In addition, refiners are installing the capabilities to refine heavier crudes, mainly coming from the tar sands region of Canada.

There are roughly 25 world-scale LNG facilities in the various stages of development or construction. Outside the United States, spending has been on LNG liquefaction facilities where the gas reserves are located, as well as receiving terminals in Europe and Asia.The U.S. LNG industry is now planning and building terminals that will receive and re-gasify imported LNG from overseas locations. Currently, there are only four LNG receiving terminals in the U.S. but another four terminals are in various stages of development.

These new downstream capabilities will allow the U.S. refiners to diversify their sources of crude supply.Refiners have been investing in cleaner fuels programs over the last couple of years to meet the new requirements for low sulfur gasoline and low sulfur diesel. With world demand for oil and its products at exceptionally high levels, refiners are starting to look at new grass-roots refineries outside the United States as well. We are working on an expansion in India that is expected to again make that refinery the world’s largest. However, the refining industry has a long history of cyclical expansion coming online just in time for demand growth slowdowns.

There are over 40 applications to build new terminals, but most people think the economics and environmental/political permitting issues will not ultimately support that many. We will see. Finally, we expect to soon see major new, world-scale, natural gas pipeline projects to transport Alaskan and Canadian natural gas down into the lower 48 states. ;;Q Why have oil and gas prices been so volatile? A The basics of supply and demand are driving oil and gas prices, as well as some financial speculation and concerns over political risks in some of the major hydrocarbon-producing regions. The realities of supply and demand play out on a global basis and are not just driven by U.S. requirements. The rapid economic growth in countries likeChina and India has raised demand relative to supply of oil, which recently helped to drive oil prices to about $80 per barrel before beginning to recede. Increased global demand for refined product has been acutely felt in the U.S. with gasoline prices rising above $3 per gallon this summer.On the upstream supply side, the 1980s and ’90s saw minimal investment in developing reserves around the globe. Similarly, refiners did not invest in downstream capacity increases.