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.