The U.S. Energy Information Administration’s (EIA) latest analysis of planned refinery outages for the fourth quarter of 2018 finds that planned outages in the United States 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 has reached this conclusion despite the current high level of U.S. gasoline demand, which so far in 2018 has been close to the record high seen in 2017.
EIA’s national and regional conclusions are the result of simulating regional monthly supply based on 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 ACDU, FCCU, CRU, HU, and CU.
Regional supply and demand balances are more valuable than U.S. national balances because pipeline infrastructure, geography, and marine shipping regulations constrain the amount of product that can flow between regions in the United States. Barring unusually high unplanned outages, planned outages that extend beyond schedule, or higher-than-expected demand, the supply of gasoline, jet fuel, and distillate fuel will be adequate in all regions through December.
Planned refinery maintenance in the East Coast will be moderate in the fourth quarter of 2018, except for outages as a result of maintenance on hydrocracking capacities in October, which will exceed 50% of regional capacity. In October, planned maintenance for crude distillation capacity will reach a peak average of 243,000 barrels per day (b/d), or 19% of regional capacity. Production losses associated with planned maintenance could be offset by movements from other regions, by imports, and by drawing down inventories.
Planned outages in the Midwest in the fourth quarter of 2018 will be moderate, except for crude distillation and coking capacities in October and reforming capacity in October and November, which are close to or exceed the previous 10-year maximum. Nevertheless, EIA expects supply of petroleum products to be adequate to meet domestic demand in the Midwest during the fourth quarter. Production losses from planned outages in October and November will average 235,000 b/d and 107,000 b/d in gasoline, 49,000 b/d and 24,000 b/d in jet fuel, and 164,000 b/d and 48,000 b/d in distillate fuel, respectively.
Planned outages in the Gulf Coast in the fourth quarter will be light, and regional inventories appear to be sufficient to offset lost production from those planned outages. More than half of the refining capacity in the United States is located in the Gulf Coast region, and as a result, the region produces far more petroleum products than it consumes. The Gulf Coast’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 will result in light production losses in petroleum products. Planned outages will result in production losses of 96,000 b/d in gasoline and 99,000 b/d in distillate fuel in October. For the fourth quarter, total estimated production loss as a result of the planned outages accounts for 4.3% of existing gasoline inventory, 2.2% of jet fuel inventory, and 8.4% of distillate inventory as of the week ending August 31, 2018. Regional inventories will likely be sufficient to account for lost in-region production.
Planned refinery maintenance for the Rocky Mountain will be light in the fourth quarter. Because oil consumption in the Rocky Mountain region is low compared with other parts of the country and inventories of petroleum products are close to the 10-year average, the planned maintenance should not affect product availability.
Planned outages in the West Coast in the fourth quarter will be moderate, no higher than 10% of regional capacity, except for coking capacity in October, with outages of 11% of regional capacity. The production losses from planned maintenance in October will average 86,000 b/d in gasoline, 24,000 b/d in jet fuel, and 52,000 b/d in distillate fuel, respectively.
Although unanticipated events could result in some limitations, EIA’s review found no region in which planned refinery outages are likely to lead to inadequate gasoline, distillate, or jet fuel supplies from October through December. From October to December, total estimated production loss as a result of the planned outages accounts for 9.9% of existing gasoline inventory, 13.4% of jet fuel inventory, and 10.5% of existing distillate inventory. Regional inventories will likely be sufficient to make up for lost in-region production.
U.S. average regular gasoline and diesel prices decrease
The U.S. average regular gasoline retail price decreased 3 cents from last week to $2.81 per gallon on October 29, 2018, up 32 cents from the same time last year. Gulf Coast prices fell nearly six cents to $2.52 per gallon, East Coast prices decreased over four cents to $2.73 per gallon, West Coast prices decreased nearly two cents to $3.48 per gallon, Midwest prices fell nearly one cent to $2.68 per gallon, and Rocky Mountain prices decreased less than a cent, remaining virtually unchanged at $2.96 per gallon.
The U.S. average diesel fuel price decreased almost 3 cents from last week to $3.36 per gallon on October 29, 2018, 54 cents higher than a year ago. Gulf Coast prices fell nearly four cents to $3.12 per gallon, West Coast, East Coast, and Midwest prices each fell over two cents to $3.85 per gallon, $3.35 per gallon, and $3.31 per gallon, respectively, and Rocky Mountain prices decreased less than a cent, remaining virtually unchanged at $3.41 per gallon.
Propane/propylene inventories rise
U.S. propane/propylene stocks increased by 1.0 million barrels last week to 83.0 million barrels as of October 26, 2018, 2.1 million barrels (2.5%) lower than the five-year (2013-2017) average inventory level for this same time of year. Gulf Coast and Rocky Mountain/West Coast inventories increased by 1.4 million barrels and 0.1 million barrels, respectively, while Midwest and East Coast inventories decreased by 0.3 million barrels and 0.2 million barrels, respectively. Propylene non-fuel-use inventories represented 3.9% of total propane/propylene inventories.
Residential heating fuel prices this week at the same level as last week
As of October 29, 2018, residential heating oil prices averaged $3.37 per gallon, unchanged from last week’s price but nearly 68 cents per gallon higher than last year’s price at this time. The average wholesale heating oil price for this week is nearly $2.40 per gallon, almost 1 cent per gallon more than last week and 44 cents per gallon higher than a year ago.
Residential propane prices averaged nearly $2.42 per gallon, virtually unchanged from last week and seven cents per gallon higher than a year ago. Wholesale propane prices averaged $0.93 per gallon, almost 8 cents per gallon less than last week and 14 cents per gallon lower than a year ago.
