|SIn response to the market shift from gasoline
to diesel fuel, European refiners have increased hydrocracking capacity to
increase production of diesel compared to gasoline. Since 1990, hydrocracking as a percent of distillation
capacity has increased from 2% to almost 7%, while FCC capacity as a percent
of distillation has leveled at about 16%.
|SDespite the growth in hydrodcracking capacity,
the deficit in diesel production compared to demand and the excess in
gasoline production has continued to grow.
This is expected to continue for some time, even with continued
hydrocracking capacity growth.
|SThis implies that Western Europe may be able
to provide the United States with higher imports in the near future, to some
|SAlso, as both European and U.S. gasoline
specifications become more stringent, more Eastern European refiners may have
the incentive to upgrade as well.