Slide 13 of 18
Notes:
- While the current forecast is showing higher distillate production than last year, there is room for yet more volume through refiners switching to higher yields than those being forecast. This will only happen if economic incentives evolve to encourage this change. Current high spreads indicate those incentives may occur.
- This graph shows the distillate yield pattern over the last few years. Generally yields rise in the fall to build stocks for winter distillate use. On average, the yield increase during the fourth quarter is about 2% higher than the yield average of the lowest yield months of June, July and August. (Recognize that a 1% change in yield is about a 150 MB/D change in distillate production, which is about 4% of winter demand.)
- During the fall of 1996, the winter season began with very low stocks, but refiners pushed yields to very high levels and regained some of the lost ground.
- During the winter of 1998-99, we saw a production decline of about 160 MB/D, as refiners began the season with very high stocks and they did not want to build them further. The production reduction was due mainly to yield reduction.
- As shown on this chart, 4th quarter yields are projected to increase about 0.6% over yields seen last year. But they can go higher as seen in 1996. If yields in 4th quarter 2000 were similar to 1996, we would have about 100 MB/D more production.
