Released on July 15, 2009
(Next Release on July 22, 2009)

U.S. Refinery Capacity Still Growing

EIA updates capacity information annually for all refineries in the United States, in part, to assess how much of that capacity is being used. In the mid-1990’s, demand for petroleum products grew to the point where refineries averaged over 92% capacity utilization for several years, leading to capacity expansions at existing refineries rather than new refineries. Expansion of existing refineries is most economic because crude oil pipelines, product pipelines, utilities, and other infrastructure are already in place. From January 1996 through January 2008, though year-to-year changes varied considerably, annual average expansions of crude distillation units totaled about 175,000 barrels per day; the equivalent of adding one new medium-sized refinery every year.

The increasing use of ethanol and increasing light-duty vehicle efficiencies are expected to dampen future refined product demand growth, so the perceived need for future refining capacity growth has been declining. In addition, the recent economic downturn caused petroleum demand to fall in the second half of 2008, resulting in 2008 refinery utilization of only about 85%. Capacity expansions during 2008 were relatively low as well.

As of January 1, 2009, according to the EIA’s Refinery Capacity Report, there were 150 refineries in the United States with an operable capacity totaling 17,671,550 barrels per calendar day, up 77,703 barrels per day from January 1, 2008. The increase in capacity is mostly due to small increases at several refineries, but one new simple refinery began operating in October 2008 - the 3,000 barrel per day Interline Resources’ Northcut Refining LLC in Douglas, Wyoming. The refineries with the 5 largest year-to-year increases in capacity are shown in the table below.

Of the 150 U.S. refineries, 141 were operating and nine were idle on January 1, 2009. A refinery is considered idle if the atmospheric crude oil distillation unit (ACDU) is not in operation and not under active repair, but capable of being placed in operation within 30 days; or the ACDU is not in operation, but under active repair that can be completed within 90 days. Several refineries reported idle capacity because of units on turnaround, but some units were down due to events such as explosions and fires.

Despite selling its Krotz Springs refinery to Alon Israel Oil Company in July, 2008, Valero Energy Corporation continues to lead the industry in refinery capacity with a total operable capacity of 2,001,290 barrels per day. ExxonMobil Corporation and ConocoPhillips were ranked second and third, respectively, while BP PLC remained fourth even after selling 50% of its Toledo refinery to create BP-Husky Refining. Chevron Corporation edged out Marathon Oil Corporation for the number five slot mainly due to upgrades at its El Segundo refinery. These five companies make up 45.6% of total U.S. refining capacity.

On a PADD level, the rankings by corporate capacity are unchanged from last year. Sunoco, Inc. continues to dominate PADD 1 with 38% of its capacity. Marathon Oil Corporation leads PADD 2 with 19%. ExxonMobil Corporation has 17% of the capacity in PADD 3. In PADD 4, Suncor Energy Inc just barely beat out Sinclair Oil Corporation with 16% of capacity. Chevron Corporation has the most capacity in PADD 5 with 18%.

During the year of 2008, there were slight increases in capacity for most downstream units. Hydrotreating capacity continues to grow as the demand for low sulfur product expands. Coking capacity increased as many refiners add capacity to manage an increasingly heavy crude slate.

U.S. Average Gasoline and Diesel Prices Continue Downward Slide
The U.S. average price for regular gasoline fell for the third week in a row, dropping eight cents to $2.53 per gallon. The price was $1.59 below last year. Prices decreased throughout the country, with the largest drop occurring in the Midwest. The price dipped seven cents on the East Coast to $2.53 per gallon. In the Midwest, the price plunged nearly 12 cents to $2.43 per gallon. The average price on the Gulf Coast remained the lowest of any region, dropping eight cents to $2.39 per gallon. The price change in the Rocky Mountains was the smallest of any region, slipping three cents to $2.56 per gallon. On the West Coast, the price dropped seven cents to $2.82 per gallon. In California, the average price fell seven cents to $2.88 per gallon.

Dropping for the third consecutive week, the U.S. average price for diesel fuel fell a nickel to $2.54 per gallon. That price was $2.22 below the all-time high price set a year ago on July 14, 2008. Prices fell in every region of the country, with the largest drop taking place on the West Coast. On the East Coast and in the Midwest, the average dropped five cents to $2.56 and $2.51 per gallon, respectively. The average price on the Gulf Coast remained the lowest among the regions, falling five cents to $2.49 per gallon. The average in the Rocky Mountains dipped three cents to $2.62 per gallon. On the West Coast, the price was $2.64 per gallon, a drop of nearly seven cents. In California, the price fell six cents to $2.73 per gallon.

Propane Seasonal Build Continues Strong
The seasonal build in the Nation’s primary supply of propane continued strong last week, posting a weekly gain of 2.3 million barrels that pushed inventories up to an estimated 64.4 million barrels as of July 10, 2009. The Midwest and Gulf Coast regions reported respective gains of 2.3 million barrels and 0.6 million barrels last week while the East Coast and the combined Rocky Mountain/West Coast regions reported respective losses of 0.2 million barrels and 0.4 million barrels during this same time. Propylene non-fuel use inventories moved higher last week by 0.1 millions and accounted for a slightly higher 3.2 percent of total propane/propylene inventories compared with the prior week’s 3.1 percent share.

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