Poten's Weekly Opinion - The U.S. Flexes Its Refining Muscle

Apr 05 2024

U.S. product exports are resilient among changing trade flows

In our discussions about the U.S. oil industry, we frequently reference ever rising crude oil production and record crude oil exports. However, the United States also has a thriving refining industry. Earlier this week, the U.S. Energy Information Administration (EIA) published an analysis titled: “U.S. petroleum product exports set another record high in 2023.” According to the EIA “Petroleum product exports from the United States averaged a record 6.1 million barrels per day (b/d) in 2023, a 2.5% increase from 2022.” However, the growth in U.S. petroleum product exports is driven by a 14% increase in propane (LPG) exports, offsetting decreases in gasoline and distillate exports. So, the picture for the refined products that are moved on product tankers may look a little different. In this week’s Tanker Opinion, we’ll take a closer look at what is happening on that front.
A significant portion of U.S. product exports originate from the U.S. Gulf area, where a majority of U.S. refining capacity is located. In January 2024, the EIA estimates that the U.S. had 18.4 Mb/d of operable capacity, with 10 Mb/d (54%) of that located in PADD 3. The second largest refining area in the U.S. is PADD 2 (the Midwest), but these refineries are mostly landlocked and produce predominantly for the domestic market. Capacity in PADD 4 (Rocky Mountains) is small (650,000 b/d) and does not feature in the export markets. Refining capacity in PADD 1 (U.S. East Coast) has declined significantly over the last 20 years, from 1.7 Mb/d in 2004 to 952,000 b/d currently and product exports are generally limited.

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