Refinery Output at Historic Levels

Oil and gas refinery plant.

According to an EIA (Energy Information Administration) report, the average output of U.S. refineries in July surpassed 18 million barrels per day (b/d). This report represents the first time since the EIA began publishing data in 1990 that refineries have reached this level. The increase is linked to increasing global demand for gas and fuel oil.

The last time refinery levels approached this benchmark was a little more than a year ago, just before Hurricane Harvey hit the Gulf Coast. Despite record-high production levels, refinery utilization as a percentage of capacity has not surpassed the record set in 1998. Rather than higher utilization, refinery runs have increased due to increases in facility capacity. Between 2011-2018, refinery output has jumped by an average of 862,000 barrels per day.

These levels are driven in large part by refinery operations in the Gulf Coast and Midwest. The Gulf Coast has more than half of all U.S. refinery capacity, hitting a 9.5 million b/d average in July, while the Midwest has the second-highest refinery capacity and reached a 4.1 million b/d average.

Weekly data for this summer suggests that this year’s peak in gasoline is likely to match that of 2016 and 2017, the two highest-level years on record. Each hit a high of 9.8 million b/d and averaged out at 9.7 million b/d. Although the United States has typically been a net importer of gasoline in the spring and summer months and a net exporter in the winter, recent international demand has pushed gasoline exports to 776,000 b/d, compared with 557,000 b/d at the same time last year.

U.S. distillate product supply is also robust, averaging 3.9 million b/d for the past four weeks, which is 35,000 b/d higher than the five-year average for this time of year. In addition to relatively strong domestic distillate consumption, U.S. exports have continued to increase, reaching an average level of 1.2 million b/d.

The EIA estimates that U.S. refinery runs will average 16.9 million b/d and 17.1 million b/d in 2018 and 2019, respectively. If achieved, both would be new record highs, surpassing the 2017 annual average of 16.6 million b/d.

 

Image Credit: Pataradon Luangtongkum/Shutterstock.com

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