American Petroleum Institute
Energy Community in Depth
December 3, 2014
Many Factors Impact Prices
Price Follows Crude (Source: EIA)
What Consumers are Paying at the
Pump (June 2014)
Source: EIA estimate based on average price of $3.69 per gallon, June 2014.
Who Owns the Oil Industry?
Earnings
Return on Investment
Indiana consumes almost three times as much
energy as it produces
3000
2500
Renewables
Coal
Trillion Btu
2000
Natural Gas
1500
Oil
1000
500
0
Consumption
Source: EIA, State Energy Profiles, 2012
Production
Future U.S. Energy Demand
Growing Global Energy Demand
Risks to the Development of Oil and
Natural Gas
The Myth of “Big Oil”
Sources of Supply
Sources of Supply
Largest Oil Companies
Largest Oil Companies
Shale
Indiana’s crude oil production is falling but
natural gas is taking off
(thousands of barrels per day)
Indiana Natural Gas Marketed
Production (millions of cubic feet)
16
10000
Indiana Crude Oil Production
14
8000
12
10
6000
8
4000
6
4
2000
2
Source: EIA
0
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
0
Industrial production expands in response to
competitive advantage of low natural gas prices

Industrial production benefits from strong growth
in shale gas production

Lower natural gas prices lower costs of both raw
material and energy

Chemical and fertilizer facilities are seeing
increased utilization with lower natural gas prices

Energy-intensive industry can be more competitive
in the global market
Shale energy revolution has pronounced impact on
energy-intensive industries
Percent Increase to Industrial Production Indices due to the Unconventional Activity Value Chain
2012
Iron & Steel
2.2%
Resins & Synthetic Material
1.7%
Basic Organic Chemicals
1.5%
Plastics and Rubber
1.5%
Fabricated Metal
Agricultural Chemical
Nonmetallic Mineral
Petroleum & Coal
Machinery
Total Manufacturing
2020
2025
6.7%
7.4%
6.0%
8.1%
7.1%
9.5%
4.1%
4.6%
1.4% 3.2%
1.2%
4.8%
6.9%
1.2% 3.5%
1.0%
7.7%
4.1%
5.8%
0.4%3.3%
1.3% 3.5%
6.5%
4.0%
3.9%
Source: IHS Global, “America’s New Energy Future, Volume 3: A Manufacturing Renaissance.”
The economic impacts of the oil and natural gas
industry on Indiana’s economy by industry
Industry
Employment
Labor Income
($ millions)
Value Added
($ millions)
Oil and natural gas industry
39,628
$2,168.1
$8,910.0
Services
40,081
$1,587.2
$1,875.8
Finance, insurance, real estate, leasing
15,190
$724.5
$1,881.2
Manufacturing
13,542
$960.7
$1,679.0
Wholesale and retail trade
12,639
$465.4
$764.7
Construction
5,083
$280.8
$310.3
Transportation and warehousing
4,768
$233.6
$335.7
Information
2,522
$137.4
$439.8
Agriculture
1,684
$45.6
$94.3
Utilities
495
$57.0
$228.6
Mining
306
$23.6
$51.5
Other
428
$15.1
$24.8
136,366
$6,699.1
$16,595.7
3.8%
4.1%
6.3%
Total economic impact
As a % of state total
Source: PWC, “Economic Impacts of the Oil and Natural Gas Industry on the US Economy in 2011,” July 2013. Figures are for the year 2011.
Economic impact of unconventional oil and gas
development on Indiana
Employment
Value Added
(millions $)
Federal Taxes
State & Local
Taxes
(millions $)
2012
2020
2035
15,973
27,303
33,366
$1,667
$2,768
$3,414
$219
$369
$456
$159
$244
$265
Source: IHS Global Insight, “America’s New Energy Future: The Unconventional Oil and Gas Revolution and the
US Economy,” December 2012.
Big savings for Indiana school districts
On energy last year, enough to employ over 350 teachers
(IHS Global Insight)
Big savings for Indiana state and local governments
On energy last year, enough to employ about 87
government workers
(IHS Global Insight)
More energy can lead to American prosperity
American consumers’ annual savings due to lower gas
prices resulting from shale energy development
(IHS Global Insight)
INDIANA SPECIFIC
JOBS

Oil and natural gas industries support 136,400
jobs (3.8% of Indiana’s total employment)
 Jobs supported by new technolgies : 15,973

Expected to grow by 27, 303 in 2020 and 33,366
in 2036
YOUR TURN
LET’S
TALK
US Environmental Expenditures
Pipelines




99.999 % safety record
62 % reduction in releases from liquid pipeline
since 2001-2012
Almost 70,000 miles of petroleum pipeline
operating in the U.S.
$1.6 B spent annually on inspections and safety
Pipelines & Rail
 "U.S. freight railroads are estimated to have
carried 434,000 carloads of crude oil in 2013
(roughly equivalent to 300 million barrels)”
(Source: Congressional Research Service).

That's 691 barrels per rail car.

A grain rail car carries 3200 bushels of corn.
Pipelines & Rail

Each 100,000 barrels per day of new pipeline
capacity displaces 14.7 rail cars per day.

In corn equivalent that's 14.7 X 3200 =
463,096 bushels per day.

169,030,390 bushels of corn per year.
Oil Sands Crude





Does not contain tar or sand
Is comparable to other heavy crudes
Does not run hotter
Has been shipped by pipeline since the early
1980’s
Does provide over half of the crude consumed in
Minnesota
Bakken





1 MM bbl/d production
30 years in production
Light crude
Both traditional and fracking
Sand mining
Kalamazoo Spill
Gasoline Price Projections
Diesel Projections
Natural Gas Projections
For more information visit:
www.api.org
www.energytomorrow.org
www.energycitizens.org