1. 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

2. 2 Presentation Topics zConsumption of Transportation Fuels zProduction of Transportation Fuels zMajor Challenges Facing the Market zState Policies and Programs

3. 3 Use of Petroleum Fuels Continues to Grow

4. 4 Usage Influenced by zPopulation growth zConsumer taste zCommuting patterns-- the location of residences and work

5. 5 Usage Influenced by zTechnological change zRegulations zThe economy zPrice of fuel

6. 6 Consumption of Gasoline Is Expected to Increase zIncrease in Vehicle Fuel Efficiency has leveled off zGrowth in Vehicle Miles Traveled (VMT) will directly result in higher consumption

7. 7 Vehicle Fuel Efficiency

8. 8 Vehicle Miles Traveled

9. 9 Statewide Gasoline Fuel Demand zCEC Staff forecast 22% increase in consumption between 2000 and 2010 zGrowth from over 14 billion in 2001 to over 17 billion gallons annually zAn increase of over 3 billion gallons

10. 10 Forecast of Gasoline

11. 11 Forecast of Demand for Diesel is Similar to Gasoline

12. 12 California Refinery Capacity is Located in Both the North and South

13. 13 Currently zRefineries have little spare capacity zRefineries report no large scale expansion plans

14. 14 California Refinery Capacity Has Increased through: zHigher Capacity Utilization z“De-bottlenecking” Existing processes

15. 15 Growth in Supply Expected to Come From zA somewhat slowing, but continuing de- bottlenecking” of existing processes zGrowth in imports of finished products and blending components

16. 16 Major Challenges Facing The California Transportation Fuel Market zInternational Events and World Economy zUncertainty surrounding the phase-out of MTBE and introduction of ethanol zChanging fuel specifications including Ultra-low Sulfur Diesel

17. 17 World Events and World Economy zSupply and Price of Oil will continue to react to International Events zA 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

18. 18 Gasoline Price Volatility

19. 19 Uncertainty Surrounding the Phase-out of MTBE and Use of Ethanol in Gasoline zCost Impacts zSupply Concerns zEthanol Logistics

20. 20 California Ethanol Demand

21. 21 State Policies, Programs and Activities zReports (recent) yCosts and Benefits of Biomass-to-Ethanol Industry yFull Fuel Cycle Efficiency Study yMTBE Phase-out Quarterly Report yUSA Ethanol Survey

22. 22 State Policies, Programs and Activities zReports (forthcoming) yJoint CEC-ARB Study: Strategies to Reduce Petroleum Dependency (AB 2076) yStrategic Fuel Reserve Feasibility Study (AB 2076) yGulf-Coast to California Pipeline Feasibility Study (AB 2098)

23. 23 State Policies, Programs and Activities zTransportation Technology Programs yGreen Star Vehicle Program (Up to $3,000 per vehicle) yAlternative Fuel Vehicle Infrastructure ($2.5 million) yElectric Vehicle Infrastructure Program (Up to $750 with another $750 in matching dealer incentives)

24. 24 Conclusions zConsumption will grow more than our ability to produce petroleum products in- state zImports of petroleum products and gasoline blending components will rise zOpportunities for alternative fuels will grow