World Oil Price Concept Used in AEO2007

The world oil price in AEO2007 is defined as the average price of low-sulfur, light crude oil imported into the United States—the same definition used in AEO2006. This price is approximately equal to the price of the light, sweet crude oil contract traded on the NYMEX exchange and the price of West Texas Intermediate (WTI) crude oil delivered to Cushing, Oklahoma. The weighted average U.S. refiners’ acquisition cost of imported crude oil is $5 to $8 per barrel less than the price of imported low-sulfur, light crude oil.

Reorganization of Fuel Categories in AEO2007

AEO2007 includes, for the first time, a reorganized breakdown of fuel categories that reflects the increasing importance, both now and in the future, of conversion technologies that can produce liquid fuels from natural gas, coal, and biomass. In the past, petroleum production, net petroleum imports, and refinery gain could be balanced against the supply of liquid fuels and other petroleum products. Now, with other primary energy sources being used to produce significant amounts of liquid fuels, those inputs must be added in order to balance production and supply. Conversely, the use of coal, biomass, and natural gas for liquid fuels production must be accounted for in order to balance net supply against net consumption for each primary fuel. In AEO2007, the conversion of nonpetroleum primary fuels to liquid fuels is explicitly modeled, along with petroleum refining, as part of a broadly defined refining activity that is included in the industrial sector. Unlike earlier AEOs, AEO2007 specifically accounts for conversion losses and coproduct outputs in the broadly defined refining activity.