The U.S. Energy Information Administration’s (EIA) latest analysis of planned refinery outages for December 2017 through June 2018 finds that such outages are not likely to cause a shortfall in the supply of petroleum products including gasoline, jet fuel, and distillate fuel, relative to expected demand, either nationally or within any U.S. region. EIA reached this conclusion despite the current high level of U.S. gasoline demand, which in 2017 was as high as or higher than in any past year.
EIA’s conclusions are the result of simulating regional supply on a monthly basis based on a set of assumptions about refinery operations. The report considers planned shutdowns of refinery units as reported by Industrial Info Resources (IIR) and provides EIA’s analysis of the implications of outages affecting atmospheric crude distillation units, fluidized catalytic cracking units, catalytic reforming units, hydrocracking units, and coking units. Barring unusually high unplanned outages, planned outages that extend beyond schedule, or higher-than-expected demand, EIA expects the supply of gasoline, jet fuel, and distillate fuel to be adequate in all regions through June 2018.
Planned refinery maintenance in the East Coast is moderate from December 2017 through June 2018, except for outages due to maintenance on fluidized catalytic cracking capacity in February, which exceed the previous 10-year maximum. Planned maintenance for crude distillation capacity is moderate, with EIA’s forecast of reduced production reaching a monthly average peak of 193,000 barrels per day (b/d) in April, or 14% of regional capacity. No plans for maintenance on hydrocracking and coking units have been announced, and reforming capacity maintenance is planned to be lower than the previous year and previous 10-year average. Production losses associated with planned maintenance could be offset by movements from other regions, imports, and by drawing down inventories.
Planned outages in the Midwest region for December 2017 through June 2018 are close to or higher than the previous 10-year average and are concentrated in March and April. Nevertheless, EIA expects supply of petroleum products to be adequate to meet domestic demand in the Midwest during the first half of 2018. Planned outages in the Midwest in March and April are estimated to result in gasoline production losses of 333,000 b/d and 216,000 b/d, respectively, jet fuel production losses of 77,000 b/d and 46,000 b/d, respectively, and distillate fuel production loses of 155,000 b/d and 110,000 b/d, respectively.
Planned outages in the Gulf Coast region from December 2017 through June 2018 are moderate, and regional inventories appear to be sufficient to offset lost production from those planned outages. With more than half of the refining capacity in the United States, the Gulf Coast region produces far more petroleum products than it consumes. The region’s surplus production supplies other U.S. regions, mainly the East Coast and the Midwest, as well as international markets. EIA’s calculations indicate that planned refinery outages in the Gulf Coast are likely to result in modest production losses in petroleum products. Planned outages peak in February, with expected average losses of 222,000 b/d of gasoline and 195,000 b/d of distillate fuel. From December 2017 through June 2018, total estimated production loss as a result of the planned outages accounts for 28.8% of existing gasoline inventory, 40.0% of jet fuel inventory, and 55.5% of existing distillate inventory. Regional inventories will likely be sufficient to make up for lost in-region production. Gulf Coast refinery operations were significantly disrupted in September 2017 following Hurricane Harvey, which led to changes for planned maintenance.
Planned refinery maintenance for the Rocky Mountain region is moderate from December 2017 through June 2018. Because oil consumption in the Rocky Mountain region is low compared with other parts of the country and inventories of petroleum products are above or close to the 10-year average, the planned maintenance should not affect product availability.
Planned outages of atmospheric crude distillation capacity and fluidized catalytic cracking capacity in the West Coast region from December 2017 through June 2018 are close to the 10-year average. Planned maintenance on both types of units is concentrated in January and February. Planned maintenance on reforming and coking capacity is lower than the 10-year average, and no plans for maintenance on hydrocracking capacity have been announced. EIA expects that the production losses from planned maintenance will peak in January and February, with expected average losses for gasoline of 115,000 b/d and 122,000 b/d, respectively, average losses for jet fuel of 24,000 b/d and 21,000 b/d, respectively, and averages losses for distillate fuel of 41,000 b/d and 39,000, respectively.
U.S. average regular gasoline and diesel prices decrease
The U.S. average regular gasoline retail price dropped 5 cents from the previous week to $2.56 per gallon on February 19, 2018, up 26 cents from the same time last year. Midwest prices decreased over seven cents to $2.39 per gallon, Gulf Coast prices decreased nearly six cents to $2.28 per gallon, East Coast prices decreased nearly five cents to $2.56 per gallon, Rocky Mountain prices decreased over two cents to $2.49 per gallon, and West Coast prices decreased one cent to $3.13 per gallon.
The U.S. average diesel fuel price dropped nearly 4 cents to $3.03 per gallon on February 19, 2018, 46 cents higher than a year ago. Midwest prices fell five cents to $2.97 per gallon, West Coast and Gulf Coast prices each fell over three cents to $3.40 per gallon and $2.82 per gallon, respectively, East Coast prices fell nearly three cents to $3.08 per gallon, and Rocky Mountain prices fell nearly two cents to $2.95 per gallon.
Propane/propylene inventories decline
U.S. propane/propylene stocks decreased by 2.5 million barrels last week to 43.1 million barrels as of February 16, 2018, 8.8 million barrels (17.0%) lower than the five-year average inventory level for this same time of year. Gulf Coast, Midwest, and Rocky Mountain/West Coast inventories decreased by 1.4 million barrels, 1.2 million barrels, and 0.1 million barrels, respectively, while East Coast inventories increased by 0.1 million barrels. Propylene non-fuel-use inventories represented 7.5% of total propane/propylene inventories.
Residential heating fuel prices decrease
As of February 19, 2018, residential heating oil prices averaged $3.10 per gallon, 3 cents per gallon lower than last week but almost 46 cents per gallon higher than last year’s price at this time. The average wholesale heating oil price for this week averaged almost $2.03 per gallon, 4 cents per gallon higher than last week and nearly 31 cents per gallon higher than a year ago.
Residential propane prices averaged almost $2.57 per gallon, nearly 1 cent lower than last week but 12 cents per gallon higher than a year ago. Wholesale propane prices averaged $1.01 per gallon, 6 cents per gallon lower than last week but 19 cents per gallon higher than last year’s price.