Slide1: Current Energy Market Drivers & Impact on Hydrocarbon Chemical Prices Chemical Producers and Distributors Association
July 26, 2005 Terence J. Brennan
ExxonMobil Chemical Company This presentation includes forward-looking statements. Actual future conditions (including economic conditions, energy demand, and energy supply) could differ materially due to changes in technology, the development of new supply sources, political events, demographic changes, and other factors discussed herein (and in Item 1 of ExxonMobil’s latest report on Form 10-K. This material is not to be reproduced without the permission of Exxon Mobil Corporation.
Slide2: Near Term Energy Market Drivers
Crude Price Trend: Crude Price Trend Data Source: Platts
2004 Demand Growth Highest in Over 20 Years: 2004 Demand Growth Highest in Over 20 Years Data Source: International Energy Agency (IEA) Year-on-Year Global Oil Demand Growth MBD 2005Outlook (IEA)
Little Spare Crude Production Capacity: Little Spare Crude Production Capacity U.S. DOE Outlook 2005
World Oil Inventories: World Oil Inventories Data Source: International Energy Agency(IEA) OECD: Organization of Economic Cooperation and Development
North American Natural Gas Price Trend: North American Natural Gas Price Trend Data Source: Platts
NA Gas Price Supported by Higher Crude: NA Gas Price Supported by Higher Crude Data Source: Platts
U.S. Demand Outpacing Domestic Supply: U.S. Demand Outpacing Domestic Supply Data Source: US DOE Production Consumption
Near Term Energy Market Influences: Near Term Energy Market Influences Crude
Demand growth driven by global economic recovery
Little spare crude production capacity
Reduced inventories
Increased supply security concerns
North American Natural Gas
Demand growth driven by power sector
Higher crude price raising cost of gas alternatives
New increments of supply are higher cost
Slide11: Impact on Hydrocarbon Chemical Prices
Crude Price Trend: Crude Price Trend Data Source: Platts
US Gasoline Price Trend: US Gasoline Price Trend Gasoline -Crude Price Spread Gasoline WTI Crude Data Source: Platts
US Gasoline Price Trend: US Gasoline Price Trend Data Source: Platts
Aromatics: Aromatics Data Source: Chemical Market Associates, Inc (CMAI) Spot Mixed Xylenes Refiner’s Gasoline Blending Alternative
Propylene: Propylene Polymer Grade Propylene Refiner’s Gasoline Blending Alternative Via Alkylation Data Source: Chemical Market Associates, Inc (CMAI)
Chemical Feedstock Overview: Chemical Feedstock Overview Basic chemical prices generally trend with cost of supply
Hydrocarbon feedstock is single largest cost component
Hydrocarbon feedstock costs are linked to fuel product prices
Normally purchased out of alternative fuel product dispositions
Fuel product prices move with crude, from which they are produced
Primary fuel product markets are large and fairly efficient
Spot prices respond quickly to crude price movements
Prices play critical role in balancing supply and demand
Encourage new, higher cost tiers of supply
Discourage lower value tiers of demand