FOCUS

ON THE

U. S.

7. THE U.S. IS UNIQUE

O THE U.S. HAS LOWER ENERGY PRICES AND FAR LOWER ENERGY
TAXES THAN MOST DEVELOPED NATIONS.

O LARGE DOMESTIC SUPPLIES OF CRUDE AS WELL AS COMPETING
ENERGY SOURCES SUCH AS COAL AND OIL LEADS TO A RELA-
TIVELY EFFICIENT MARKET.

O THE U.S. HAS AN UNUSUALLY HIGH DEMAND FOR LIGHT PRODUCTS
AND FOR SPECIALIZED PRODUCTS SUCH AS UNLEADED GASOLINE
AND LOW-SULFUR FUEL OIL.

O LITTLE GOVERNMENT INTERFERENCE AND STRONG MARKET
COMPETITION LEAD TO RAPID ADJUSTMENTS TO CHANGING CON-
DITIONS.

O THE U.S. MARKET IS RELATIVELY OPEN TO IMPORTS.

хо

THE U.S. MARKET IS LESS DOMINATED BY GIANT OIL CONCERNS.
INDEPENDENT OIL PRODUCERS AND REFINERS ARE POLITICALLY
IMPORTANT.

O REGIONAL DIFFERENCES (EAST COAST, GULF COAST, WEST COAST)
REQUIRE DIFFERENT APPROACHES TO THE PROBLEMS.

O THERE ARE MAJOR ECONOMIC GROWTH AND CURRENCY STRENGTH
DIFFERENTIALS BETWEEN U.S. OIL DEMAND AND IMPORTS AND
THOSE OF OECD ALLIES.

O THE U.S. HAS RESPONDED RAPIDLY TO THE CAPACITY SURPLUS,
CUTTING ALMOST 3 MILLION BARRELS/DAY OF CAPACITY IN THE
LAST FOUR YEARS.

O THE TYPICAL REFINERY THAT HAS CLOSED WAS SMALLER THAN
50,000 B/D, WITH NO CRACKING OR MAJOR UPGRADING FACILITIES
MANY OF THESE WERE REFINERIES CONSTRUCTED UNDER THE GOVERN
MENT PROGRAM OF SUPPORT FOR SMALL REFINERS IN THE 1970s.

O SINCE REFINERS HAVE CONTINUED TO INSTALL UPGRADING, WHILE
THE UNSOPHISTICATED UNITS HAVE CLOSED, THE AVERAGE SOPHIS-
TICATION OF U.S. REFINERIES HAS SCARED.

o U.S. REFINING CAPACITY IS NOW AROUND 15.4 MILLION B/D, COMPARED TO 15.4 MILLION B/D OF "OIL DEMAND." THIS WOULD INDICATE A ROUGH BALANCE. HOWEVER, AS THE FOLLOWING FIGUR SHOWS, EVEN WITH NO IMPORTS THE U.S. NOW ONLY NEEDS ABOUT 12.6 MILLION B/D OF CAPACITY TO MEET ITS 15.4 MILLION B/D DEMAND.

9. PRODUCT IMPORTS: BACKGROUND

O HISTORICALLY THE U.S. HAS BEEN A LARGE IMPORTER OF FUEL
OIL FOR USE AS CRACKER FEED AND AS FUEL. OIL SUBSTITUTION
POLICIES, RECESSIONS, AND HIGHER PRICES DEPRESSED THESE
IMPORTS IN THE LATE 1970s.

O ALTHOUGH PRODUCT IMPORTS HAVE BEEN RISING IN RECENT YEARS,
PRODUCT EXPORTS HAVE BEEN RISING AS WELL. NET IMPORTS ARE
RISING, BUT ARE STILL WELL BELOW THE LEVELS OF THE 1970s.

O MUCH OF THE GROWTH IN PRODUCT IMPORTS SINCE 1982 CAN BE
EXPLAINED BY THE REBOUNDING U.S. ECONOMY AND A STRONG
DOLLAR, IMPORTS OF PETROLEUM PRODUCTS SEEM TO HAVE RISEN
IN LINE WITH THE GENERAL LEVEL OF IMPORTS. MOREOVER, THE
RISE IN PETROLEUM PRODUCT IMPORTS IS SIMILAR TO THAT SEEN
IN OTHER POST-RECESSIONARY PERIODS.