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This is from The Wall Street Journal , very interesting!!!

By Alexei Barrionuevo
THE WALL STREET JOURNAL

"THE DRIVE TO DIESEL - in everything from big Mercedes-Benz sedans to tiny Smart cars - has left Europe with a glut of gasoline, and refiners there are routinely unloading much of that excess across the Atlantic. European gasoline exports to the U.S. have shot up 82% since 2000, helping to keep U.S. gasoline prices steady even as prices for crude oil - from which gasoline is refined - have bounced around in response to world events.
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"We have become the dumping ground for surplus gasoline from Europe," said Larry Goldstein, president of Petroleum Industry Research Foundation, a New York-based energy consulting firm. "Europe is no longer just a marginal supplier to the U.S."
Though the price of crude oil has climbed from lows around $18 a barrel to highs above $30 this year, U.S. pump prices during the peak driving season have been "flatter than we have ever seen," said Dave Costello, an economist at the Energy Department's Energy Information Administration.
Despite robust U.S. demand for gasoline, average monthly prices from April to September moved just two cents, to $1.40 a gallon for regular unleaded, from $1.38, according to the EIA - though they have climbed 4.5 cents a gallon this month as hurricanes crossed the Gulf Coast, disrupting supplies. During that six-month period, crude prices moved up $4 a barrel on fears of a war with Iraq. Should a war with Iraq come about, any disruption of crude supplies from the Middle East would likely affect Europe as well as the U.S., curtailing production at refineries on both sides of the Atlantic.

The U.S. benchmark for crude for December delivery settled Friday at $27.05 a barrel, down $1.15.
European refiners say the U.S., where consumers have failed to accept diesel with the same enthusiasm as the French, Italians and Germans, is the only market that can handle the quantities of excess gasoline that Europe produces. U.S. demand for gasoline is up nearly 3% this year to about nine million barrels a day. Imports satisfy about 9% of U.S. demand, with nearly half of these coming from Europe. By contrast, gasoline demand is down 2% in Western Europe and is expected to continue to decline as more Europeans buy diesel cars.
In response, TotalFinaElf SA, Europe's largest refiner, expects to increase exports to the U.S. this year by 4% to 52,000 barrels a day. "The increase in demand in 2002 was quite spectacular," said Tomas Venicek, a TotalFinaElf refining and marketing executive.

Indeed, in the wake of the terrorist attacks of Sept. 11, Americans are traveling more by car and less by air, and the popularity of gas-guzzling SUVs continues almost unabated. Even the most fuel-efficient gasoline car sold in the U.S., the subcompact Honda Civic HX, which gets 44 miles to the gallon on the highway, can't quite muster the 50 miles per gallon of the diesel engine in the heavier and roomier VW Jetta Wagon, which is available in the U.S.
This year's gasoline-import surge also was fueled by countries outside Europe betting that U.S. prices would spike last summer as they had in the previous two years. During the summers of 2000 and 2001, a spate of accidents at Gulf Coast and Midwest refineries caused shortages that sent gasoline prices soaring to more than $2 a gallon in some Midwest cities.

When crude oil is refined, it produces several products, including gasoline, diesel and jet fuel. Depending on how a refinery is configured, it will produce varying amounts of these products from a single barrel of crude. In decades past, European refiners invested heavily in refining equipment that emphasized gasoline production. But a renewed groundswell in Europe in the past decade to reduce carbon dioxide and other greenhouse-gas emissions, as well as improvements in diesel technology, have accelerated the Continent's drive toward diesel.
Today, with the help of tax incentives, one of every three new cars sold in Europe is powered by a diesel engine. Diesel cars get better fuel mileage, provide more power and create fewer greenhouse gases, which are believed to contribute to global warming, than gasoline models. In France, more than half of the cars are diesel. By contrast, in the U.S., where gasoline is relatively cheap, diesel accounts for less than 1% of U.S. car sales.

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Diesel demand is up nearly 5% in Europe this year and up 50% over the decade. But European refiners say they can't simply increase diesel production and reduce the yield of gasoline without a major renovation of their facilities. To be efficient, refineries must keep their total processing rates as high as possible. To change the diesel/gasoline mix would require investments of at least $100 million per refinery, which European companies have been reluctant to make. One reason: European refiners already are obligated to spend money on plant upgrades to meet regulatory requirements for lower-sulfur diesel to cut emissions.
"The manufacturing capacity is getting more and more out of sync with what the demand is in Europe," said Michael P. Hoffman, group vice president for refining and marketing at BP PLC.
European refinery officials say they are gradually making investments to increase diesel and heating-oil production, while decreasing gasoline output or keeping it stable. They say they don't see supplying the U.S. gasoline market as a long-term strategy. Still, they expect to be producing excess gasoline for at least several more years.
Europe has long sent some cargoes of gasoline across the Atlantic, normally during the U.S. summer driving season or when supplies tighten and there is profit to be had. But now the cargoes are arriving, mainly at U.S. East Coast ports, in record numbers.
Total gasoline imports through September averaged 857,000 barrels a day, up 12% from last year and the highest level since at least 1988. Imports from Europe alone were up 34% on an average daily basis through the end of July, the latest data available. Besides the traditional exporters in Western Europe, cargoes arrived from contributors in the East, including Romania, Turkey and Russia. More barrels also streamed in from Canada, Egypt and Singapore.
The increased shipments have crimped U.S. refining profits and could further discourage U.S. companies from making investments to expand their refining capacity, said Gene Edwards, senior vice president of supply and trading for Valero Energy Corp. in San Antonio. Refining profit margins, or profits per barrel of refined product, are averaging under $4 a barrel, a four-year low. "If the imports hadn't come in it would have been a phenomenal year for gasoline," he said.
While imports benefit motorists by helping to keep prices low, an increasing reliance on them does carry risks. The U.S. gasoline supply could become more vulnerable to the whims of foreign governments and companies wanting to close plants or make regulatory changes that make economic sense in their home markets.
The flood of imports comes as the U.S. refining industry is struggling to keep up with changing U.S. regulations. Already, the refining industry plans to spend between $14 billion and $16 billion through 2007 to upgrade plants to meet federal requirements for low-sulfur gasoline and diesel fuels, according to the American Petroleum Institute; those companies that can't make the investments could be forced to shut down plants. Exxon Mobil Corp., the nation's second-largest refiner, expects to spend nearly $3 billion and Valero $1 billion. If imports continue to help depress profits, refiners will have even less flexibility to consider investments to expand gasoline capacity, Mr. Edwards said.
Some changes in the U.S. industry could slow the flow of imports from Europe. New York and Connecticut, which make up 20% of the East Coast market for lower-emissions gasoline, are scheduled to remove the additive MTBE from gasoline by 2004 because of health concerns. Some refining experts say a number of European refineries could have difficulty producing gasoline that could be blended with ethanol, the substitute for MTBE, which cuts emissions and adds octane to gasoline.
TotalFinaElf's Mr. Venicek says he is confident his company, which is one of Europe's most technologically sophisticated refiners, can manufacture and export gasoline that could be blended with ethanol. He says Europe also is contemplating removing MTBE because of health concerns."

Copyright © 2002 Dow Jones & Company, Inc.
All Rights Reserved.
 

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Re: Europe's embrace of diesel-powered cars is helping to fuel America's ... (GrecianVolvo)

You know, I would think the Patriotic types would be pushing hard for improved Diesel technologies. Many manufacturers, including domestics, offer diesel powerplants in Europe. Cars like the Jeep Grand Cherokee, Dodge Caravan, etc. etc. all offer diesel powerplants.

Volvo needs to bring over the D5.
 

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Re: Europe's embrace of diesel-powered cars is helping to fuel America's ... (Poritz)

D5 is a new commonrail I5 diesel. Volvo has had numerous press releases on the engine that are somewhere in our News section (sorry, we don't have a search yet) and there's a writeup (provided by Volvo) on the XC70 D5 in our Features/Roadtests section.
 

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Re: Europe's embrace of diesel-powered cars is helping to fuel America's ... ([email protected])

I'd buy a D5 if they were available. I've owned some diesels before in my life ( a Merc actually ), and while it was tough to find fuel once in a while, I loved the gas mileage.
 
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