Gasoline plentiful as U.S. refiners produce less
Falling demand for petroleum, higher gasoline imports from Europe and a regulatory requirement to produce more ethanol in 2009 are factors causing the U.S. refining industry’s spring maintenance downtime to be more marked than usual, says the U.S. Energy Information Administration.
On a national basis, however, extra maintenance outages are not expected to have much impact on retail gasoline prices between now and June, according to EIA’s Market Assessment of Planned Refinery Outages.
An annual rite of spring is the refining industry’s heaviest maintenance downtime of the year, occurring when winter demand for heating oil falls, and before the summer driving season. As spring 2009 sees more or longer outages than usual, regional movements in gasoline may be required, with the East Coast in particular expected to have the tightest supply-demand balance.
In a weak market, refiners may choose to bring down their entire operations rather than partial units that could continue operating at less efficiency. In Texas, for example, Valero’s Texas City Refinery was shut down 40 days in February and March, and Total’s Port Arthur refinery was shut down for an unspecified period in late March.
Weekly data indicates that for the first quarter, demand for gasoline and distillates — representing 70 percent of refinery output from crude oil – declined by 3 percent. The need for U.S-produced gasoline is falling faster than consumption because of surplus supplies coming from Europe, where consumers are being encouraged to move to diesel-fueled vehicles from gasoline light-duty vehicles, causing Europe to produce more gasoline than it can use.
The Energy Independence and Security Act of 2007 requires more ethanol to be used in 2009 than in 2008, applying further downward pressure on U.S. refiners’ need for crude input and product outputs.
Because gasoline supplies are still plentiful, any increases in gasoline and diesel prices this spring and summer would be mainly dependent on crude prices, the report says.
The national average for regular gasoline fell for the first time in three weeks, slightly, or by nine-tenths of a percent, to 203.7 cents per gallon. The Gulf Coast area ranked lowest among the regions, with the average price dropping 1.3 cents to 195.6 cents per gallon.
Published Tuesday, April 14th, 2009 at 6:14 am and filed under Industry News.