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MENA, MONEY & MOJO MENA, MONEY & MOJO

Presented byPresented by Tom Kloza, Chief Oil Analyst, OPISTom Kloza, Chief Oil Analyst, OPIS

"Political Correctness is a doctrine fostered by a delusional minority and by the mainstream media which holds forth the proposition that it is entirely possible to pick up a turd by the clean end."

Why I’m Mad at George Clooney

►Glibido

►Petrosclerosis

►Petronoia

►Pysteria

PEE-AT-THE-PUMPPEE-AT-THE-PUMP

Golden Gasoline: Use Your Pee for FuelGolden Gasoline: Use Your Pee for Fuel

A recent scientific advancement could see to it that a routine "pit stop" might someday kill two birds with one stone. Think about it - on long road trips you stop at gas stations to do what two things? Empty your bladder and fill your tank. One U.S. chemist has discovered a way for the two needs to come together in an efficient union. A new catalyst has the ability to extract hydrogen from your very own liquid gold.

Change Is Not Always SubtleChange Is Not Always Subtle

The Yin & Yang Of CrudeThe Yin & Yang Of Crude

Money is the biggest fundamentalMoney is the biggest fundamental► The crude oil futures & options market is now many times the

size it was when we marched off to the Iraqi War. It has increased exponentially in the last 20 years.

► Some of that money is speculative, like the “Dukes” in Trading Places, but some of it is very passive and very patient.

► Producers and refiners are the normal circuit breakers, but for now, many are foregoing a “hedging strategy”.

► Money isn’t just shaping oil prices. It is shaping every commodity, particularly those that can be moved internationally and represent a bet on China.

Follow the Money- CrudeFollow the Money- Crude

Follow the Money- GasolineFollow the Money- Gasoline

Follow the Money- DistillateFollow the Money- Distillate

Inaccurate Measurements 2010 Inaccurate Measurements 2010

Investment Banks Traditional Investment Banks Traditional View of Oil FuturesView of Oil Futures

Spare Capacity Falling, Untenable by YE 2013Spare Capacity Falling, Untenable by YE 2013

Gasoline SpendingGasoline Spending

The Truth About Pump Prices

Investment Banks Remain Bullish, But Not Every Investment Banks Remain Bullish, But Not Every Picture Comes Out The Way You Want It ToPicture Comes Out The Way You Want It To

Some Points to PonderSome Points to Ponder

Will Electric Vehicles ReallyWill Electric Vehicles Really Replace the combustible engine? Replace the combustible engine?

Source: General Motors

Some PredictionsSome Predictions► 2011 should be front end-loaded. China cool-down; might

take an “event” to light a fire for gasoline in the second half of the year. But beware 4Q2011/1Q2012!!!

► Plenty of refining capacity, but “margin management” overlaps with turnarounds. More than 2-million b/d of additional worldwide refining comes on board in the next year.

► Demand destruction was arrested in June. America can survive episodic visits to $3.75-$4 gal, but what about fatigue? July numbers soft spot or beginning of R?

► Expect extremes this decade.

► Financial market “spanking” changes the entire paradigm. But no curbs mean apocalyptic spike this decade.

Will Oil Markets Age Gracefully?Will Oil Markets Age Gracefully?

Everyone Views The World From Everyone Views The World From Their Own Unique Perspective Their Own Unique Perspective

The U.S. According To TexansThe U.S. According To Texans

OPRA

mobsters

My View Of My Home State  My View Of My Home State 

Try Not To Generalize The View Abroad Try Not To Generalize The View Abroad

Warning -- There is News Warning -- There is News And There Is PropagandaAnd There Is Propaganda

U.S. Business Al-Jazeera U.S. Business Al-Jazeera

ConsumerConfidence

Sovereign Debt Default

Technological Breakthroughs

Alternative Fuel Mandates

Chinese Woes

Equities Slump

Dollar Rally

Additional Fuel Tax

Position Limits

More PredictionsMore Predictions

► No obvious pivot points in next 100 days. Markets may be event-driven and summer doesn’t typically deliver events.

► Without hurricanes, gasoline prices should weaken in September. But expect a robust rally from December through April. Futures outperform wet markets.

► U.S. refining is in clear surplus - -particularly coastal regions. But refining is not nearly as desperate as Wall Street makes it out to be. Inland refineries have huge cost advantages . . . For now.

Definite U.S. Gasoline & Diesel Price Point This Half Decade

One Certain Path . . . . One Certain Path . . . .

Try Not To Overanalyze your business(like one major oil company I know)

Director, First Impressions

Personal Corporate Trainer

Branded Distributor

Human Resources Manager

Six Sigma Black Belt

Content Supervisor

VP Industry Affairs

New Products Visionary

Business Solutions

Consultant

Chief Reliability Officer

Strategy Development

Manager

Appendix: OPIS Retail Appendix: OPIS Retail Margins and Market Share Margins and Market Share

Annual MarginsAnnual Margins(in cts per gal)(in cts per gal)

17.4

16.3

13.514.0 13.814.1

15.0

13.2

15.1

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

11 Margin 10 Margin 09 Margin

USA Rockies ID

Monthly MarginsMonthly Margins(in cts per gal)(in cts per gal)

0

5

10

15

20

25

30

US Margin Rockies Margin ID Margin

Annual Margins by MSAAnnual Margins by MSA(in $ per gal)(in $ per gal)

0.189

0.153

0.008

0.179

-0.002

0.171

0.108

0.027

0.096

0.1180.126

0.064

0.114

0.041

0.049

-0.05

0.00

0.05

0.10

0.15

0.20

Boise City, Id Coeur d'Alene, ID idaho Falls, Id Lewiston, Id Pocatello, ID

2011 Margin 2010 Margin 2009 Margin

Annual Margins by CountyAnnual Margins by County

20112011 20102010 20092009

Annual Market Share in IDAnnual Market Share in ID

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Chevron Sinclair Shell Maverik Phillips 66 Conoco Exxon Tesoro Other

11 Market Share 10 Market Share 09 Market Share

Annual Efficiency in IDAnnual Efficiency in IDMarket Share Divided By Outlet Share. Higher Number indicates Higher Per Store VolumesMarket Share Divided By Outlet Share. Higher Number indicates Higher Per Store Volumes

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

Chevron Sinclair Shell Maverik Phillips 66 Conoco Exxon Tesoro Other

11 efficiency 10 Efficiency 09 efficiency

Annual Price Difference in IDAnnual Price Difference in IDAverage Price Differential The Brand Prices At On A Given DayAverage Price Differential The Brand Prices At On A Given Day

-7.00

-6.00

-5.00

-4.00

-3.00

-2.00

-1.00

0.00

1.00

2.00

3.00

4.00

Chevron Sinclair Shell Maverik Phillips 66 Conoco Exxon Tesoro Other

11 Price Differential 10 Price Differential 09 Price Differential

% of Income Spent on Gas% of Income Spent on Gas

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

Jan

-00

Jan

-01

Jan

-02

Jan

-03

Jan

-04

Jan

-05

Jan

-06

Jan

-07

Jan

-08

Jan

-09

Jan

-10

Jan

-11

ID % of Income Spent on Gas US % ofIncome Spent on Gas

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