Released on July 14, 2010
(Next Release on July 21, 2010)

U.S. Refinery Capacity Declines for First Time Since 2003

EIA collects 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-to-late1990s, demand for petroleum products grew to the point where refineries averaged over 92 percent capacity utilization for several years, leading to capacity expansions at existing refineries. However, from late 2007 through the first half of 2009, petroleum demand declined, reflecting the combined effect of the economic downturn, increasing petroleum prices through mid-2008, and the increased use of ethanol blended into gasoline, resulting in excess refining capacity and a refinery utilization rate of only about 83 percent in 2009. Looking forward, the schedule of higher standards for new vehicle fuel efficiency and the continuing phase-in of increased mandates for the use of renewable fuels limit the potential for growth in petroleum demand. Influenced by both recent market developments and the market outlook, refinery capacity fell during 2009 for the first time since 2003.

As of January 1, 2010, EIA’s Refinery Capacity Report, showed there were 148 refineries in the United States with an operable capacity totaling 17,583,790 barrels per calendar day, down 87,760 barrels per day from January 1, 2009 (Figure 1). The decrease in capacity is mostly due to the shut down of two refineries, Sunoco’s 145,000 barrel per day Eagle Point refinery in Westville, New Jersey and Valero’s 182,200 barrel per day Delaware City, Delaware refinery. These declines were offset, in part, by the expansion at Marathon’s Garyville, Louisiana refinery which showed an increase of 180,000 barrels per day.

Source: Energy Information Administration

Of the 148 U.S. refineries, 137 were operating and 11 were idle on January 1, 2010. 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 routine maintenance that happened to fall on January 1. Some smaller plants including the Flying J (Big West) refinery in Bakersfield, California, and the Western, Bloomfield, New Mexico refinery have been completely idled. However, because they could be restarted within 30 days, they were not classified as shut down.

With the shut down of Valero Energy Corporation’s Delaware City plant, ExxonMobil Corporation replaced Valero as the industry leader in total refining capacity, a position Valero had held since January 1, 2007. ConocoPhillips and BP PLC were ranked third and fourth, respectively, for the fourth year in a row. Marathon Oil Corporation moved back into the fifth slot due to expansion of its Garyville, Louisiana refinery. These five companies hold 45.6 percent 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 (East Coast) with 37 percent of its capacity. Marathon Oil Corporation leads PADD 2 (Midwest) with 18 percent. ExxonMobil Corporation has 16 percent of the capacity in PADD 3 (Gulf Coast). In PADD 4 (Rocky Mountain), Suncor Energy Inc. leads with 16 percent of capacity, while Chevron Corporation has the most capacity in PADD 5 (West Coast) with 18 percent.

Overall, during 2009, there was a slight decrease in capacity for units downstream from the ACDU. As with the decline in ACDU capacity, the downstream unit decline is mostly due to the shutdown of the Delaware City and Eagle Point refineries. The expansion at the Garyville refinery and smaller enhancements to units across the industry helped mitigate those reductions.

U.S. Average Gasoline and Diesel Prices Continue to Slide
Dropping for the second week in a row, the U.S. average price for regular gasoline slipped a penny to $2.72 per gallon. The national average was $0.19 higher than last year. With the exception of the Midwest, average prices declined in all regions of the country. On the East Coast and Gulf Coast, the averages each dropped more than a penny and a half, to $2.66 per gallon and $2.56 per gallon, respectively. Despite an increase of less than a half cent, the average in the Midwest was essentially unchanged at $2.68 per gallon. The average in the Rocky Mountains slipped over a cent to $2.74 per gallon. The West Coast average fell about a cent to settle at $3.04 per gallon and the California price dipped less than a half cent to $3.11 per gallon.

The retail diesel fuel price decreased for the third consecutive week, falling two cents to $2.90 per gallon. However, the average remained $0.36 above the price a year ago. East Coast prices fell over two cents to $2.92 per gallon, while the Gulf Coast average slipped a penny to $2.86 per gallon. The largest decline took place in the Midwest, where the average fell two and a half cents to $2.87 per gallon. The Rocky Mountain and West Coast averages each fell about two cents to $2.91 per gallon and $3.06 per gallon, respectively. In California, the average dipped a penny to $3.12 per gallon.

Propane Inventories Build Again
Although total U.S. inventories of propane continued their seasonal build last week, growing by 1.9 million barrels to end at 51.6 million barrels, they were 12.8 million barrels below last year’s level. The Gulf Coast region led the gain with 1.2 million barrels of new propane stocks. The Midwest region grew by 0.6 million barrels, while the Rocky Mountain/West Coast region added 0.1 million barrels. The East Coast regional stocks were down slightly. Propylene non-fuel use inventories decreased their share of total propane/propylene stocks from 6.8 percent to 6.1 percent.

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