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SAs just described, more seems to be going on in the
distillate markets than the change to ULSD.
This section will look back at history, quickly focusing on the
Atlantic Basin to gain some insights into what history is telling us about
the future.
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STransportation has been the primary driver behind petroleum
product demand growth, and it is perhaps the least sensitive to price and
fuel substitution effects in the short run – if not also the long run.
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SCAFÉ standards, enacted in the U.S. in 1975, gave rise to
substantial efficiency improvements in light-duty vehicles, and were the
major factor behind a decline in gasoline demand seen in the early
1980’s. Today, however, the “easy”
efficiency improvements seen in the early 1980’s are gone. Efficiency improvements are still possible,
but we are likely to see less impact in the short run than we saw in the
early 1980’s.
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SDistillate demand, driven largely by diesel transportation
use, has grown worldwide more strongly than gasoline. While heavy-duty vehicle use drives U.S.
demand for diesel, diesel-fueled light duty vehicles are playing a large role
in Europe.
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SToday, the large Asian economies of China and India are
accounting for much of the growth in both gasoline and distillate. They are being driven by economic
development. Barring a recession, that
growth may be difficult to stem.
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SBut a major region that seems to be driving distillate
ahead of gasoline in the world is Europe.
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