|SWhile the distillate market was going through the unsually
tight situation in 2008 just described, the recession was underway. The recession officially began in December
of 2007, but petroleum demand in the U.S. and Europe did not plummet until
the second half of 2008. Across the
year, U.S. gasoline demand dropped 3.2% annually in 2008 from 2007, and
distillate demand fell 5.7%.
|SThis chart compares 2008 and 2009 for the U.S. and
Europe. While both regions show
declines, there are some distinct differences. In the U.S., the gasoline decline seems to
have slowed, and for the year, we expect demand to grow slightly in 2009 over
2008. Distillate demand, on the other
hand is still expected to drop significantly by 8.4%. Distillate demand in the U.S. is used
mainly in the heavy-duty trucking sector, which is hit hard with a slow
economy since there are fewer goods to be moved.
|SEurope, on the other hand, is seeing a larger decline in
gasoline and less in distillate. This
is the result of the continued move to use more distillate in the light-duty
fleet. That is, Europe’s distillate
market contains light-duty vehicle use, which is less subject to economic
declines than the commercial heavy-duty use.
This is cushioning the distillate decline compared to distillate use
in the U.S.
|SThere still is much uncertainty as to when and how much of
a rebound we will see in product demand.
But we may see European distillate growth return to positive numbers
sooner than in the U.S. as a result of its light-duty vehicle use. But the rebound may be slow in coming. While EIA is forecasting improvement in the
U.S. economic situation in 2010, with U.S. total petroleum demand increasing
over 2009, total demand at 19.09 million barrels per day is smaller than
demand in 2008.