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EnSys Energy & Systems, Inc.

Table T2

Scenario 2 "Add Factors" for Industrial Energy Prices ($1994 per unit)

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Table T3

EnSys Energy & Systems, Inc.

Analysis of Petroleum Product Prices and Fuel Price Add Factors

Carbon Add 2010 Delivered Prices - AEO 1996 Emission Factors

Scenario 1

U.S.A.

$/bbl bbl/tonne $/tonne tcbn/toe $/tonne $/tonne %

As can be seen, projected U.S. prices range for light products in 2010 from $262/ton for heating oil to nearly 500 $/ton for gasoline with residual fuel somewhat lower at an average of $145/ton. In Europe and Japan the price ranges are more marked up to $1170/ton and $765/ton respectively for gasoline. The final step in tables T3, T4, T5 applies the scenario add factors to these projected 2010 delivered prices and then illustrates the percentage increase over the base 2010 prices that the Scenario 1 add factors would represent. These percentage increases are in turn summarized in Table T6. Corresponding Scenario 2 add factor effects are summarized in Table T7.

What is significant about these percentage increases is that they are highly variable both from product to product and from region to region. In general, the percentage increases are lower for the lighter refined products and heaviest for residual fuel oil with an overall range from 7% increase for motor gasoline in Europe to 91-108% increases for residual fuel in the U.S. and Japan. In general, the percentage increases for highway fuels, i.e. motor gasoline and diesel fuel are among the lowest because they already bear the highest tax burdens.

Final Draft

EnSys Energy & Systems, Inc. One implication of this wide variability in percentage increase is that there could be an associated wide variability in product demand impacts. In other words, the impact among different products and different regions would not be uniform. Resulting refined product demand patterns could be appreciably altered, requiring shifts in refinery processing configurations in order to accommodate these changes. A more detailed examination and simulation of the effects of these price increases tied to price elasticities of demand is warranted and could be undertaken using WORLD modeling. Scenario 2 add factors produce U.S. price increases of two-thirds those applying under Scenario 1. Increases in Europe are unchanged and those in Japan modestly lower.

Table T4

Analysis of Petroleum Product Prices and Fuel Price Add Factors

1. Natural gas price in $/mmbtu is $3.40. Gas and electricity prices from IEA Energy Prices & Taxes, 3rd qtr 1995.

2. Tax Components from API Research Study 071 "Petroleum Product Taxes in the OECD Countries"

3. Estimated delivered prices based on tax cpt + 2010 market price from WORLD base case + estimated distribution cost.

Final Draft

EnSys Energy & Systems, Inc.

Table T5

Analysis of Petroleum Product Prices and Fuel Price Add Factors

1. Natural gas price in S/mmbtu is $10.40. Gas and electricity prices from IEA Energy Prices & Taxes 3rd Qtr. 1995.

2. Tax Components from API Research Study 071 "Petroleum Product Taxes in the OECD Countries 3. Estimated delivered prices based on tax cpt + 2010 market price from WORLD base case + estimated distribution cost.