|SThis chart shows imports stacked roughly by
their ability to produce low sulfur gasoline.
Those with the greatest 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 to a lesser extent 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. 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. However, Asia is a small source of imports, supplying only 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 enough extra
supply for export to make up for other lost volumes?