1. Petroleum Outlook: Increased Inter-PADD Movements Expected Joanne Shore Energy Information Administration API Annual Pipeline Conference Dallas, Texas April 2002 www.eia.doe.gov

2. Introduction Supply-Demand Fundamentals Drive Prices Regional Prices Reflect Regional Supply-Demand Balances & Distribution System Needs Future Regional Supply-Demand Balances

3. WTI Crude Oil Price: Uncertain Future, But Drivers Adding Upward Pressure Sources: History: EIA; Projections: Short-Term Energy Outlook, April 2002.

4. OPEC Discipline & Economic Recovery Tighten World Balance in 2002 *Total includes commercial and government stocks. Source: EIA

5. U.S. Supply/Demand Balance Follows World Sources: History: EIA; Projections: Short-Term Energy Outlook, April 2002.

6. Product Supply/Demand Balance Affects Wholesale Price Relative to Crude Oil Source: Reuters Apr-Aug ‘99 8 cents Apr-Aug ‘00 15cents Apr-Aug ‘01 16cents

7. Regional Supply/Demand Balances Affect Regional Prices Source: EIA

8. Recent Focus on Distribution System’s Ability to Help Restore Regional Imbalances Imports

9. Pipeline & Barge Movements of Light Products* Critical to Regional Supply Note: Light products are gasoline, distillate and jet fuel. Source: EIA, Petroleum Supply Monthly, 2001

10. Light Product Demand Growth Expected in All Regions Source: EIA

11. Potential Increases in Light Product Demand 2001-2007 Source: EIA

12. But How Will Supply Grow Relative to Demand? Source: EIA

13. Domestic Supply Is Expected To Grow in Aggregate Source: EIA Time Period Annual Average Shutdown Capacity(*) (MB/CD) Growth of Continuously Operating Capacity 1990-19951390.5% 1995-2000962.0% 2000-2007602.0% (*)Historical shutdowns are for years 1990-94, 1995-1999.

14. Size of Shutdowns Largest in PADD 2, But More Shutdowns Possible PADDNumber Total Shutdowns Share of 2000 Capacity Average Size (MB/CD)(Percent)(MB/CD) 17814.812 2 36110.030 3192984.016 435810.719 51440012.929 Refinery Shutdowns 1990-2000 Source: EIA

15. Potential Light Product Volume Changes 2000 - 2007 Note: Light products are gasoline, distillate & jet Source: EIA

16. MTBE Ban Refinery Impacts LOSS OF GASOLINE YIELD Substitute Ethanol for MTBE –But Only Need Half As Much Ethanol for Same Oxygen Remove “Light Ends” to Keep RVP Down Remove “Heavy Ends” to Keep DI Down (CA) BALANCE BY INCREASING: Crude Oil Throughput (utilization increase) “Outside” Clean Streams (Iso-octane, alkylate) Volume of Ethanol Used Product Imports If Available

17. RFG & Blending Component Imports May Not Increase Source: EIA

18. Illustrative MTBE Ban Impacts Light Product Volume Changes 2000 - 2007 Production Net Imports

19. Illustrative MTBE Ban Impact on Net Receipt Changes 2000 - 2007 Note: Light products are gasoline, distillate & jet Source: EIA

20. Conclusion Demand growth will continue to pressure supply Refinery growth is expected, but tight markets produce varying regional balance dynamics –PADD 3 key incremental supply source –Increasing flows to PADD’s 1 and 2 MTBE bans could pressure distribution system –Loss of gasoline production capability –Loss of imports –More distinct products to move –Increased inter-PADD movements