Sunoco 2010 Annual Report Download - page 27

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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 coal operations. In the event of decreases in coal prices, the results of
operations and cash flows of our Jewell coal 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.
Weather conditions and natural disasters could materially and adversely affect our business and operating
results.
The effects of weather conditions and natural disasters can lead to volatility in the costs and availability of
energy and raw materials, which can negatively impact our operations or those of our customers and suppliers.
Our inability to obtain adequate supplies of crude oil could affect our business and future operating results in
a materially adverse way.
We meet all of our crude oil requirements through purchases from third parties. Most of the crude oil
processed at our refineries is light-sweet crude oil. It is possible that an adequate supply of crude oil or other
feedstocks may not be available to our refineries to sustain our current level of refining operations. In addition,
our inability to process significant quantities of less-expensive heavy-sour crude oil could be a competitive
disadvantage.
We purchase crude oil from different regions throughout the world, including a significant portion from
West Africa, and we are subject to the political, geographic and economic risks of doing business with suppliers
located in these regions, including:
• trade barriers;
• national and regional labor strikes;
• political unrest;
• increases in duties and taxes;
• changes in contractual terms; and
• changes in laws and policies governing foreign companies.
Substantially all of these purchases are made in the spot market, or under short-term contracts. In the event
that we are unable to obtain crude oil in the spot market, or one or more of our supply arrangements is terminated
or cannot be renewed, we will need to find alternative sources of supply. In addition, we could experience an
interruption of supply or an increased cost to deliver refined products to market if the ability of the pipelines or
vessels to transport crude oil or refined products is disrupted because of accidents, governmental regulation or
third-party action. If we cannot obtain adequate crude oil volumes of the type and quality we require, or if we are
able to obtain such types and volumes only at unfavorable prices, our results of operations could be affected in a
materially adverse way.
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