West Coast gasoline market stabilizing, prices finally falling

Refinery outage on West Coast that is causing shortage appears it will drag on longer than expected

After months of higher than national average prices, rising imports are finally stabilizing the West Coast gasoline market.

Gasoline imports to the US West Coast rose 48,000 b/d to 111,000 b/d for the week ended Sept. 11, according to the US Energy Information Administration.

According to cFlow, Platts News trade flow software, at least seven gasoline cargoes were in the Los Angeles area or en route for delivery over the past week.

Platts reports “sagging production and stocks” on the West Coast, citing the California Energy Commission’s estimate for weekly production of CARBOB, which fell 6.7 per cent to 6.79 million barrels, and a drop in CARBOB stocks of 7.2 per cent to 5.1 million barrels.

After reaching a 2015 peak of $3.60/gal on July 20, regular gasoline prices in PADD 5 (West Coast) have since fallen to $2.99/gal as of September 14, but remain 62 cents/gal above the U.S. average as a result of tight gasoline supplies that reflect the ongoing outage at the fluid catalytic cracking unit at ExxonMobil’s Torrance, Calif. refinery, according to the EIA.

The outage might not be overcome any time soon.

California regulators canceled a meeting with ExxonMobil scheduled for Thursday about the company’s plans to restart the fluid catalytic cracker at the refinery, according to Platts.

The 87,500 b/d unit has been down since Feb. 18, severely hampering gasoline supply in the region.

The most recent data from the U.S. Federal Highway Administration show Americans drove a record 1.54 trillion miles during the first half of 2015, compared with the previous high of 1.50 trillion miles driven in the first half of 2007, contributing to higher demand for gasoline in the United States.

Monthly data show gasoline consumption in the United States increased by 3 per cent during the first half of 2015 compared with the first half of 2014.

U.S. motor gasoline consumption, which rose by 80,000 b/d in 2014, is projected to increase by 210,000 b/d (2.3%) in 2015 as the effects of employment growth and lower gasoline prices outweigh increases in vehicle fleet efficiency.

However, gasoline consumption is forecast to remain flat in 2016, as a long-term trend toward vehicles that are more fuel-efficient offsets the effects of other factors, said the EIA in its weekly petroleum report.