels, electricity, natural gas, hydrogen
may impact oil consumption
 Complements: Price of one crude oil type may affect demand of
another used for blending; car prices impact petrol usage
• Effects on oil demand tend

to be greater in long term
 Technological change
• Reduce quantity of oil needed (e.g. lighter, more
fuel-efficient planes)
• Alters ability of oil to compete in end-use markets

(e.g. oil’s massive decline for power generation)
• Creates and destroys end-use markets

(e.g. the rise and possible decline of
internal combustion engine)
• Technology typically a long-term variable

 Often ignored in short-term analysis
 Consumer preferences
• Affect oil’s end-use markets

(transport, petrochemicals,…)
• Vary over time, country (e.g.

due to demographics, quality
of life, technology…)
 Government activities
• Policies, regulations, expenditures…
 Highways, infrastructure, industry, defense
 Fiscal, monetary, social policies
affect investment & GDP growth
 Health & safety, environmental
policies
 Climate policies may have major
impact on oil demand (carbon
taxes, enforced regulation,…)
 Seasonality
• Weather (determines seasons for
driving, refinery maintenance,…)
 Short-term variable: influences consumption
patterns within the year
World oil consumption 2018 – 2019

103
102
mb/d
101
100
2018
99
2019
98
Jan
Aug
Sep
Nov
Dec
Apr
Oct
Mar
May
Jun
Jul
Feb
Source: US EIA Statistics

Oil demand function
 Demand function: Relationship between oil demand and major determinants
for given time period, expressed mathematically:
Is a function of These determinants
 Y: Income  Pcm: Price of complement
 Po: Price of oil  Tech: Technological change
Qd = f (Y, Po, Psb, Pcm, Tech, Gov,...)  Psb: Price of substitute  Gov: Government activity
Quantity of oil - -
demanded
+ + +/- +/-
Relationship could be linear, logarithmic,

quadratic, non-linear,…
 Qd = β0 + β1Y + β2Po + β3Psb + …
 logQd = β0 + β1logY + β2logPo + β3logPsb + …

Oil demand function – Income
 In analyzing markets, at times focus on

particular variable; e.g. income or GDP
 Qd = f (Y)
+
 Use historical sample data of Y and Qd
to determine effect of Y on Qd
 Can then be used for forecasting
 Qd = β0 + β1Y
When Y ↑ by 1 unit, Qd ↑ by β1 units (or when Y ↓ by 1 unit, Qd ↓ by β1 units)
When GDP ↑ by 1%, oil demand ↑ by β2%
β2 Estimates of GDP change on oil demand by country

(If we specify equation in logarithmic
form, effects of variable changes are
given in percentage)
 Example: In Spain, study finds oil

demand increases by 1.09% when
GDP increases by 1%
Source: Javan and Zahran (2015),

OPEC Energy Review
 GDP positively correlated with oil consumption

 Eventually oil use flattens in each country, then
declines, though GDP keeps rising
Oil demand function –
oil price
 Qd = f (Po, …)
-
When price ↑ by 1%, oil demand by ↓ 0.463%
Source: Jaforullah and King (2018),

New Zealand Economic Papers
prices of substitutes & complements
 Qd = f (Psb, Pcm)
+ -
Demand function –  Qd = f (Psb, Pcm)
prices of substitutes & complements + -
Gas & coal prices US Gas & coal in US electricity

14 2E+15
Coal Natural gas Coal Natural gas
12 1.8E+15
1.6E+15
10
1.4E+15
$/mmbtu
8 1.2E+15
btu
6 1E+15
8E+14
4
6E+14
2
4E+14
- 2E+14
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Source: US EIA Statistics
Oil demand function – technological change
 Qd = f (Tech)
+/-
 Can be difficult to quantify technology

 Could represent, e.g. with some
measure of fuel efficiency
 In theory decreases oil demand, but
may increase (rebound effect)
 Can also represent with measure of fuel

switching (e.g. nuclear development)
government activities
 Qd = f (Govt)
+/-
 Determinant represented by:

 Taxes on carbon
 Fuel subsidies
 Enforced regulation
 Fiscal & monetary policy (and
subsequent effects on economy,
interest rate, currency,…)
Oil demand curve
 Derived from demand function
Shows oil demand at
 Qd = f (Po) P
various prices, ceteris
paribus, over specified
- ($/bbl) time period
 ∆ in Po causes movement along curve P1
 Assumed to be continuous & reversible
 In the long run, might not reverse P2
D
 Interested in total market demand, but
can distinguish between many curves: Q1 Q2 Q (bbl/yr)
 E.g. refineries; country imports; particular
industries; speculators; inventories/stocks
Change in oil demand – shift in curve
P Change in any
($/bbl) determinant other than
D (decrease)← oil price (e.g. GDP ↑ or
GDP ↓) causes shift
P
 Change in oil price
=> movement along curve
 Change in other determinants
=> shift of curve
D D (increase)→
Q Q Q Q (bbl/yr)
Oil demand curves – different periods
 Short run (steep curve) P

 Insufficient time to find substitutes ($/bbl)
• Quantity demanded of oil doesn’t respond much

to price changes
Long run
 Long run (flatter curve)
Short run
 Sufficient time to switch to alternatives,
improve efficiency
Q (bbl/yr)
• Price changes have greater effect on quantity of
oil demanded
Demand curves – short run
P
 Short-run example: ($/l)
Petrol for road transport
P2
 Steep demand curve
• Insufficient time to find substitute
P1
• Difficult to adjust lifestyle
Q2 Q1 Q (l/yr)
Demand elasticities – price
% 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞
 𝐸𝐸𝑑𝑑 =
% 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝
P
($/bbl)
Sensitivity (responsiveness) of oil
demand to price changes
Elastic
 Oil price elasticity of demand: % change in
demand caused by 1% change in price
Inelastic
 Between 0 and 1 is inelastic
 >1 is elastic Q (bbl/yr)
 Demand & price move in opposite directions
(so elasticity is %↓ in demand caused by 1%↑ in price,
or %↑ in demand cause by 1%↓ in price)
 Price elasticity: Long run > short run (takes time to alter oil usage)
Demand elasticities – income
% 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞
 𝐸𝐸𝑑𝑑 =
% 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖
GDP
Peak
Sensitivity (responsiveness) of oil demand
to income; e.g. business cycle
 Income elasticity of demand: % change in

demand caused by 1% change in income
Trough
 Between 0 and 1 is inelastic
 >1 is elastic
 Demand and income move in same direction
Time
• In short run, income elasticities >1 (oil demand varies considerably with business
cycle – fluctuations greater than GDP itself)
• In long run, thought to be =1 (but perhaps <1 in rich world; >1 in developing world)
GDP growth 2010-2020
World GDP Growth
 GDP growth in 2019 lowest 6

5.4
since global financial crisis 4

4.3
3.5 3.5 3.6 3.5
3.8 3.6
3.3 2.8
Percent
 Growing US-China trade tensions 2
 GDP growth in 2020 worst -2

since WW2 -3.3
-4
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
 COVID slows economic activity
Source: International Monetary Fund statistics
GDP growth 2010-2020
World GDP Growth vs. Oil Demand Growth
6 6
 Oil use rises & falls with GDP 4 4
2 2
 Transportation (road, air, sea);
Percent
mb/d
industry (e.g. petrochemicals); and 0 0
buildings & power all expand rapidly -2 -2
during booms, suffer severely -4 -4

during recessions -6 -6
-8 -8
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
GDP (left) Oil demand (right)
Source: International Monetary Fund

statistics; OPEC statistics
Historical GDP growth & oil demand growth
 Figure shows
strong correlation
over the past
decades
 Suggests income
elasticity ~1
Source: Citi Research (2020)
Intensity of oil use (IU)
𝑄𝑄𝑑𝑑
 𝐼𝐼𝐼𝐼 = IU
𝑌𝑌
Industrialization
Ratio of oil demand to income

Services
 At early stages of economic development, countries
are in oil-intensive mode (infrastructure, heavy
industry,…)
 As development continues, economy shifts to
manufacturing and then services
Income
 The inverse of intensity of use is productivity
Intensity of oil use (IU)
𝑄𝑄𝑑𝑑 IU
 𝐼𝐼𝐼𝐼 = (bbls per
𝑌𝑌 $ of
GDP)
Ratio of oil demand to income

 Relationship between IU and GDP shifts over Estimated IU
time (e.g. due to oil-saving technology) curve
 Can be used for a ‘crude’ oil demand forecast GDP

per capita
Intensity of use – Australia
Intensity of energy use vs. GDP / capita Intensity of oil use vs. GDP / capita
180
IU ('000 toe per bn $ GDP)
600
IU ('000 bl per bn $ GDP)

160
500
140
400
120
300
100
80 200
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
55,000
60,000
65,000
70,000
5,000
0
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
55,000
60,000
65,000
70,000
5,000
GDP per capita GDP per capita
Sources: British Petroleum,

World Bank
 Relationship between intensity of use and per capita GDP
in Australia, 1965 – 2019, constant US dollars
Ratio: Global oil demand
Oil use per unit of GDP growth & GDP growth
Sources: Citi Research (2021)
 Figures show declining importance

of oil in the global macroeconomy
Highlights
 Short-term oil demand factors
 Income or GDP is often the dominant force
 Fluctuations in economy explain much of
yearly demand changes
 Longer-term factors
 Changes in the oil price itself
 Prices of substitutes
 Advances in technology
 Consumer preferences
 Government policies
 Structural GDP trends
 Long-term factors harder to quantify;

receive less attention
Highlights
 In addition to GDP growth,
intensity of use also matters
 Ratio of oil consumption over GDP
 Oil intensity changes with

economic development
 Rises initially with per-capita income
 Declines as economy advances
 Elasticity of oil demand

 In short run, income elasticities >1 (oil demand varies considerably with
business cycle); in long run thought to be =1
 Price elasticities: long run > short run (takes time to alter oil consumption)
Thank you!
Questions?
r.aguilera@curtin.edu.au
Recent developments & short-term prospects
80
 Upside
60
 Speedy vaccine
rollout
$/barrel
40
 Downside Brent
20
 More COVID WTI
waves; climate
0
policies
Jan 01, 2018
Jan 01, 2019
Jan 01, 2020
Jan 01, 2021

Jul 01, 2018
Jul 01, 2019
Jul 01, 2020
Jul 01, 2021

-20
-40
Case study: Unprecedented oil demand shock
 Due to COVID, global % Real GDP Growth
9
economy contracted
6
-3.3% in 2020
3
 Devastating, yet not as 0
bad as anticipated
-3
-6
 Trade, transport, travel &
-9
industry ground to a halt,
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
middle- & light-distillate
fuel consumption dried up Advanced Emerging & developing World
Source: International Monetary Fund (2021)

 Petrol, gasoline, diesel,
jet/kerosene, etc.
 Last year, it was thought a 2nd COVID  Oil demand was then expected to
wave could cause double dip for GDP ‘double dip’ also
Global oil demand, mb/d
 Two lost years of GDP growth  Oil demand follows same pattern

 Oil demand 2019: 100.9 mbd World liquid fuels consumption Components of annual change
million barrels per day million barrels per day
 Oil demand 2020: 92.3 mbd 105 10
world change forecast
 ↓8.6% 100
8 Organization of
Economic
Cooperation and 5.3
 GDP 2020: ↓3.3% 95
6
Development (OECD)
3.7
4 non-OECD
 If we assume income elasticity 90 2 0.8
=1, GDP 2020 figure results in
↓3.3% oil demand 85 monthly history 0
monthly forecast
-2
 But oil demand fell by more 80 annual average
than GDP -4
75
-6
 Thus, other factors at play
70
-8
 Government restrictions: -8.6
65 -10
2019 2020 2021 2022 2019 2020 2021 2022
• Shut down transport systems;
• Stay home –
no driving, no flying... Source: US EIA Short-term Energy Outlook, July 2021
 Oil demand 2020:
World liquid fuels consumption Components of annual change
92.3 mbd million barrels per day million barrels per day
105 10
world change forecast
 Oil demand 2021 100
8 Organization of
Economic
6 Cooperation and 5.3
forecast: 97.6 mbd 95 Development (OECD)
3.7
4 non-OECD
 ↑5.7% 90 2 0.8
85 monthly history 0
 GDP 2021 monthly forecast
-2
80
forecast: ↑6.0%
annual average
-4
75
-6
 If we assume income 70
-8
-8.6
elasticity =1, GDP 65 -10
2019 2020 2021 2022 2019 2020 2021 2022
2021 forecast results
in ↑6.0% oil demand Source: US EIA Short-term Energy Outlook, July 2021
Source: Oxford Institute for

Energy Studies (2021)
 Road fuels accounted half of demand decline in April 2020

Global oil demand by product Year-on-year change, by quarter
 Demand is almost back to pre-covid levels

 Aviation (kerosene jet fuel) rebound taking more time
 Sharp recovery in
2021, but then oil
demand slows
 Pandemic forces
changes in behavior
(work at home, less
travel…)
Source: IEA Oil 2021

Case study:
Unprecedented
oil demand
shock
 Figure from mid-2020
 Some regions hit

harder than others
 Some fuels hit harder

than others
 Highlights uncertainty
of the time

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Understanding Oil’s Exceptional Price Performance

with Economic Principles

Roberto F. Aguilera, Ph.D.

 2021 – 2023: Society of Petroleum Engineers (SPE) Asia Pacific

 2018 – 2019: SPE Distinguished Lecturer Program; delivered

 2013 – 2017: Analyst at OPEC Secretariat, Vienna; Co-author of

 2010 – 2013: Curtin University Research Fellow

 Past affiliations: International Institute for Applied Systems Analysis

 PhD & Master degrees, Colorado School of Mines;

• Session 3: Oil price formation and volatility

 Determinants of oil demand 105

 Oil demand function and curve 90

Jan 01, 2018

Jan 01, 2019

Jan 01, 2020

Jan 01, 2021

Jul 01, 2018

Jul 01, 2019

Jul 01, 2020

Jul 01, 2021

Jan 01, 2018

Jan 01, 2019

Jan 01, 2020

Jan 01, 2021

Jul 01, 2018

Jul 01, 2019

Jul 01, 2020

Jul 01, 2021

 Historical & projected energy

 Source: Aguilera and Aguilera, Mineral Economics (2019)

 Source: OPEC World Oil Outlook (2020)

 Fossil fuels account for 80% in 2020; 20% in 2050

6.0E+04  Projected to keep

6.0E+04  Projected to keep

 Wide range of views on future pace of oil

 Slowing consumption due to oil-saving

 So far, no large-scale substitute for oil in

Estimates from 2017; most now

Saudi Arabia 80,000

Source: BP Statistical Review of World Energy (2021)

 Top 10: Combo of large GDP/capita, population or oil production

 Oil universe is large & complex;

 Important to consider the time

 Thus, changes in economic activity (e.g. GDP) have direct

 The oil price itself – also important

 Prices of oil substitutes & complements

• Effects on oil demand tend

• Alters ability of oil to compete in end-use markets

• Creates and destroys end-use markets

• Technology typically a long-term variable

• Affect oil’s end-use markets

• Vary over time, country (e.g.

World oil consumption 2018 – 2019

Source: US EIA Statistics

Relationship could be linear, logarithmic,

 Qd = β0 + β1Y + β2Po + β3Psb + …

 logQd = β0 + β1logY + β2logPo + β3logPsb + …

 In analyzing markets, at times focus on

β2 Estimates of GDP change on oil demand by country

 Example: In Spain, study finds oil

Source: Javan and Zahran (2015),

 GDP positively correlated with oil consumption

When price ↑ by 1%, oil demand by ↓ 0.463%