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HOUSTON -- Exxon Mobil Corp. Chairman and Chief Executive Lee Raymond said the oil company would invest $2.7 billion to $2.9 billion over the next several years to upgrade its refineries to handle federally required low-sulfur gasoline and diesel fuels.
While ExxonMobil is making the necessary investments, some small refineries would have difficulty meeting the new regulations and may shut down, potentially crimping supplies of gasoline and other refined products in some regions, according to The Wall Street Journal.
"There will always be the potential that a few refineries either aren't going to spend all the money they need or are only going to partially spend, and therefore the supply will be somewhat less than the regulators assume it will be," Raymond said.
New rules by the U.S. Environmental Protection Agency (EPA), to take effect in 2004 through 2006, require a 90 percent reduction in the sulfur content of gasoline and diesel fuel.
Some smaller refiners have struggled with the new rules. Last week Premcor Inc. said it would close its 70,000 barrel-a-day plant in Hartford, Ill., in October due to the high cost of meeting looming environmental standards. In January 2001, the St. Louis company closed its 80,000 barrel-a-day Blue Island refinery in Illinois, saying the plant needed too much investment to meet new low-sulfur gasoline regulations.
The moves together are expected to make an already tight Midwest refining market even tighter. The Blue Island closure was already viewed by analysts as contributing to last summer's high gasoline prices in the Midwest by shrinking supplies and making the area more prone to price spikes when plants have problems, the report said.