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To: Peter V who wrote (77329)	4/6/2008 2:02:04 PM
From: Elroy Jetson	Respond to of 116555

The same refinery fraction provides Diesel, Jet Fuel, and Heating Oil. In Europe, as in the West Coast of the U.S., natural gas and electricity are used in place of Heating Oil. Generally this results in lower pre-tax diesel and jet fuel prices in Europe than in America. The price of these products has been additionally pressured in the U.S. in recent years by the military demand for diesel and jet fuel. I think you have greatly over-estimated the costs of low-sulfur fuel requirements. Modern refineries like those operated by Chevron need to remove the sulfur out of crude oil before it is refined to avoid poisoning the catalysts used in the refining process. For older style refineries reducing sulfur levels does impose additional costs. But these refineries are playing a losing game and will have to be rebuilt for a variety of business reasons. New refineries provide a great deal of flexibility in both in the inputs products used and the product range produced. The input molecules are broken down and rebuilt into the desired product output. In California this means using either very heavy crude oil in combination with natural gas as input stocks or light crude from Iraq or other suppliers. In Louisiana this means using either high sulfur Orinoco tar sand crude from Venezuela, or a variety of crudes from Mexico or the Middle East. Any of these inputs can produce the current output mix in demand. Any flexibility limitations in a given configuration are easily adjusted during the refinery rebuilds every 18 months or so. Older style distillation-only refineries can handle only the crude oil types they were designed for, and have a very limited degree of flexibility in their output products. As the changes in crude stock availability become more prevalent these refineries will need to be completely rebuilt to remain viable. .