Outlook for Oil Demand in the Pacific Basin Region

Large GDP increases in the Pacific Rim countries have been accompanied by similarly large increases in demand for oil products. In the case of residual fuels, this demand has been tempered by the substitution of other energy products such as coal or gas. In the region's developing and newly industrialised nations, it has not been possible to make the very large investments in infrastructure which allow other energy sources to be used for transportation. As a result, GDP growth has been mirrored in the demand growth for automotive fuels. Other non-substitutable products such as lubricants have also benefitted by the region's GDP growth.   The combination of a number of years of sustained growth, coupled with increasing quality requirements is now stretching the upgrading capacity of the region's refineries. IT, as seems likely, the region continues to enjoy a high GDP growth rate, then this will be accompanied by increasing reliance on finished products coming out of the Middle East.   The owners of the most simple form of refinery in which crude is simply distilled and the naphtha reformed into petrol will face major capital investments. If they decide not to bear this cost, they will face increasing problems in selling their surplus residual fuel oil at an economic price. Quality will become an increasingly important issue. Not only in the well publicised areas such as unleaded petrol, but also for products such as lubricants which play a major role in the efficiency of modem equipment. Quality of service such as hours of opening, ease of access, and service station facilities will also become increasingly important as the oil companies use these to attract customers and gain brand differentiation.