Global demand hurts cheaper gas forecasts
by Bhushan Bahree and Thaddeus Herrick
A growing shortfall in refining capacity is not just a US issue but a world problem. Even if high oil prices ease,
prospects for cheaper gasoline, diesel and jet fuel are likely to be limited for at least several years by a growing
global problem: a severe crunch in refining capacity.
Previously, the shortage of plants to refine and process crude oil into usable products has been largely a problem
for the United States, by far the world's largest oil consumer. But growing demand for oil from China, India and
other rising powers are aggravating the shortfall in refining.
Global demand is expected to grow by nearly 2 mm barrels a day this year -- from 82.5 mm barrels a day last year --
but the world's capacity to refine and process crude oil is expected to grow by less than half that.
As a result, the recent move by the Organization of Petroleum Exporting Countries to crank up production of crude oil
to nearly its limit isn't likely to translate into major price cuts for consumers soon. That could keep pressure on
airlines, automakers, and other industries particularly sensitive to prices of oil-based fuels.
It's a problem that the world's energy and economy czars are focusing ever more closely on.
"There is a bottleneck in refining world-wide," said Saudi oil minister Ali Naimi, the effective leader of OPEC.
