ABSTRACT
Crude oil is the single largest source of energy for the United States, followed by natural gas and coal. Approximately 3% of the total crude oil is used as feedstock for the production of chemicals (Banholzer et al., 2008). Natural gas is used for the production of fertilizers and to supply energy to the production processes. Petroleum re‚neries extract and upgrade valuable components of crude oil using various physical and chemical methods into a large array of useful petroleum products. While the United States is one of the world’s largest producers of crude oil, the country relies heavily on imports to meet the demand for petroleum products for consumers and industry. This reliance on international ties to petroleum trade has led to numerous upheavals in the industry over the last four decades, the most recent being when crude oil prices reached $134 per barrel in 2008 (EIA, 2010b), as shown in Figure 3.1. Natural disasters such as hurricanes in the Gulf Coast region (Katrina and Rita in 2005 and Gustav in 2008) caused major damages to offshore oil-drilling platforms and disruption of crude oil supply. Natural gas prices have also varied from $4 per cubic feet in 2001 to $13 per cubic feet in 2008 and back to $4 per cubic feet in 2011 with the development of shale deposits.
