NPRA 2007 Annual Meeting
Future Directions for Atlantic Basin Diesel Balance through 2015
•Diesel supply/demand balance tighter than gasoline. 
–Supply growth from Middle East and Asia, but occurs late in time period
–Net deficit may widen for a time
•Gasoline supply growth from European excess and ethanol growth dampen incentives to expand U.S. capacity
•Margins: Continued strength in diesel relative to gasoline
SThe higher diesel margin relative to gasoline seen in the last couple of years is primarily a reflection of the tighter distillate supply/demand balance in the Atlantic Basin.  ULSD adds some price pressure to the system, but pressure was building apart from ULSD.  The pressures tightening the diesel market in the past few years are likely to continue.

SOn the other hand, factors are in play that are diminishing the need for increased petroleum-based gasoline supply.

SWhile the market always presents uncertainties about the future, the market in combination with policies driven by GHG and energy security are presenting the potential for some major changes in the future.  No one has a good crystal ball at this point.  A scenario approach is needed to understand how different factors could evolve to change market direction.  And creative management is needed more than ever to be able to take advantage of the market opportunities that may evolve, while avoiding the potential pitfalls.