For the week ending July 6, 2018, the four-week average of U.S. gross refinery inputs surpassed 18 million barrels per day (b/d) for the first time since the U.S. Energy Information Administration (EIA) began publishing that data series in 1990 (Figure 1). U.S. refineries are running at record levels in response to robust domestic and international demand for motor gasoline and distillate fuel oil.
Methodological reclassifications drove a reduction in the number of operating refineries in EIA's latest report as of the beginning of the year. According to the Refinery Capacity Report, the total number of operable refineries recorded in the report decreased from 141 on January 1, 2017, to 135 on January 1, 2018. These changes to the survey data include merging four refineries previously considered separate in survey data into two and the re-categorization of two refineries from idle to shut down. Consequently, the decrease in number of operating refineries does not necessarily represent a meaningful shift in U.S. refinery operating capacity.
Suncor Energy operates a refinery in Commerce City, Colorado. In previous survey data, this refinery was counted as two separate plants: Commerce City East and Commerce City West, but Suncor has been running both plants as a single entity. The 2018 report combined these plants into one, reporting as Commerce City, Colorado. Similarly, Marathon Petroleum Co. LP purchased a 459,000 b/cd BP refinery in Texas City, Texas, in 2013 and called it Galveston Bay. Marathon has since integrated operations of Galveston Bay with their existing 86,000 b/cd Texas City, Texas, refinery. The combined single entity can be found in the 2018 report's data as Galveston Bay, Texas.
From 2017 to 2018, the amount of idle capacity decreased by 90%, which can be explained in part by the shutting down of two refineries that had been idle on January 1, 2017. Paramount Petroleum Corp. had not operated its 84,500 b/cd CDUs in Paramount, California, since 2012. In 2017, Delek Group LTD purchased the refinery and determined that they would no longer run those units, so their status in the 2018 report was changed from idle to shut down. Terminaling operations for storage and loading do, however, continue at that site. Axeon Specialty Products' 74,000 b/cd asphalt refinery in Paulsboro, New Jersey, was also idle at the start of 2017. In April 2017, the refinery stopped processing crude oil through its CDUs so their status was changed to closed at the start of 2018. This plant also maintains terminaling operations.
Record refinery runs have helped accommodate increases in U.S. crude oil production, which averaged 9.4 million barrels per day (b/d) in 2017, an increase of 3.7 million b/d over 2011. Gross crude oil inputs to refineries averaged 16.6 million b/d in 2017 compared with 14.8 million b/d in 2011. From 2011 to 2017, operable refinery crude distillation capacity increased 881,000 b/cd, and utilization rose from 86.2% in 2011 to 91% in 2017, resulting in the 1.8 million b/d increase in gross crude inputs. Over the same period, crude oil imports decreased by 1 million b/d and crude oil exports increased by 1.1 million b/d (Figure 2).
The Refinery Capacity Report also includes information on capacity expansions planned for the balance of the year. Capacity is not expected to expand significantly during 2018. Further investment in refinery expansion projects will depend on expectations about crude oil price spreads and the relative economic advantage of the U.S. refining fleet compared with refineries in the rest of the world.
EIA's Refinery Capacity Report and the discussion in this article measure refinery capacity in barrels per calendar day and barrels per stream day. Barrels per calendar day is a measure of the amount of input that a distillation unit can process in a 24-hour period under usual operating conditions, taking into account both planned and unplanned maintenance. Barrels per stream day, another measure of refinery capacity, is the maximum number of barrels of input that a distillation facility can process within a 24-hour period when running at full capacity under optimal crude and product slate conditions with no allowance for downtime. Stream day capacity is typically about 6% higher than calendar day capacity.
U.S. average regular gasoline and diesel prices decrease
The U.S. average regular gasoline retail price decreased nearly 5 cents from last week to $2.83 per gallon on June 25, 2018, up 55 cents from the same time last year. Midwest prices dropped over seven cents to $2.72 per gallon, East Coast and Gulf Coast prices each fell nearly four cents to $2.76 per gallon and $2.62 per gallon, respectively, West Coast prices dropped nearly three cents $3.41 per gallon, and Rocky Mountain prices decreased nearly two cents to $2.96 per gallon.
The U.S. average diesel fuel price decreased nearly 3 cents from last week to $3.22 per gallon on June 25, 2018, 75 cents higher than a year ago. Gulf Coast prices fell nearly four cents to $2.98 per gallon, Midwest prices fell three cents to $3.14 per gallon, East Coast prices declined nearly three cents to $3.22 per gallon, and West Coast and Rocky Mountain prices each fell nearly two cents to $3.74 per gallon and $3.32 per gallon, respectively.
Propane/propylene inventories rise
U.S. propane/propylene stocks increased by 4.3 million barrels last week to 58.4 million barrels as of June 22, 2018, 7.3 million barrels (11.2%) lower than the five-year average inventory level for this same time of year. Gulf Coast, Midwest, East Coast, and Rocky Mountain/West Coast inventories increased by 2.7 million barrels, 0.7 million barrels, 0.5 million barrels, and 0.3 million barrels, respectively. Propylene non-fuel-use inventories represented 4.4% of total propane/propylene inventories.
