U.S. Energy Information Administration - EIA - Independent Statistics and Analysis
Today in Energy
Over a five-month period following an explosion at a California oil refinery in February 2015, imports of gasoline into California increased to more than 10 times their typical level, drawing from sources that include India, the United Kingdom, and Russia.
Imported gasoline has been arriving from all over the world (see graph above) at rates of 28,000–68,000 barrels per day (b/d) for March through July (the latest data available). These levels compare with an average of 5,000 b/d in 2013-14.
California gasoline markets continue to adjust to the February 18 explosion and fire at the ExxonMobil refinery in Torrance, California, located southwest of Los Angeles. The ExxonMobil refinery is the third-largest refinery in Southern California. The refinery unit affected by the explosion, the fluid catalytic cracker (FCC), is essential to making gasoline. Torrance's FCC represents 22% of the region's total FCC capacity, making it a key source of gasoline and distillate fuels that meet California's very stringent fuel specifications. On September 30, ExxonMobil announced the sale of the refinery to PBF Energy, which will be PBF Energy's first refinery on the West Coast once the sale is complete.
Because of its unique product specifications and long distance from international gasoline markets, California specifically, and the West Coast in general, does not typically import much gasoline. As a result, the sudden loss of supply from the Torrance refinery resulted in immediate supply shortfalls and higher wholesale and retail prices. The higher wholesale prices covered the costs of importing more gasoline from distant markets into California to make up for the supply shortfalls.
The U.S. Energy Information Administration's company-level import data show that from March to July, California imports of motor gasoline averaged 52,000 b/d, from 15 different countries. The main supply sources have been refineries in India and the United Kingdom, averaging 13,000 b/d and 11,000 b/d over that time, respectively. California has also imported an average of 5,600 b/d from Russia over that period, along with smaller amounts from refineries across Europe and Asia.
Most of the imported gasoline has arrived in Southern California ports (Long Beach, Los Angeles, and El Segundo). From March to July, more than 50% of the imported motor gasoline volumes have been classified as "all other motor gasoline blending components," indicating that the gasoline material being imported consists mostly of higher octane blending components such as alkylate and reformate, which are then used to make California-grade gasoline.
With the Torrance refinery still offline, wholesale and retail prices in California have remained higher than in other areas of the country. Since the outage (mid-February through September), wholesale spot California grade gasoline prices in Los Angeles have averaged $2.17 per gallon (gal). This price represents an average premium of 38¢/gal compared to the front month futures contract of reformulated blendstock for oxygenate blending (RBOB, the petroleum component of gasoline) from the New York Mercantile Exchange (Nymex). In July, Los Angeles spot gasoline prices hit $3.39/gal, or $1.35/gal higher than the Nymex RBOB. In September, Los Angeles spot prices averaged $1.69/gal, an average premium of 31¢/gal compared with Nymex RBOB.
Note: L.A. denotes Los Angeles; CARBOB denotes California Reformulated Blendstock for Oxygenate Blending; Nymex denotes New York Mercantile Exchange; RBOB denotes Reformulated Blendstock for Oxygenate Blending.
The increase in spot wholesale prices also has resulted in higher retail gasoline prices, particularly in Southern California. California retail gasoline prices are typically higher than the U.S. average as a result of higher taxes and differences in gasoline specifications. However, California and Los Angeles retail prices for regular gasoline averaged $0.96/gal and $1.27/gal higher than the U.S. average in July, respectively, and averaged 76¢/gal and 90¢ per gallon higher in September. However, California and Los Angeles retail prices are 72¢/gal and 62¢/gal lower than the same time last year, respectively, reflecting the broader decline in crude oil prices.
EIA released a PADD 5 Transportation Fuels Markets study on September 30 that examines supply, demand, and distribution of petroleum-based transportation fuels in Petroleum Administration for Defense District (PADD) 5, which encompasses California, Arizona, Nevada, Oregon, Washington, Alaska, and Hawaii.
Principal contributor: T. Mason Hamilton