|SOne of the reasons Europe is key to distillate
prices is that it has shifted dramatically towards diesel and away from
gasoline, and much of that increased diesel demand is met from imports.
|SThis chart illustrates Europe’s shift in
preference for distillates over gasoline relative to the rest of the world, where the mix of gasoline and
distillate demand has not changed much.
|–The chart looks at the relationship between
total distillate demand, which consists of diesel, heating oil, and jet fuel,
and the demand for gasoline. The
change in distillates captured in the chart is driven mainly by changes in
|–Note that outside of Europe, the relative flat
relationship between gasoline and distillate indicates that, while diesel is
growing, so is gasoline.
|SThe chart indicates that in the short term, a
major source of distillate pressure relative to gasoline seems to be coming
from Europe. (While not shown on the chart, the U.S. share of distillate has
shifted slightly higher, and the rest of the world has actually shifted a bit
towards more gasoline.)