Sunoco 2009 Annual Report Download - page 25

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•Impact of environmental and other regulations affecting the composition of gasoline and other refined
products: Federally mandated standards for use of renewable biofuels, such as ethanol and biodiesel in
the production of refined products, are transforming traditional gasoline and diesel markets in North
America. These regulatory mandates present production and logistical challenges for both the
petroleum refining and ethanol industries, and may require additional capital expenditures or expenses
by us. We may have to enter into arrangements with other parties to meet our obligations to use
advanced biofuels, with potentially uncertain supplies of these new fuels. If we are unable to obtain or
maintain sufficient quantities of ethanol to support our blending needs, our sale of ethanol blended
gasoline could be interrupted or suspended which could result in lower profits.
There also will be compliance costs related to these regulations. We may experience a decrease in
demand for refined petroleum products due to new federal requirements for increased fleet mileage per
gallon or due to replacement of refined petroleum products by renewable fuels. In addition, tax
incentives and other subsidies making renewable fuels more competitive with refined petroleum
products may reduce refined petroleum product margins and the ability of refined petroleum products
to compete with renewable fuels. A structural expansion of production capacity for such renewable
biofuels, could lead to significant increases in the overall production, and available supply, of gasoline
and diesel in markets that we supply. This potential increase in supply of gasoline and diesel could
result in lower refining margins for us, particularly in the event of a contemporaneous reduction in
demand, or during periods of sustained low demand for such refined products.
It is possible that any, or a combination, of these occurrences could have a material adverse effect on our
business or results of operations.
Volatility in coal prices could materially affect our business and operating results.
Sales prices for coke production at most of our facilities reflect the pass through of coal costs. As a result,
the profitability of these operations is not impacted directly by the price of coal. However, coal prices are a key
factor in the profitability at our Jewell operations. The global economic slowdown has negatively affected coal
prices. In the event of continued decreases in coal prices, the results of operations and cash flows of our Jewell
cokemaking operation could be materially impacted.
Changes in general economic, financial and business conditions could have a material effect on our business
or results of operations.
Weakness in general economic, financial and business conditions can lead to a decline in the demand for the
refined products and chemicals that we sell. Such weakness can also lead to lower demand for transportation and
storage services provided by us. In addition, the global economic slowdown has had an adverse impact on the
steel industry which could negatively affect the demand for the coal and coke that we produce. It is possible that
any, or a combination, of these occurrences could have a material adverse effect on our business or results of
operations.
Our operations could be disrupted if our information systems fail, causing increased expenses and loss of
sales.
Our business is highly dependent on financial, accounting and other data processing systems and other
communications and information systems, including our enterprise resource planning tools. We process a large
number of transactions on a daily basis and rely upon the proper functioning of computer systems. If a key
system was to fail or experience unscheduled downtime for any reason, even if only for a short period, our
operations and financial results could be affected adversely. Our systems could be damaged or interrupted by a
security breach, fire, flood, power loss, telecommunications failure or similar event. We have a formal disaster
recovery plan in place, but this plan may not entirely prevent delays or other complications that could arise from
an information systems failure. Our business interruption insurance may not compensate us adequately for losses
that may occur.
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