|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
|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.
|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
1980s. Today, however, the easy
efficiency improvements seen in the early 1980s are gone. Efficiency improvements are still possible,
but we are likely to see less impact in the short run than we saw in the
|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
|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.
|SBut a major region that seems to be driving distillate
ahead of gasoline in the world is Europe.