|SUntil relatively recently, supply increases
could come from the U.S., since we had excess refining capacity. However demand caught up with U.S. refining
capacity about the mid 1990’s.
|SSince that time we have seen increases in
capacity. In the last 10 years,
capacity has increased about 1.9 MMB/D, or on average about 190 thousand
barrels per day each year, which is equivalent to about one medium sized
refinery each year.
|SBut that expansion has not been even. During the last few years, capacity
expansion slowed, probably due to several factors, such as:
|–Resource constraints as refiners direct both
dollars and resources to the large changes that must be made to accommodate
the low sulfur fuel programs; and
|–Availability of economic product imports.
|SIn addition to distillation capacity
expansion, we also have seen expansion in units downstream from the
distillation unit, which increases yield of light products.
|SBut has that expansion met U.S. demand growth,
and will it meet demand growth in the future?