Production Will Meet Demand Increase This Summer
Notes:
- Production must meet increases in demand this year. Last year, increased imports met most of the summer demand increase, and increases in stock draws met almost all of the remainder. Production did not increase much. But this year, inventories will not be available, and increased imports seem unlikely. Thus, increases in production will be needed to meet increased demand.
- Imports availability is uncertain this summer. Imports in 1999 were high, and with Phase II RFG product requirements, maintaining this level could be challenging since not all refineries exporting to the U.S. will be able to meet the new gasoline specifications.
- Stocks will also contribute little supply this summer. Last year’s high gasoline stocks allowed for a stock draw that was 58 MB/D higher than volumes projected for the high-demand third quarter this summer. Thus, with low stocks, production will have to cover both new demand growth and 58 MB/D of additional supply that came from inventories last summer. Even with the smaller stock draw this summer, stocks are likely to remain low.
- Refinery utilization this summer will be high, in spite of increases in capacity that have occurred since last year. Should demand be stronger than expected or imports be less than projected, utilization will be even higher than that shown above.