|SThe detailed crude oil refinery input data
that is available for U.S. refineries is not available for the rest of the
world, but OECD data is available for refinery output of residual fuel oil
and crude runs, which will help to explore if refinery capacity constraints
had a major impact.
|SOutside the U.S., there is still a
considerable volume of bottoms material in refineries that is not being
converted to lighter product. As a
result, if the world crude oil slate had seen a significant decline in gravity
in 2004, one would have expected residual fuel oil yields to increase.
|–The U.S. leads the world in residual fuel
destruction. Residual fuel production
is only about 5%of total product production, but we still have some refiners
without bottoms processing running some fraction of heavier crude oils and
producing residual fuel.
|–In Europe and in Asia there are many
refineries with no bottoms processing and a number of countries that produce
20 – 30% of their product as residual fuel oil.
|SThis graph shows that residual fuel oil
yield did not increase, implying that the amount of heavy crude oil being
added to meet growing demand was not enough to noticeably affect refinery
yields, and therefore was probably not a major factor in determining
light-heavy crude oil price differences.