EIA has issued its semiannual report on refinery outages and their potential implications for the availability of gasoline and distillate supply. The report considers the supply of distillate fuel and gasoline supply at the Petroleum Administration for Defense District (PADD) and sub-PADD levels rather than at a national level. National balances have limited meaning for the adequacy of distillate fuel and gasoline supply because pipeline infrastructure, geography and marine shipping regulations constrain the amount of product that can flow among the different regions of the United States. The report also contains a discussion of current market conditions and average historical unplanned outages.
As with previous semiannual refinery outage reports, this report analyzes the adequacy of available refinery capacity to produce middle distillate (diesel fuel, jet fuel, and heating oil) and gasoline, focusing on the two refinery units, the crude distillation unit (CDU) and the fluid catalytic cracking unit (FCCU), that are most strongly correlated with distillate and gasoline production, respectively.
Across the different regions of the country, fall 2014 planned refinery maintenance was concentrated in September and October, and many refineries have returned to or are in the process of returning to normal operations. Less maintenance is planned for November and there is no maintenance planned for December.
Table 1 provides a by-PADD, by-month summary of the percentage of available refining capacity expected to be out of service for maintenance during September through November.
|East Coast (PADD 1)||0%||0%||0%||0%||0%||0%|
|Midwest (PADD 2)||1%||5%||3%||9%||20%||7%|
|Gulf Coast (PADD 3)||2%||5%||2%||10%||4%||0%|
|Rocky Mountains (PADD 4)||1%||7%||0%||2%||10%||0%|
|West Coast (PADD 5)||1%||0%||0%||0%||0%||0%|
Source: Industrial Info Resources (IIR), September 24, 2014 database.
In most regions, planned maintenance was light compared to last year as well as to historical levels. However, in the Midwest, 9% of FCCU capacity was offline for maintenance in September and 20% was offline in October. This resulted in below-average gasoline stocks in September and October, which proved problematic in parts of the Midwest when unexpected outages in the Upper Midwest and the Eastern Great Lakes region further reduced gasoline supply. While Midwest refineries supply most of the distillate fuel and gasoline that is consumed in the region, the Midwest also receives products from the Gulf Coast, including supplemental supply during disruptions, as was the case in October.
FCCU maintenance in the Rocky Mountain region (PADD 4) also was significant during October. PADD 4 refineries produce much of the distillate fuel and gasoline that is consumed in the region, but the region is also supplied with product from PADD 2 as well as Canada. During periods of tight supply, additional product can be made available to PADD 4 from these other regions. Seven percent of the region's CDU capacity was also offline in October. However, PADD 4 distillate stocks have been above the five-year average level and supply should be adequate.
In the Gulf Coast region (PADD 3), which is the largest refining center in the United States and home to just over half of U.S. capacity, planned fall 2014 CDU maintenance was concentrated in October, when 5% of regional CDU capacity was offline. FCCU planned maintenance was concentrated in September when 10% of regional capacity was offline. Supply of distillate and gasoline remained adequate during this period, although the change in the seasonal gasoline vapor pressure specification did cause some transient market imbalances, as is often the case.
With substantially more refining capacity than is needed to meet in-region gasoline and distillate demand, PADD 3 refineries are important sources of supply for other U.S. regions, notably PADD 1, PADD 2 and to a lesser extent PADD 5. The region also supplies international markets. Exports of gasoline from PADD 3, which have averaged 443,000 barrels per day for the first eight months of 2014, can in some instances be diverted to domestic use, providing an important source of additional supply to meet both in-region and neighboring region supply shortfalls.
PADD 5 had very little planned CDU maintenance and no planned FCCU maintenance.
GASOLINE AND DIESEL FUEL PRICES DECLINE
The U.S. average price for regular gasoline decreased five cents last week to $2.89 per gallon as of November 17, 2014, 33 cents lower than the same time last year. The Rocky Mountain price declined seven cents to $3.01 per gallon. The Midwest, Gulf Coast, and West Coast prices each fell five cents, to $2.86 per gallon, $2.67 per gallon, and $3.11 per gallon, respectively. The East Coast price declined four cents to $2.91 per gallon.
The average U.S price for diesel fuel decreased two cents from the week prior to $3.66 per gallon, down 16 cents from the same time last year. The East Coast and Rocky Mountain prices both declined three cents, to $3.54 per gallon and $3.77 per gallon, respectively. The West Coast and Gulf Coast prices fell two cents, to $3.76 per gallon and $3.54 per gallon, respectively. The Midwest price fell less than a penny to remain at $3.79 per gallon.
RESIDENTIAL HEATING FUEL PRICES DECREASE
As of November 17, 2014, residential heating oil prices averaged $3.38 per gallon, 3 cents per gallon lower than last week, and nearly 44 cents less than last year’s price for the same week. Wholesale heating oil prices averaged $2.60 per gallon, 10 cents per gallon lower than last week and nearly 44 cents lower when compared to the same time last year.
Residential propane prices decreased to $2.40 per gallon, almost 1 cent per gallon lower than last week, and 10 cents per gallon less than the price at the same time last year. Wholesale propane prices averaged $1.00 per gallon, nearly 2 cents lower than last week’s price and almost 41 cents per gallon lower than the November 18, 2013 price.
PROPANE INVENTORIES POST SLIGHT GAIN
U.S. propane stocks increased by 0.1 million barrels last week to 81.2 million barrels as of November 14, 2014, 22.8 million barrels (39.0%) higher than a year ago. Gulf Coast inventories increased by 0.4 million barrels while Midwest inventories decreased by 0.3 million barrels. East Coast inventories and Rocky Mountain/West Coast inventories both remained unchanged. Propylene non-fuel-use inventories represented 3.7% of total propane inventories.