Released:  October 23, 2013
Next Release:  October 30, 2013

Growth in jet fuel net exports reflects higher production, stagnant consumption

The United States exported an average of 146,000 barrels per day (bbl/d) of jet fuel during the first seven months of 2013 (Figure 1). If this pace of exports continues through year-end, it will set a record annual jet fuel export level. Following a script now familiar in petroleum markets, jet fuel exports have increased in recent years, reflecting decreasing domestic consumption, relatively stable refinery production (Figure 2), and growing demand from abroad in the non-OECD economies.

U.S. jet fuel product supplied (a proxy for consumption) has been in decline for more than a decade. After peaking at more than 1.7 million bbl/d in 2000, jet fuel consumption fell to near 1.4 million bbl/d in 2009, and has remained near that level since then. Jet fuel consumption has declined as airlines have replaced older planes with newer, more fuel-efficient models and as they continue to consider fuel costs in optimizing flight plans and routes. Through July 2013, consumption declined 6,000 bbl/d (-0.4%) compared with the same period in 2012.

Domestic refinery production of jet fuel also declined over 2000-2012. Production in 2012 was just under 1.5 million bbl/d, 135,000 bbl/d (8.4%) below its 2000 level despite a 75,000-bbl/d increase in production since 2009. From 2009 to 2012, crude oil inputs to refineries increased 663,000 bbl/d (4.6%). Increasing yields of jet fuel at refineries have provided only a modest boost to production, with 2012 jet fuel yields averaging 9.5%, compared to 9.3% in 2009.

Because of robust global demand, refiners have cut jet fuel production by less than declines in domestic consumption. In 2007, jet fuel exports averaged 41,000 bbl/d, 71% of which was delivered to Canada. Imports of jet fuel in 2007 were 217,000 bbl/d, primarily into the East Coast (PADD 1) and West Coast (PADD 5). However, through July of this year, exports had climbed to an average of 146,000 bbl/d and imports had declined to 62,000 bbl/d. Since late 2010, the United States has generally been a net exporter of jet fuel, and in 2013 net exports averaged 84,000 bbl/d through July. Additionally, export destinations have become more diversified, with only 36% of jet fuel exports going to Canada in 2013 through July, while exports to Central and South America now represent 28% of the U.S. total and shipments to Western Europe another 17%.

Of the 62,000 bbl/d of jet fuel that has been imported into the United States in 2013, one-third has been delivered to the East Coast and two-thirds to the West Coast. Most East Coast jet fuel imports come into Florida. Before 2013, most jet fuel imports into the West Coast were delivered to California. However, in 2013 the bulk of PADD 5 imports have been to Hawaii, following the closure of Tesoro's 94,000-bbl/d Kapolei refinery in April. In June, Hawaii imported 45,000 bbl/d of jet fuel, almost 60% of total imports into the United States for that month. The increase in Hawaii's jet fuel imports is likely transitory. In September, the Kapolei refinery, which is now owned by Par Petroleum, was restarted. EIA weekly data indicate that PADD 5 jet fuel imports for the week ending October 18 were 18,000 bbl/d, well below the average of 46,000 bbl/d reported in EIA's weekly data for May through September.

Gasoline prices rise while diesel fuel is flat
The U.S. average retail price of regular gasoline increased one cent to $3.36 per gallon as of October 21, 2013, 33 cents lower than last year at this time. Both the Midwest and Gulf Coast prices increased two cents, to $3.31 per gallon and $3.13 per gallon, respectively, while the East Coast price was up less than a penny to remain at $3.35 per gallon. Rocky Mountain and West Coast prices both decreased three cents, to $3.43 per gallon and $3.66 per gallon, respectively.

The national average diesel fuel price was unchanged from last week at $3.89 per gallon, and is now 26 cents lower than a year ago. Prices on the East Coast, Gulf Coast, and West Coast all increased less than one cent, to $3.91 per gallon, $3.80 per gallon, and $4.05 per gallon, respectively. The Midwest price declined less than a penny to remain at $3.85 per gallon, and the Rocky Mountain price is $3.88 per gallon, one cent lower than last week.

Propane stocks fall from prior week
Total U.S. inventories of propane decreased by 0.5 million barrels last week to end at 66.0 million barrels, about 8.5 million barrels (11.5%) lower than the same week last year. Midwest inventories led the draw, falling 0.8 million barrels, while the Gulf Coast drew 0.6 million barrels. East Coast stocks gained 0.8 million barrels and the Rocky Mountain/West Coast stocks were up slightly. Propylene non-fuel-use inventories represented 4.5% of total propane inventories.

Residential heating fuel prices increase
Residential heating oil prices increased during the period ending October 21, 2013. The average residential heating oil price rose by 1 cent per gallon last week to reach $3.85 per gallon, a decrease of 19 cents per gallon from the same time last year. Wholesale heating oil prices remained flat, holding at just under $3.11 per gallon.

The average residential propane price increased by nearly 4 cents per gallon last week to reach $2.37 per gallon. This is an increase of 16 cents per gallon compared with the same period last year. Wholesale propane prices increased by 2 cents per gallon to reach $1.27 per gallon for the week ending October 21, 2013.

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