Demand for oil is expected to fall slightly to an average 85.1 million barrels a day worldwide in 2009. World oil consumption was 85.91 million barrels a day in 2008. (Source: U.S. Energy Information Administration, Short-Term Energy Outlook, released Jan. 13, 2009)
The United States uses petroleum more for transportation needs (70 percent of total demand) than heat and power. As a result, demand peaks in the summer as people travel more, the opposite of most of the rest of the world where demand for oil peaks in the coldest months. (Source: U.S. Energy Information Administration)
U.S. petroleum consumption averaged an estimated 19.5 million barrels per day in 2008, and in 2009 that figure is expected to drop to 19.1 million barrels per day. (Source: U.S. Energy Information Administration, Short-Term Energy Outlook, released Jan. 13, 2009)
West Texas Intermediate spot oil prices averaged $99.55 per barrel in 2008, up sharply from $72.30 per barrel in 2007. They are expected to drop even more in 2009, to $43.25. (Source: U.S. Energy Information Administration, Short-Term Energy Outlook, released Jan. 13, 2009)
There were 250.8 million registered vehicles in the United States in 2006, of which 135.4 million were passenger vehicles. (Source: U.S. Bureau of Transportation Statistics)
The average passenger car used 554 gallons, traveled 12,400 miles and had a fuel economy of 22.4 miles per gallon in 2006. (Source: U.S. Bureau of Transportation Statistics)
U.S. gasoline demand averaged 8.98 million barrels per day in 2008 – approximately 390 million gallons per day, or about 35 million fill-ups per day – and is projected to be 8.89 million barrels per day in 2009.
(Source: U.S. Energy Information Administration, Short-Term Energy Outlook, released Jan. 13, 2009)
U.S. demand for gasoline significantly increases beginning every February, and peaks in August. (Source: U.S. Energy Information Administration)
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U.S. oil production in 2008 was an estimated 4.93 million barrels per day and is expected to increase to 5.25 million barrels per day in 2009. (Source: U.S. Energy Information Administration, Short-Term Energy Outlook, released Jan. 13, 2009)
In the U.S., ethanol accounted for 0.60 million barrels per day of the U.S.’s 19.5 million barrels per day of supply. (Source: U.S. Energy Information Administration, Short-Term Energy Outlook, released Jan. 13, 2009)
The U.S. imported 12.9 million barrels per day of crude oil and finished petroleum products in 2008. Imports account for approximately two-thirds of U.S. petroleum supply. (Source: American Petroleum Institute)
The top five importers of petroleum (crude oil and finished products) to the United States are:
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Canada (2.18 million barrels per day)
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Saudi Arabia (1.49 million barrels per day)
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Mexico (1.20 million barrels per day)
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Venezuela (1.14 million barrels per day)
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Nigeria (0.98 million barrels per day)
(Source: American Petroleum Institute, Jan.-Oct. 2008 averaged data)
The United StatesU.S. imports half of its oil from non-OPEC countries: 53 percent of total imports came from OPEC; only 22 percent of total imports came from Persian Gulf countries. (Source: American Petroleum Institute, Jan.-Oct. 2008 averaged data)
The top five importers that accounted for more than one-third of all U.S. petroleum consumed are:
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Canada (11.2 percent)
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Saudi Arabia (7.9 percent)
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Venezuela (6.0 percent)
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Mexico (4.8 percent)
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Nigeria (5.1 percent)
(Source: American Petroleum Institute, Jan.-Oct. 2008 averaged data)
There are 7 to 8 billion barrels of oil tied up in worldwide stocks at any given time, from the wellhead to the consumer, filling tankers, pipelines, railcars, trucks and linking all of the markets. (Source: U.S. Energy Information Administration)
Holding inventory costs money – approximately $1.50 a barrel per month for oil if a company owns the tank storage facility and $4 per barrel per month if the storage is rented. For gasoline, the costs are approximately $2 and $6, or about 1 cent per gallon per month if the storage space is rented. Thus, companies try to manage their inventories as efficiently as possible. (Source: U.S. Energy Information Administration)
The U.S. Strategic Petroleum Reserve (SPR) is the largest stockpile of government-owned emergency crude oil in the world. It was established in 1975 in the aftermath of the 1973-74 oil embargo to provide emergency crude oil supplies for the U.S. The oil is stored in underground salt caverns in Texas and Louisiana – plus a planned expansion in Mississippi. (Source: U.S. Department of Energy)
As of January 6, 2009, the SPR held 701.9 million barrels – 422.4 million barrels of sour crude oil and 279.5 million barrels of sweet crude oil. Its capacity is approximately 727 million barrels. Following passage of the Energy Policy Act of 2005, the SPR was authorized to expand to a 1 billion barrel capacity, and President Bush announced in January 2007 that it should be expanded even further – to 1.5 billion barrels. (Source: U.S. Department of Energy)
The maximum drawdown capability of the SPR is 4.4 million barrels per day. It would take 13 days from the time a presidential decision were made to tap the reserves for oil to enter the U.S. market. (Source: U.S. Department of Energy)
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The largest refinery in the United States is the ExxonMobil Baytown, Texas, facility, which processes 557,000 barrels of crude oil per day. However, in 2006, Royal Dutch Shell announced that it intended to make the Motiva refinery in Port Arthur, Texas, the largest in the United States. The company said it intended to increase capacity to 610,000 barrels per day in 2010. (Source: U.S. Energy Information Administration, published news reports)
Planned periodic shutdowns of refineries, called “turnarounds,” allow for the regular maintenance, overhaul, repair, inspection, and testing of plants and their process materials and equipment. They are scheduled at least 1 to -2 years in advance, and usually when demand for refined product is at its lowest level, typically early in the year. At this time, refineries also convert their “crackers” so that they can refine summer-blend fuel. (Source: American Petroleum Institute)
The length of a refinery turnaround is typically 1 to 4 weeks, depending on the unit and the amount of maintenance that needs to be done. The industry average is about four years between turnarounds for catalytic cracking units. (Source: American Petroleum Institute)
The total number of U.S. refineries has been significantly reduced since 1980. Approximately half of the U.S. refineries have closed since then; today there, there are 150 operational refineries in United States. The last major refinery built in the United States was in 1976. (Source: U.S. Energy Information Administration)
Despite the precipitous drop in the number of refineries operating in the United States, domestic refining capacity has not declined by an equal percentage. Increased in facility size and improvements in efficiencies has offset much of the lost physical capacity of the industry. In 1982 (the earliest data provided), the United States operate 301 refineries with a combined capacity of 17.889 million barrels of crude oil each calendar day. In 2008, the nation operated 150 refineries with a combined capacity of 17.593 million barrels per calendar day. This translates into a per facility capacity increase of 97%, from 59,431 barrels per day to 117,286 barrels per day. (Source: U.S. Energy Information Administration)
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Shipping oil from Venezuela to the U.S. takes approximately 6-8 days (roundtrip); shipping oil from the Middle East to the United States takes between 40 and 45 days (roundtrip). During this journey, the price – and ownership – of the oil can change a number of times. (Source: American Petroleum Institute)
Crude oil from the Middle East is moved mainly by Very Large Crude Carriers (VLCCs) capable of delivering 2 million barrels per trip. (Source: U.S. Energy Information Administration)
The first oil pipeline in the United States was built in 1865, following the discovery of oil in Pennsylvania. Today, pipelines are the most important petroleum supply line in the United States for transporting crude oil, refined fuel and raw materials. Pipelines move nearly two-thirds (66 percent) of the ton-miles of oil transported annually. The rest is transported via water carriers (28 percent), trucks (4 percent) or rail (2 percent). (Source: Association of Oil Pipe Lines)
Product pipelines, which range in size from eight inches to over 30 inches, transport more than 50 refined petroleum products such as: various grades of motor gasoline, home heating oil, diesel fuel, aviation fuel, jet fuels and kerosene. (Source: Association of Oil Pipe Lines)
Interstate pipelines deliver more than 540 billion gallons of petroleum each year, of which 59 percent is crude oil; the remaining is refined product. The cost to transport a barrel of refined gasoline from Houston to the New York harbor is about $1, which equates to about 2.5 cents per gallon. (Source: Association of Oil Pipe Lines)
The Colonial Pipeline is the major product pipeline that stretches from Texas to New Jersey, transporting almost 40 different formulations of gasoline alone – different grades of each mandated type of gasoline, the requirements for which vary seasonally and regionally. Liquefied ethylene, propane, butane, and some petrochemical feedstocks are also transported through oil pipelines. (Source: Association of Oil Pipe Lines)
Product moves through pipelines at three to eight miles per hour (roughly walking pace) depending upon line size, pressure, and other factors such as the density and viscosity of the liquid being transported. At these rates, it takes from 14 to 22 days to move liquids from Houston to New York City. (Source: Association of Oil Pipe Lines)
There are approximately 200,000 miles of oil and refined product pipelines in the United States; they are in all 50 states. (Source: Association of Oil Pipe Lines)
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Petroleum products may be sold at any of the following levels:
- Spot market market – refers to the one-time sale of a quantity of product "on the spot," in practice typically involving quantities in thousands of barrels at a convenient transfer point, such as a refinery, port, or pipeline junction. Spot prices are commonly collected and published by a number of price reporting services.
- Terminal, or “rack” – sales of product by the truckload (typically about 8,000 to 9,000 gallons) at the loading rack of a product terminal, supplied from a refinery, pipeline, or port.
- Dealer tankwagon, or “DTW” – sales of a truckload or less of product, delivered into storage at a retail outlet.
- Retail – sales to the consumer, normally occurring at a service station, convenience store, or other retail outlet. (Larger consumers, such as commercial or government vehicle fleets, may buy directly from wholesalers in larger quantities.)
(Source: “Gasoline Price Pass-through,” published January 2003 by the U.S. Energy Information Administration)
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The federal excise tax on gasoline is 18.4 cents per gallon and 24.4 cents per gallon for diesel fuel.
Motor gasoline taxes averaged 45.0 cents per gallon in January 2009, including the 18.4 cents per gallon in federal taxes. (Source: American Petroleum Institute)
Diesel fuel taxes averaged 50.8 cents per gallon in January 2009, from a high of 70.6 cents per gallon in Hawaii to a low of 24.4 cents per gallon in Alaska. (Source: American Petroleum Institute)
The states with the highest gasoline taxes, as of January 2009, are:
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New York (59.7 cents per gallon)
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Washington (55.9 cents per gallon)
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California (53.7 cents per gallon)
The states with the lowest gasoline taxes, as of January 2009, are:
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Alaska (18.4 cents per gallon)
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Georgia (30.8 cents per gallon)
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Wyoming (32.4 cents per gallon)
(Source: American Petroleum Institute)
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With 42 gallons in each barrel of oil, a $1 change in the price of a barrel of oil roughly translates to roughly a 2.4-cent change per gallon at the pump.
U.S. retail gasoline prices averaged $3.25 in 2008, and are expected to average $1.87 per gallon in 2009. Diesel fuel averaged $3.79 per gallon in 2008 and is expected to drop to $2.27 per gallon in 2009. (Source: U.S. Energy Information Administration, Short-Term Energy Outlook, released Jan. 13, 2009)
Estimates showed that the price “pass-through” from the spot to the retail market is complete within two-and-one-half months, with about 50 percent of the change occurring within two weeks and 80 percent within four weeks. The average speed of pass-through is significantly more rapid for diesel fuel, possibly reflecting fewer middlemen, on average, transacting for each gallon of diesel fuel as opposed to gasoline. (Source: "Gasoline Price Pass-through," published January 2003 by the U.S. Energy Information Administration)
Price volatility has been extreme the past eight years. Crude oil prices have fluctuated between a low of $18.28 in November 2001 to a high of $147.27 per barrel in July 2008. Gasoline prices fluctuated between a low of $1.06 in December 2001 to a high of $4.11 in July 2007. (Source: AAA/U.S. Energy Information Administration data)
Since final implementation of the Clean Air Act Amendments in 2000, the seasonal transition to summer-blend fuel has helped gasoline prices significantly before they reached their peak.
Year 1st Week in Feb. Peak Seasonal Price Increase
2008 $2.978 (Feb. 4) $4.104 (July 21) +112.6
2007 $2.191 (Feb. 5) $3.218 (May 21) +102.7
2006 $2.342 (Feb. 6) $2.947 (May 15) +60.5
2005 $1.909 (Feb. 7) $2.280 (April 11) +37.1
2004 $1.616 (Feb. 2) $2.064 (May 24) +44.8
2003 $1.527 (Feb. 3) $1.728 (Mar. 17) +20.1
2002 $1.116 (Feb. 4) $1.413 (Apr. 8) +29.7
2001 $1.443 (Feb. 5) $1.713 (May 14) +27.0
2000 $1.325 (Feb. 7) $1.681 (June 19) +35.6
(Source: U.S. Energy Information Administration)
While the majority of the roughly 115,000 convenience stores selling gasoline are “branded” outlets selling a specific major oil company's brand of fuel, three (ExxonMobil, BP and Conoco Phillips) of the five major integrated oil companies are in the process of selling all of their retail assets, leaving only Shell and ChevronTexaco owning stores. NACS estimates that today less than 2 percent of all convenience stores are owned by major oil companies, and once the sale of these stores is complete, less than one percent will be owned by the major integrated oil companies.
The major oil companies own very few retail fueling outlets, but many stations do have contracts to sell a specific brand of fuel.
The top branded retail outlets by company in 2007 are:
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Shell Oil Products U.S. (14,000 sites)
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BP America Inc. (13,000 sites)
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ExxonMobil (10,904 sites)
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Chevron Products Co (9,731 sites)
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ConocoPhillips (8,750 sites)
(Note: These figures include all gasoline retailers, not just convenience stores) (Source: National Petroleum News’ MarketFacts 2008)
There were 161,768 total retail fueling sites in the United States in 2008. This is a steep and steady decline since 1994, when the station count topped 202,800 sites. (Source: National Petroleum News’ MarketFacts 2008)
As of December 31, 2008, there were 114,673 convenience stores selling motor fuels in the United States. This represents 79 percent of the 144,875 convenience stores in the country. (Source: NACS/TDLinx)
The number of convenience stores selling motor fuels has increased significantly in 30 years:
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2007: 114,673 stores (79 percent of all stores)
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1977: 11,932 stores (28 percent of all stores)
(Source: NACS data)
Most convenience stores selling motor fuels are one-store operations. 89,567 of the country’s 114,673 convenience stores selling fuels are one-store operations. By contrast, less than 2 percent are owned and operated by the integrated oil companies, of which only two (ChevronTexaco and Shell) still are committed to selling fuel at the retail level. (Source: NACS data)
As of September 2008, there were 77 hypermarket companies in the United States operating at least one retail gasoline site. These companies represented over 4,495 “hypermart” sites (big-box retailers) and sold 13.9 billion gallons of gasoline. These sites sell approximately 258,000 gallons per month, about twice the volume of a traditional fuel retailer. Overall, the fuel site growth for hypermarts has slowed down to an annualized rate of 224 sites for 2008. The supermarket subset has grown the most over the past year, at a 5.5 percent rate. (Source: Energy Analysts International, “Outlook for the U.S. Fuels and Hypermarts in Retail Study”)
Retailer gross margins for motor fuels have eroded over the past two decades, and in 2007 hit 5.2 percent, their lowest level, on a percentage basis, since 1983 when they were 5.0 percent. (Source: NACS data)
The Oil Price Information Service (OPIS) reports that motor fuels gross margins in 2008 were 18.0 cents. This is several cents per gallon more than in previous years and is because retailers generally make more money when prices are falling and lose money when they rise. In 2008, prices rose about $1.00 per gallon (from $3.109 per gallon on January 7 to $4.114 on July 7), and then fell $2.50 per gallon ($4.114 per gallon on July 7 to $1.613 on December 29). (Sources: OPIS, U.S. Energy Information Administration)
NACS estimates that retailer expenses, including credit card fees, make up 13 to-15 cents per gallon, meaning that retailers with gross margins of 18 cents per gallon averaged approximately 3 to -5 cents in profit per gallon sold in 2008.
Motor fuels sales in convenience stores totaled $408.9 billion in 2007, a more than four-fold increase from the $93.4 billion in sales just a decade earlier (1997). (Source: NACS data)
Motor fuels sales accounted for more than two-thirds of the convenience store industry's sales in 2007 (70.8 percent). However, because of low margins, motor fuels sales contributed only about one-third of total store gross margins dollars (34.5 percent). (Source: NACS data)
Motor fuels sales per convenience store have increased:
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2006: 121,982 gallons/month
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1996: 84,500 gallons/month
(Source: NACS data)
Sales of premium and mid-grade have declined over the past decade as consumers trade down octane levels when prices increase. This leads to some consumers not returning to higher octanes as prices decline. The sale of mid-grade and premium has declined from 30.2 percent of gasoline gallons purchased in 1998 to 15.9 percent by 2006, before bouncing back slightly in 2007.
Percent of Total Gasoline Gallons Sold
Year Regular Mid-grade Premium
2007 81.6 10.7 7.7
2006 84.1 9.3 6.6
2005 81.2 10.7 7.7
2004 81.4 10.2 7.2
2003 78.5 12.1 9.4
2002 77.3 13.0 9.7
2001 79.2 12.5 8.3
2000 78.1 13.1 8.8
1999 73.3 14.4 12.4
1998 69.8 15.4 14.8
(Source: NACS data)
In 2007, gasoline theft cost the U.S. convenience store industry $134 million, a sharp decline from the $300 million reported in 2005 and the $237 million reported in 2004. The average loss per store was slightly more than $1,000, and that figure is conservative, since it is based on all convenience stores that sell gasoline, including those in states that mandate full-serve (New Jersey and Oregon) and stores in areas where prepay in the norm, such as California and many major metropolitan areas. Gasoline theft has declined since September 2005 when more stations began mandating prepay for fuel. (Source: NACS data)
In 2003, 18 percent of new supermarkets had gas pumps. And almost 62 percent of grocery stores scheduled to be constructed in 2004 included fueling in their blueprints. (Source: Food Marketing Institute)
Factoring in all gasoline sales in 2007 transactions – whether the customer paid by cash, check or by either debit or credit card – credit card fees averaged 4.4 cents per gallon. When only examining credit and debit card transactions, that cost per gallon escalated to as much as 10 cents per gallon in 2008, depending on the transaction and the card used. (Source: NACS data)
In 2007, convenience store industry credit card fees ($7.6 billion) more than doubled convenience store industry profits ($3.4 billion). (Source: NACS data)
Americans spent an estimated $24.2 billion using credit cards and $33.74 billion using debit cards in 2008. (Source: The Nielson Report, November 2008)
Between 60 and 70 percent of all transactions at the pump are by plastic – either debit or credit card – but many markets see credit usage at 80 percent or more, with some stores seeing 100 percent payment by plastic (Sources: NACS 2009 Consumer Fuels Report, member surveys)
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Balkanization: The end-result of the patchwork quilt of unique fuels required throughout the United States. Unique fuel regulations have created gasoline zones across the U.S. where only certain fuels can be sold. This "Balkanization" of the fuel supply has made it more expensive and difficult to produce and deliver gasoline.
Boutique fuels: Unique gasoline blends required for a specific region or metropolitan area of the U.S. Prior to 1990, six types of gasoline were sold in the U.S. Today, there are approximately 20 unique gasoline formulations manufactured for, and sold within, specific markets throughout the United States that are mandated by federal, state, and local governments. These "boutique" fuels are not interchangeable with fuel blends sold in other areas of the country. Federal law limits the number of boutique fuels authorized for use in the nation, but does not include state biofuel mandates in its definition of “boutique fuels.” Consequently, states have proceeded to require the use of certain biofuel products. These mandates pose similar challenges to the motor fuel supply and distribution system as other types of regulated “boutique fuels.”
Branded retail outlet: A retailer that sells a motor fuel with the name of a major oil company, but is not necessarily owned (and is usually not owned) by that oil company. Branded retailers benefit from marketing and advertising support, consumer brand loyalty, and priority access to gasoline supplies. In return, the branded marketer pays a surcharge for the use of the brand and the benefits that come with it.
Capacity: A measure of the maximum crude oil a refining facility can process in a given time period, usually expressed as “barrels per day.” Capacity is often referenced when assessing how close a manufacturer is to operating at peak efficiency, based on 24-hour operations. Domestic refineries currently operate at between 93 and 95 percent of capacity (which in reality is full capacity given refinery downtime for maintenance). By contrast, the average American industry operates at approximately 82 percent of capacity.
Federal Reformulated Gasoline: Also known as RFG. The 1990 Clean Air Act required the nation's most polluted metropolitan areas to sell a special blend of gasoline during summer months in order to reduce the emissions of ozone forming volatile organic compounds (VOCs) and toxic air pollutants. The regulations require specific fuel content levels for oxygen, benzene and aromatics and set performance standards for nitrogen oxides, VOCs and toxics.
Fungible: Interchangeable. The U.S. gasoline system was designed to facilitate the efficient flow of gasoline to all regions of the nation, allowing the same gasoline formulation to be sold in all markets. The system is no longer fungible, with approximately 20 unique gasoline formulations required in specific markets throughout the United States.
OPEC: The Organization of Petroleum Exporting Countries. OPEC is an international organization of 11 developing countries – from Africa, Asia, the Middle East, and Latin America – that are heavily reliant on oil revenues as their main source of income. OPEC's members – Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela – collectively supply about 40 percent of the world's oil output, and possess more than three-quarters of the world's total proven crude oil reserves. Twice a year, or more frequently if required, the oil and energy ministers of OPEC member countries meet to decide on its output level, and consider whether any action to adjust output is necessary in the light of recent and anticipated oil market developments.
PADD: Petroleum Administration for Defense Districts. The U.S. Department of Energy divides the United States into five regions for planning purposes. The result is a geographic aggregation of the 50 states and the District of Columbia into five Districts, each operating essentially as its own market. The five districts are: PADD I (East Coast, PADD II (Midwest), PADD III (Gulf Coast), PADD IV (Rocky Mountain) and PADD V (West Coast).
(Graphic courtesy of Association of Oil Pipe Lines)
Pass-through: The time from which wholesale price changes fully reach consumers. Wholesale gasoline price increases — or decreases — paid by retailers are not immediately passed on to consumers, but are spread over a period of time. A large portion of the price change is passed through immediately, with the rest spread over a period of time that could be as long as eight weeks. Pass-throughs help minimize the price volatility of gasoline.
Refinery: Where crude oil is refined into a specific blend of gasoline or other fuels (such as diesel, kerosene, etc.) or for other oil-based applications. There are currently only 150 refineries in the U.S. — less than half the number 20 years ago. In addition, production capacity has decreased from 18.6 to 16.5 million barrels per day since 1981. No new refinery has been built in the United States since 1976
Replacement costs: The cost to acquire the next shipment of fuel. This price is almost always different than the cost of the gas that retailers have in their tanks. Because of the enormous volume of fuel sold — a typical store sells more than 100,000 gallons of gas a month — retailers must price their fuel based on their estimated cost of the next delivery. Even slight wholesale price variations can increase a retailer's replacement cost by hundreds — or even thousands — of dollars. The importance of replacement costs is particularly acute for smaller businesses, which have less cash on hand to meet payments.
Retailer: Refers to convenience stores that sell motor fuels. As of Dec. 31, 2008, a total of 114,675 convenience stores were selling motor fuels in the U.S. (79 percent of country's 144,875 convenience stores). These retailers are also referred to as "petroleum marketers."
Spot market: This market is usually comprised made up of motor fuel that has not been pre-allocated to the integrated or branded outlets. Retailers and other fuel distributors purchase fuel at terminals, or "racks," where costs fluctuate based on current prices.
Summer-fuel blends: Several state and local governments have developed fuel regulations to control for the formation of smog during summer months. These generally require that gasoline sold during the summer have a lower Reid vapor pressure (RVP), which measures the gasoline's potential to emit vapors, which contribute to the formation of smog.
Tight supplies: Describes a situation in which demand for gasoline — or crude oil — exceeds the supply available, and prices rise based on this supply/demand imbalance. Also known as “market shorts” or “upsets.”
Ultra Low Sulfur Diesel (ULSD): ULSD is a clean-burning diesel fuel that is defined by the United States Environmental Protection Agency (EPA) to have a maximum sulfur content of 15 parts per million (ppm). ULSD will eventually replace the current on-highway diesel fuel, known as Low Sulfur Diesel (LSD), which can have as much as 500 ppm sulfur content. ULSD is required for use in vehicles that will be equipped with advanced emission control systems starting with the 2007 model year, and is being phased into use between 2006 and 2010.
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