Recent Fuel Price Trends Market Developments Petroleum Market

Recent Fuel Price Trends & Market Developments Petroleum Market Advisory Committee Meeting California Energy Commission Sacramento, California December 16, 2015 Gordon Schremp Energy Assessments Division California Energy Commission gordon. schremp@energy. ca. gov California Energy Commission

Snapshot - Retail Prices Declining in CA National Average Prices • CA retail gasoline prices are slowly dropping • California – Down 15. 4 cpg since last month and down 3. 5 cpg since last week – 22. 1 cpg lower than same time last year California Average Prices • Washington – Down 10. 3 cpg since last month and down 2. 0 cpg since last week – 42. 5 cpg lower than same time last year 12/16/2015 California Energy Commission Washington Average Prices 2

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California Retail Gasoline Components 12/16/2015 California Energy Commission 6

Refinery Operations • Refinery problems – gasoline impact quantified • West coast gasoline production capability significantly degraded • Based on analysis of IIR data, the quantity of gasoline production capacity off-line during April – November averaged nearly 148 thousand barrels per day (TBD) greater than 2014 o October – 190 TBD more, November 230 TBD more and December (Y-T-D) 215 TBD more than previous year Source: Industrial Information Resources (IIR) Loss Gasoline Production Report. 12/16/2015 California Energy Commission 7

Refinery Operations – Look Ahead • Other refinery issues: • Exxon. Mobil – Torrance refinery will not resume operation of gasoline production equipment until 1 Q 2016 – Sale to PBF announced • West Coast planned maintenance activity heavier-than-normal through late December – mainly impacting gasoline production Source: Industrial Information Resources (IIR) Refinery Off-line Report. 12/16/2015 California Energy Commission 8

California Gasoline Production Current vs. 5 -year High-Low Band Source: California Energy Commission analysis of Petroleum Industry Information Reporting Act data. Data through November 27, 2015 12/16/2015 California Energy Commission 9

Southern Calif. Gasoline Production Current vs. 5 -year High-Low Band Source: California Energy Commission analysis of Petroleum Industry Information Reporting Act data. Data through November 27, 2015 Extended period of lower-than-normal output due to Exxon. Mobil idle gasoline production equipment. 12/16/2015 California Energy Commission 10

Northern Calif. Gasoline Production Current vs. 5 -year High-Low Band Source: California Energy Commission analysis of Petroleum Industry Information Reporting Act data. Data through November 27, 2015 12/16/2015 California Energy Commission 11

California Gasoline Inventory Levels Current vs. 5 -year High-Low Band California gasoline inventories have recovered to normal range aided by marine imports. Data through November 27, 2015 Source: California Energy Commission analysis of Petroleum Industry Information Reporting Act data. 12/16/2015 California Energy Commission 12

Southern Calif. Gasoline Inventory Current vs. 5 -year High-Low Band Source: California Energy Commission analysis of Petroleum Industry Information Reporting Act data. Extended period of lower-than-normal inventory due to Exxon. Mobil idle gasoline production equipment. 12/16/2015 California Energy Commission Data through November 27, 2015 13

Northern Calif. Gasoline Inventory Current vs. 5 -year High-Low Band Source: California Energy Commission analysis of Petroleum Industry Information Reporting Act data. Data through November 27, 2015 12/16/2015 California Energy Commission 14

West Coast Foreign Gasoline Imports 12/16/2015 California Energy Commission 15

California Foreign Gasoline Exports 2015 exports have averaged 22. 0 TBD vs. 27. 1 TBD during 2014. 98. 6 percent of shipments originated from Northern California during 2015. 12/16/2015 California Energy Commission 16

Pacific Northwest Foreign Gasoline Exports 2015 exports have averaged 16. 5 TBD vs. 22. 9 TBD during 2014. 12/16/2015 California Energy Commission 17

Fuels-Under-the-Cap (FUTC) Tracking • Fuels-Under-the-Cap regulation went into effect January 1, 2015 • The Oil Price Information Service (OPIS) calculates a value for the FUTC obligation each business day, California Cap-at-the-Rack (CAR) • Assessment valuation uses price of carbon x carbon intensity of the transportation fuel • Winter CARB reformulated gasoline with 10 percent ethanol • Summer CARB reformulated gasoline with 10 percent ethanol • CARB diesel fuel • Majority of fuel providers have elected to use the daily OPIS CAR calculation for inclusion in their bills of lading at the distribution terminal • Either as a line item or embedded in the price • Some marketers are calculating their own FUTC assessment and including in the overall price of the fuel 12/16/2015 California Energy Commission 18

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Retail Fuel Price Tracking Observations • Gasoline • • • From December 31, 2014 to December 15, 2015 the gap between the California retail gasoline price and other Western states has ranged between an increase of 1. 5 to 23. 6 cents per gallon The calculated FUTC assessment by OPIS has averaged 10. 2 cents per gallon over the same period and lies within the range of retail price differential change Even greater differentials are attributed to increased tightness in the California gasoline market caused by refinery issues - crude oil prices have also rebounded and stabilized but are not a contributing factor to the retail price differential • Diesel Fuel • • From December 31, 2014 to December 15, 2015 the gap between the California retail diesel fuel price and other Western states has ranged between a decrease of 1. 3 and an increase of 18. 9 cents per gallon The calculated FUTC assessment by OPIS has averaged 13. 0 cents per gallon over the same period and lies within the range of retail price differential change 12/16/2015 California Energy Commission 23

Questions? Source: Michael Zwahlen, Sacramento Press 12/16/2015 California Energy Commission 24

Additional Charts 12/16/2015 California Energy Commission 25

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