U.S. gasoline exports soared during summer
Gasoline exports reached record highs in May, June and July, an unusual reversal for the summer season when exports typically are low.
In May, gasoline exports, including finished motor fuel and blended gasoline, averaged 941,000 barrels per day, up 41 percent from the the month’s five-year average, according to the Energy Department.
June exports averaged 935,000 barrels per day, a 33 percent increase from the month’s fiveyear average, while July exports averaged 935,000 barrels per day, 24 percent more than its fiveyear average, according to the Energy Department.
Gasoline exports are typically highest in winter and early spring, when demand for motor fuel declines.
For that reason, refineries produce more gasoline during winter and early spring than U.S. consumption usually requires, and the extra production helps rebuild seasonal inventories and is exported, primarily to Mexico.
U.S. gasoline exports to Mexico, however, also increased this summer.
In May and June, Mexico imported more gasoline than average for several reasons, including a fire at Pemex’s Minatitlan refinery that required extensive repairs and slashed the company’s gasoline output. Pemex is Mexico’s national oil company.
As well, a ransomware attack on Colonial Pipeline in May shut down the vital conduit, cutting off nearly half the gasoline and diesel consumed on the East Coast. As a result, Gulf Coast refiners might have been encouraged to export fuel to Mexico that otherwise would have been distributed domestically, the Energy Department said.
Exports to Mexico have accounted for 50 to 70 percent of U.S. gasoline shipments over the past five years.
Heating oil supplies may sink to 20-year low
The U.S. may be heading into winter with the lowest stockpiles of heating oil to meet surging demand in more than two decades.
Inventories of distillates — used as diesel for both transportation and heating oil — are enough to meet 31.2 days of demand, according to the Energy Information Administration. That’s the tightest it has been for this time of year since 2000.
The dwindling supplies raise the specter of energy shortages and price spikes in the U.S. this winter — at a time when the rest of the world has already been upended by fuel shortages and blackouts. They also underscore how the economic rebound from the COVID-19 pandemic, a surge in demand for virtually all goods and an ensuing trucking boom are now colliding with volatile energy markets, threatening to raise the cost of fuel for homeowners, farmers and truckers.
The diesel balance won’t be as bad as the gas crisis in Europe, Suzanne Danforth, an analyst at Wood Mackenzie, said. “But it’s going to be tight, very tight.”
The tightness is largely the result of the freeze in Texas in February that took down 18 refineries. As much as 5.5 million barrels a day of processing capacity were taken offline by the arctic temperatures, causing a drawdown of gasoline and diesel inventories.
The squeeze may get worse before it gets better as truck drivers respond to a surge in online shopping and historic delays in the global supply chain. Midwest farmers are out with their tractors harvesting the second largest corn crop ever produced. The timing couldn’t be worse, with many U.S. refineries typically shutting down production this time of year to conduct maintenance.