Factors in fuel pricing

Fuel prices are impacted by a number of factors, including changes in the price of crude oil, supply and demand, fuel specifications, government regulations, taxes, and transportation costs. Actual or perceived changes in these fundamentals, such as those caused by geopolitical uncertainty or market speculation, can have an impact on global commodity markets where crude oil and refined products are bought and sold. Therefore, it's important to recognize that a number of factors may combine to impact transportation fuel prices at any given time. Historically, the price of all petroleum products has fluctuated as these factors change. More specifically with regard to motor gasoline:

• Crude oil is a global commodity. Although crude oil prices have currently moderated from their highs earlier this year, it is important to remember that those prices continue to be established by a large number of transactions between buyers and sellers each day on commodity markets around the globe. In recent years, crude oil demand has been growing at its fastest pace in the past decade, driven in part by significant economic growth in developing countries and in the U.S. Although the recent global economic downturn has resulted in a drop in the growth of demand for crude oil and gasoline, the price of crude continues to account for about 65 percent of the cost of gasoline, according to the Energy Information Administration. Even with lower demand levels, the U.S. demand for oil continues to exceed domestic production, and we must compete in the world market for a share of both the world's available crude and refined products such as gasoline.
• To comply with federal and state regulations, U.S. refiners now produce and deliver to separate markets several types of gasoline. Mandated fuel changes over the last several years include the phase-in of ultra-low sulfur diesel fuel and the blending of increased amounts of ethanol into gasoline. These requirements affect the amount of gasoline and diesel fuel which can be produced in the U.S. and potentially affect the availability of refined product imports, which can add further challenges to the supply chain.

ExxonMobil Position
Gasoline prices are influenced by a highly competitive retail marketplace and many other factors, including global commercial trading markets for crude oil and refined petroleum products. Our focus at ExxonMobil is to continually take steps to improve our ability to compete through a selective investment program, ongoing efforts to reduce costs, and a strong commitment to operational excellence.

Prices for crude oil and refined products are set by worldwide markets comprised of buyers and sellers reacting to their individual needs as well as perceptions of supply and demand. Policies and initiatives need to be advanced that support the underlying economic fundamentals that lead to a balanced marketplace. Despite the significant decreases in crude and gasoline prices recently seen in the U.S., ExxonMobil continues to support the development of a wide-range of energy sources, including increased domestic oil and gas production both onshore and offshore, development of unconventional resources such as oil shale and oil sands, and focused efforts to reduce the complexities and limitations that are creeping into the refinery and logistics systems due to the proliferation of specialty fuels.