|SEurope’s growth in diesel demand stemming from
its emphasis on diesel-fueled light-duty vehicles has risen from Europe’s
desire to reduce consumption. It has
been encouraged by tax and vehicle purchase incentives. Furthermore, Europe’s particulate and NOx
emission requirements for these diesel-fueled vehicles are less stringent
than in the U.S.
|SThe most recent surge in penetration was possible because
the manufacturing and distribution
base for these vehicles was in place, and consumer acceptance was
established. That is, Europe had a
firm base from which the recent growth could spring. This is not the case in the U.S.
|SAs we look to the future, Europe’s challenge
will be how best to continue meeting its distillate demand growth. It’s traditional sources of imports (FSU and Middle East) may be limited in their ability to increase
supply, particularly now that Europe has moved to low sulfur diesel. Europe is a major market force in the
Atlantic Basin, and as its need for distillate increases, the relative price
of diesel and gasoline may change, and any price pressure will be felt in the