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STurning to supply, consider Europe’s situation.
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–There are a number of refining projects in Europe to increase refinery
diesel production. But these do not
seem to be sufficient to keep pace with increasing diesel demand.
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–Biofuel initiatives to reduce carbon dioxide will include increased
ethanol requirements, which will add even more to gasoline supply and
increase export volumes. Biodiesel
should also help to meet Europe’s growing diesel demand, but will be far from
sufficient to eliminate the growing need for imports.
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–Finding increasing diesel volumes for import could be a challenge
during the next few years. After 2010,
diesel export volumes from projects planned for the Middle East and
India may help ease the supply
situation.
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–The diesel margin in the Atlantic basin will be affected by the
long-haul economics of product imports into Europe.
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SU.S distillate supply growth presents some challenges as
well, but not to the same degree as Europe’s challenges
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–U.S. refiners should be able to handle modest increases in distillate
yields. Lower quality crude oil feeds
(such as tar sands) will add to diesel production costs.
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– Gasoline from refineries will face much more of a challenge from
other supply sources. High ethanol
supply growth and increased product import availability will diminish the
need for new gasoline capacity.
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SIn the Atlantic Basin, the distillate supply situation
appears to be much tighter than the gasoline supply as we look forward.
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