Record Gulf coast exports fuel terminal logjam
NEW YORK — Record fuel exports are straining the capacity of ports along the Gulf of Mexico, causing congestion at terminals, deepening a glut of gasoline and lowering prices.
Distillates leaving the U.S. in the week ended Feb. 1, most of it from the Gulf Coast, climbed 8.7 per cent from a year earlier, government data show. Gasoline in the region sank to a record low versus futures in December and the discount yesterday was more than four times wider than the 10-year average, according to data compiled by Bloomberg.
Capacity for sending fuel abroad from ports in Louisiana and Texas is falling short as refiners process more oil than any time since 1990 after the highest U.S. production in two decades swelled crude supplies. Demand from Central and South America will rise three times as fast as in the U.S. this year, prompting terminal operators such as Kinder Morgan Energy Partners LP to add docks and storage tanks.
“A lot of extra oil is being refined, especially with demand from Latin America,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “Gasoline prices are getting hit and that suggests there’s a capacity restraint that’s being imposed. If we see the prices continue to drop, we’ll probably see cutbacks in refinery production.”
Conventional gasoline on the Gulf Coast slumped to 23 cents below futures on the New York Mercantile Exchange on Jan. 28 before narrowing to 12.75 cents yesterday, according to data compiled by Bloomberg. That compares with an average of 2.86 cents over the past 10 years.
Gasoline sold in the Gulf is hovering at the lowest for this time of year since at least 1992, according to data compiled by Bloomberg. Inventories in the Gulf Coast, known as PADD 3, are near the highest level since the Energy Department’s Energy Information Administration started publishing weekly data in 1990. Stockpiles climbed to 83.8 million as of Jan. 11. Refineries in the region processed a record high of 8.42 million barrels a day in the week ended Dec. 14.
Ballooning supplies haven’t resulted in savings for motorists across the U.S., underscoring the difficulty in transporting products across the country. Pump prices in the region were $3.383 a gallon on Feb. 11, 22.8 cents below the national average, compared with a mean difference of 12.5 cents over the past five years, Energy Department data show.
Shipments of gasoline, diesel and other refined products from the Gulf rose 9.3 per cent to a record 2.3 million barrels a day in the first 11 months of 2012, EIA data show. That helped boost the average time vessels had to wait to be loaded at the Port of Houston-Galveston by four per cent to 57.9 hours, according to PortVision, a maritime technology firm.