|SThis chart shows imports stacked roughly by
their ability to produce low sulfur gasoline.
Those with the highest ability are on the bottom.
|SOne could assume that refineries that
depend on the United States for much of their output would invest to comply
with U.S. regulatory changes. Facilities
dependent on U.S markets include Eastern Canadian refineries, the Hovensa
refinery in the U.S. Virgin Islands, and refineries in Venezuela. In 2003, these three regions supplied
42% of total gasoline imports.
|SIn addition, Western Europe has become an
important supplier to the United States, and with European Union (EU)
specifications being close to U.S. specifications, we might expect a large
share of those volumes to continue to be available.
|SHowever, much of the historical supply from
Latin America outside of Venezuela may not be able to meet our specifications
in the near future, and Venezuela’s ability to supply future specifications
on time is uncertain as a result of the changes in PDVSA that occurred since
the strike in December 2002.
|SWe may also lose some Eastern European
volumes – particularly when we move to 30 ppm requirements next
year. Furthermore, some of our
Asian sources of imports (e.g., India and China) may not be able to supply
low-sulfur product for some time, although Asia is a small source of
imports, supplying 4% of total imports in 2003.
|SThis implies that in the short run, we may
need higher prices to attract needed volumes both because fewer sources can
produce U.S. product and because the product we need is higher valued.
|SOne of our biggest import source areas, Europe,
may need to supply more product in the future if other areas drop out. But will Europe have extra supply for