1

California Transportation Fuel Demand and Production Outlook

& Issues

Pat Perez, Manager (pperez@energy.state.ca.us)Transportation Fuel Supply & Demand Office

CALIFORNIA ENERGY COMMISSION

6th California State Fleet Management Conference

October 31, 2001

Double Tree Hotel - Sacramento

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Presentation Topics

Consumption of Transportation FuelsProduction of Transportation FuelsMajor Challenges Facing the MarketState Policies and Programs

3

Use of Petroleum Fuels Continues to Grow

Annual California On-road Fuel Usage

0

2

4

6

8

10

12

14

16

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Year

Bill

ion

Gal

lon

s

Gasoline

Diesel

4

Usage Influenced by

Population growthConsumer taste Commuting patterns-- the location of

residences and work

5

Usage Influenced by

Technological change RegulationsThe economyPrice of fuel

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Consumption of Gasoline Is Expected to Increase

Increase in Vehicle Fuel Efficiency has leveled off

Growth in Vehicle Miles Traveled (VMT) will directly result in higher consumption

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Vehicle Fuel Efficiency

California Average Fleet Efficiency

0

5

10

15

20

25

Year 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Year

Mil

es

Pe

r G

all

on

8

Vehicle Miles Traveled

Vehicle Miles Traveled

0

50

100

150

200

250

300

350

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Year

Bill

ion

Mile

s

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Statewide Gasoline Fuel Demand

CEC Staff forecast 22% increase in consumption between 2000 and 2010

Growth from over 14 billion in 2001 to over 17 billion gallons annually

An increase of over 3 billion gallons

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Forecast of Gasoline

Projected Statewide Gasoline Demand

0

5

10

15

20

25

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Year

Bil

lio

n G

all

on

s -G

aso

lin

e

Gasoline

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Forecast of Demand for Diesel is Similar to Gasoline

0

5

10

15

20

25

2000 2020

Year

Bil

lio

n G

all

on

s

Diesel

Gasoline

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California Refinery Capacity is Located in Both the North

and South

South52%

North48%

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Currently

Refineries have little spare capacityRefineries report no large scale

expansion plans

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California Refinery Capacity Has Increased through:

Higher Capacity Utilization“De-bottlenecking” Existing

processes

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Growth in Supply Expected to Come From

A somewhat slowing, but continuing de-bottlenecking” of existing processes

Growth in imports of finished products and blending components

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Major Challenges Facing The California Transportation Fuel

Market

International Events and World Economy

Uncertainty surrounding the phase-out of MTBE and introduction of ethanol

Changing fuel specifications including Ultra-low Sulfur Diesel

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World Events and World Economy

Supply and Price of Oil will continue to react to International Events

A world-wide recovery or continued recession will directly impact the California transportation fuel market through the price of oil, impacts on the local economy, and price of gasoline

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Gasoline Price Volatility

California Gasoline Dealer Margins

(30)

(20)

(10)

-

10

20

30

40

50

01/06/97 04/28/97 08/25/97 12/22/97 04/13/98 08/03/98 11/23/98 03/15/99 07/05/99 10/25/99 01/28/00 05/12/00 10/02/00 01/22/01 05/14/01

Ce

nts

/Ga

llon

Dealer Margin

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Uncertainty Surrounding the Phase-out of MTBE and Use

of Ethanol in Gasoline

Cost ImpactsSupply ConcernsEthanol Logistics

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California Ethanol Demand

0

100

200

300

400

500

600

700

800

900

1000

Past Present Future A Future B

Mil

lio

n G

all

on

s p

er

Ye

ar

Past: 1980s - 1990s maximumPresent: mid-2001Futures : A- 6% in most (70%) CA gasoline by 2003B- 6% in all CA gasoline by 2003

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State Policies, Programs and Activities

Reports (recent) Costs and Benefits of Biomass-to-

Ethanol Industry Full Fuel Cycle Efficiency Study MTBE Phase-out Quarterly Report USA Ethanol Survey

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State Policies, Programs and Activities

Reports (forthcoming) Joint CEC-ARB Study: Strategies to

Reduce Petroleum Dependency (AB 2076)

Strategic Fuel Reserve Feasibility Study (AB 2076)

Gulf-Coast to California Pipeline Feasibility Study (AB 2098)

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State Policies, Programs and Activities

Transportation Technology Programs Green Star Vehicle Program (Up to

$3,000 per vehicle) Alternative Fuel Vehicle Infrastructure

($2.5 million) Electric Vehicle Infrastructure Program

(Up to $750 with another $750 in matching dealer incentives)

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Conclusions

Consumption will grow more than our ability to produce petroleum products in-state

Imports of petroleum products and gasoline blending components will rise

Opportunities for alternative fuels will grow