2. Crude Oil, Heating Oil, and Propane Outlook Briefing for the State Heating Oil and Propane Program Conference Asheville, NC Mike Burdette Petroleum Division, Energy Information Administration August 11, 2003

3. EIA’s Preliminary Winter Fuels Outlook World Oil Markets U.S. Heating Oil U.S. Propane

4. WTI Crude Oil Price: Potential for Volatility Around Base Case Sources: History: EIA; Projections: Short-Term Energy Outlook, August 2003.

5. Annual World Oil Demand Growth 1998-2005 Sources: History: EIA; Projections: Short-Term Energy Outlook, August 2003.

6. Quarterly World Oil Demand Growth From Previous Year Sources: History: EIA; Projections: Short-Term Energy Outlook, August 2003. 200120022003200420002005

7. U.S. Petroleum Demand Sources: History: EIA; Projections: Short-Term Energy Outlook, August 2003.

8. Will OPEC Keep Markets Adequately Supplied? History Projections Sources: History: EIA; Projections: Short-Term Energy Outlook, August 2003.

9. Will OPEC Keep Markets Adequately Supplied? History Projections Sources: History: EIA; Projections: Short-Term Energy Outlook, August 2003.

10. OECD Commercial Crude Oil Inventories Expected to Recover to Normal Range Sources: EIA, Short-Term Energy Outlook, August 2003 End of Month Inventories

11. When Will U.S. Crude Inventories Recover? Sources: EIA, Short-Term Energy Outlook, August 2003 History Million Barrels

12. Crude Oil Outlook Conclusions U.S. and global oil demand continues to recover Iraqi and non-OPEC production is expected to rise OPEC intends to adjust as necessary to maintain prices near current levels OECD inventories should return to low end of normal range by year’s end WTI prices expected to ease below $30 by year- end, possibly as low as $26 by end of 2004

13. Distillate Prices Generally Follow Crude Oil Spot West Texas Intermediate East Coast Retail On-Highway Diesel Fuel East Coast Residential Heating Oil

14. Distillate Prices Generally Follow Crude Oil Spot West Texas Intermediate East Coast Retail On-Highway Diesel Fuel East Coast Residential Heating Oil ?

15. East Coast Distillate Stocks Starting out Low Source: Energy Information Administration Normal Range 2000-01 1999-00 2002-03 2001-02

16. Distillate Demand Last Year Was Higher Than Forecast Sources: History: EIA; Projections: Short-Term Energy Outlook, August 2002, August 2003.

17. Last Winter’s Weather Was Close to Average Sources: History: EIA; Projections: Short-Term Energy Outlook, August 2002.

18. Fuel Oil Demand Influenced by Natural Gas Prices Sources: History: EIA; Projections: Short-Term Energy Outlook, August 2003.

19. Distillate Demand Expected to be Similar to Last Winter’s Sources: History: EIA; Projections: Short-Term Energy Outlook, August 2003.

20. Distillate Production Likely Higher Than Last Winter Sources: History: EIA; Projections: Short-Term Energy Outlook, August 2003.

21. Distillate Imports Were Stronger Last Winter Sources: History: EIA; Projections: Short-Term Energy Outlook, August 2003.

22. Distillate Supply/Demand Balance Reflected in Spreads Spot Heating Oil Price WTI Price

23. Distillate Stocks Expected to Remain Low Sources: History: EIA; Projections: Short-Term Energy Outlook, August 2003. Actual Forecast

24. Winter Crude Oil and Distillate Price Outlook Sources: History: EIA; Projections: Short-Term Energy Outlook, August 2003. Residential Heating Oil Wholesale Distillate Crude Oil (WTI)

25. Consumer Prices and Expenditures – Heating Oil (Northeast) 2000- 2001 2001- 2002 2002- 2003 2003- 2004 Actual Forecast (est.) Consumption (gals.) 731584711692 Average Price$1.37$1.10$1.31$1.29 Expenditures$999$643$931$893

26. Heating Oil Outlook Conclusion Distillate stocks are likely to be low going into the winter Prices likely to average similar or less than last winter, given current crude oil price forecast Residential customers’ fuel requirements should be similar to last winter, if weather is normal Slightly lower prices and volumes could yield savings compared to last year

27. Propane Prices Follow Crude Oil

28. Propane Prices Follow Crude Oil and Natural Gas

30. Total U.S. Propane Production Lower Than Recent Years Source: Energy Information Administration 4-Week Average

31. Propane Production by Source Source: Energy Information Administration Tropical StormsRefinery Outages &Turnarounds High Natural Gas Prices

32. Gas Plant Production by PAD District Source: Energy Information Administration

33. U.S. Propane Imports Source: Energy Information Administration 4-Week Average

34. U.S. Propane Imports Source: Energy Information Administration Waterborne

35. U.S. Propane Exports Source: Energy Information Administration Exports increase from U.S. Gulf Coast due to loss of supply from Venezuela.

36. Propane Demand is Highly Seasonal, But Fresh Supply is Not Source: Energy Information Administration

37. Propane Stock Build/Draw Source: Energy Information Administration As of Aug. 1

38. U.S. Propane Stocks Average Range Lower Operational Inventory = 18.5 Million Barrels Actual Forecast Source: Energy Information Administration

39. PAD District I Stocks (East Coast) Average Range Source: Energy Information Administration Actual

40. PAD District II Stocks (Midwest) Average Range Source: Energy Information Administration Actual

41. Average Range Source: Energy Information Administration PAD District III Stocks (Gulf Coast) Actual

42. Consumer Prices and Expenditures – Propane (Midwest) 2000- 2001 2001- 2002 2002- 2003 2003- 2004 Actual Forecast (est.) Consumption (gals.) 979803936902 Average Price$1.37$1.11$1.20 Expenditures$1,344$887$1,122$1,082

43. Propane Outlook Conclusion U.S. inventories likely to remain at low end of historic average range Propane prices should remain stable this winter -- but natural gas prices are the wild card Residential customers’ fuel requirements should be similar to last winter, if weather is normal Slightly lower prices and volumes could yield savings compared to last year

44. Gasoline Prices Ending Summer on the Upswing