|SWith the increasing growth of diesel demand
and declining growth of gasoline in Northwest Europe, one might have expected
diesel prices to increase relative to gasoline. This graph shows that has not occurred. While the swings in the price differences
have increased, on average there is no downward trend.
|SThe United States’ need for gasoline imports
has helped Europe maintain its gasoline production balance. Hydrocracker investment to increase diesel
production is expensive, and with Europe being in a better position to meet
U.S. gasoline specifications than many other exporters, increasing flow of
gasoline from Europe to the United States is likely. Higher U.S. prices may be required to draw
these gasoline import volumes, which will retard hydrocracker growth in
Europe and provide more imports for the United States.