O I L PRICES
183
distillation capacity worldwide. Also, the United States has by far
the largest concentration of processing units (downstream capacity) to maximize the production of gasoline.
In 2007, the world refining capacity was 87,913,000 barrels per
day, which is marginally lower than what is currently required
although refinery throughput for 2007 was 75,545,000 barrels per
day — an 86% usage rate (BP, 2008). Furthermore, world oil consumption for 2007 was 85,220,000 barrels per day, with the difference between consumption and refinery throughput being the
amount of crude oil used directly as fuel by various industries.
With another eight million to ten million barrels per day capacity
coming on line in the next four to five years has the potential to
retain an excess of refining capacity over production. However, the
situation is dependent on the rate at which the product demand
growth continues.
Constrained refining capacity has been frequently identified
as one of the key reasons for the rise in crude oil prices over the
last two years but refining capacity will begin to expand later
this year and continue well past 2009 (http://zawya.com/printStory.cfm?storyid=v51n31-1TS05&1=133200080804). Most of the
capacity will come on-stream in Asia and the Middle East and
is driven by demand for middle distillates and the new refineries will have an upgrading capacity that is going to make it a
bit easier to meet gasoil demand. Expanding global upgrading
capacity promises to make a considerable difference in the market increasing the ability to upgrade heavy, high sulfur feedstock
into distillate.
In addition to API gravity and sulfur content, the chemical composition and other natural characteristics of crude oil affect the cost
of processing or restrict the suitability of crude oil for the manufacture of specific products and also dictates whether a crude oil feedstock can be used for the manufacture of specialty products, such as
lubricating oils and/or of petrochemical feedstocks.
Refiners therefore strive to run the optimal mix of crudes through
their refineries, depending on the refinery's equipment, the desired
output mix, and the relative price of available crudes. In recent
years, refiners have confronted two opposite forces: (1) consumer
and government mandates that increasingly required light products of higher quality (the most difficult to produce) and, (2) crude
oil supply that was increasingly moving towards the heavy oils
having lower API gravity and higher sulfur content.
183
distillation capacity worldwide. Also, the United States has by far
the largest concentration of processing units (downstream capacity) to maximize the production of gasoline.
In 2007, the world refining capacity was 87,913,000 barrels per
day, which is marginally lower than what is currently required
although refinery throughput for 2007 was 75,545,000 barrels per
day — an 86% usage rate (BP, 2008). Furthermore, world oil consumption for 2007 was 85,220,000 barrels per day, with the difference between consumption and refinery throughput being the
amount of crude oil used directly as fuel by various industries.
With another eight million to ten million barrels per day capacity
coming on line in the next four to five years has the potential to
retain an excess of refining capacity over production. However, the
situation is dependent on the rate at which the product demand
growth continues.
Constrained refining capacity has been frequently identified
as one of the key reasons for the rise in crude oil prices over the
last two years but refining capacity will begin to expand later
this year and continue well past 2009 (http://zawya.com/printStory.cfm?storyid=v51n31-1TS05&1=133200080804). Most of the
capacity will come on-stream in Asia and the Middle East and
is driven by demand for middle distillates and the new refineries will have an upgrading capacity that is going to make it a
bit easier to meet gasoil demand. Expanding global upgrading
capacity promises to make a considerable difference in the market increasing the ability to upgrade heavy, high sulfur feedstock
into distillate.
In addition to API gravity and sulfur content, the chemical composition and other natural characteristics of crude oil affect the cost
of processing or restrict the suitability of crude oil for the manufacture of specific products and also dictates whether a crude oil feedstock can be used for the manufacture of specialty products, such as
lubricating oils and/or of petrochemical feedstocks.
Refiners therefore strive to run the optimal mix of crudes through
their refineries, depending on the refinery's equipment, the desired
output mix, and the relative price of available crudes. In recent
years, refiners have confronted two opposite forces: (1) consumer
and government mandates that increasingly required light products of higher quality (the most difficult to produce) and, (2) crude
oil supply that was increasingly moving towards the heavy oils
having lower API gravity and higher sulfur content.