Refineries Running At Record Levels To Meet High Demand

Refineries Running At Record Levels To Meet High Demand


Just about one year ago, the refining industry along the Gulf Coast of Texas and Louisiana suffered a severe blow by Hurricane Harvey. Even though it took several months to get back to full strength, “U.S. refiners are running at near-record levels,” according to the Energy Information Administration (EIA).

U.S. gross refinery inputs surpassed 18 million barrels per day (b/d) for the first time during the week ending July 6 (the most current data available), according to an EIA report issued on Aug. 2. It is the largest since the EIA began publishing that data series in 1990.

“U.S. refineries are running at record levels in response to robust domestic and international demand for motor gasoline and distillate fuel oil,” EIA stated.

The U.S. average regular gasoline retail price was $2.85 per gallon on July 30, up 49 cents from the same time last year. Gulf Coast prices, which includes Texas, averaged $2.59 per gallon.

The U.S. average diesel fuel price averaged $3.23 per gallon up 70 cents from 2017.

The last time the four-week average of U.S. gross refinery inputs approached 18 million b/d was the week of Aug, 25, 2017, which also marked the peak of U.S. gross refinery inputs for the year. Hurricane Harvey made landfall the following week, resulting in widespread refinery closures and shutdowns along the U.S. Gulf Coast.

Record-high U.S. input levels are driven in large part by refinery operations in the Gulf Coast and Midwest regions, EIA noted. The Gulf Coast has more than half of all U.S. refinery capacity and reached a new record input level the same week as the record-high overall U.S. capacity, with four-week average gross refinery inputs of 9.5 million b/d for the week ending July 6. The Midwest has the second-highest refinery capacity and the four-week average gross refinery inputs reached 4.1 million b/d for the week ending June 1.

U.S. refineries are responding to high demand for petroleum products, specifically motor gasoline and distillate. The four-week average of finished motor gasoline product supplied— EIA’s proxy measure of U.S. consumption—typically hits the highest level of the year in early August. Weekly data for this summer suggest this year’s peak in finished motor gasoline product probably will equal 2016 and 2017 of 9.8 million b/d each compared to 9.7 million b/d recorded last week.

Although the United States has typically been a net importer of gasoline in the spring and summer months when domestic consumption increases and a net exporter in winter months when demand is lower, recent strong international demand has pushed four-week average finished gasoline exports to 776,000 b/d for the week ending July 27, compared with 557,000 b/d at the same time last year.

U.S. distillate product supplied is also robust, averaging 3.9 million b/d for the past four weeks, 35,000 b/d higher than the five-year average level for this time of year. In addition to relatively strong domestic distillate consumption, U.S. exports of distillate have continued to increase, reaching a four-week average of 1.2 million b/d as of July 27. For the week ending July 27, the four-week average of U.S. distillate product supplied plus exports (a measure of total call on U.S. distillate supplies) reached 5.1 million b/d.

Alex Mills is the former President of the Texas Alliance of Energy Producers. The opinions expressed are solely of the author.

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Alex Mills is the former President of the Texas Alliance of Energy Producers. The Alliance is the largest state oil and gas associations in the nation with more than 3,000 members in 305 cities and 28 states.


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