|SThis presentation touched on a number of
factors that could affect refiners capacity decisions, and attempted to illustrate the challenge
the industry faces as we look ahead. In
the short-term, many factors point to the potential for improved potential
for return on capacity investment.
|Most forecasts show increasing gasoline and
diesel fuel demand growth. Even if
vehicle fuel economy again improves significantly, the impacts will not occur
|Our primary product import is gasoline, and
with tightening U.S. specifications relative to much of the rest of the
world, we might need to pay higher prices to attract increasing import
volumes at least for the next few years.
|As refiners direct investment dollars to
treatment capacity in order to reduce gasoline and diesel fuel sulfur
content, capacity expansion may slow.
In addition, some of the fuel specification change requirements will
reduce refinery capability to produce gasoline through yield loss.
|Refinery closures are likely to continue.
|All of this adds up to increased margins in
the short term, which should improve the environment for capacity
investment. However, margin
improvement may be the result of short-term price swings rather than a smooth
|SLong-term changes could dramatically affect
the shape of the refining business, but such changes are not likely to occur
quickly, and should produce signs of change in advance of the impacts, which
is an incentive to keep an eye on the long term.