NO PROBLEMS SEEN IN MEETING U.S. SUMMER GASOLINE DEMAND RISE

Motor gasoline demand in the U.S. during the 1993 peak summer driving season will climb by about 100,000 b/d from last year's level, predicts Energy Information Administration. EIA cites the current state of the economy and relatively weak gasoline prices in expectations of increased highway travel in accounting for the 1.3% year to year rise in demand. The Department of Energy agency sees no significant problems in meeting summer gasoline demand despite much uncertainty over likely demand

June 21, 1993

3 min read

Motor gasoline demand in the U.S. during the 1993 peak summer driving season will climb by about 100,000 b/d from last year's level, predicts Energy Information Administration.

EIA cites the current state of the economy and relatively weak gasoline prices in expectations of increased highway travel in accounting for the 1.3% year to year rise in demand.

The Department of Energy agency sees no significant problems in meeting summer gasoline demand despite much uncertainty over likely demand levels. There remains, however, the possibility of higher than expected demand, EIA said.

Total U.S. vehicle miles traveled this summer is expected to jump by 2.3% from 1992's level as personal income and employment continue to expand moderately.

Slowing growth in U.S. auto mileage efficiency continues. Average fleet auto efficiency is expected to increase by only about 1% this summer, EIA predicts.

Gasoline price predictions fall in a wide range for this summer with the base case about 2cts/gal higher than last year's level. Gasoline price uncertainty, although significant in percentage terms because of sizable uncertainty over crude oil prices, has little effect on short term gasoline demand because of the typically small short term price elasticity of demand for gasoline, EIA noted (Table 1).

HIGH DEMAND CASE

Under a high demand case, U.S. summer gasoline demand could jump by a further 150,000 b/d, EIA contends (Table 2).

This increase would be met by a combination of increases in refinery output, net imports, and stock drawdowns.

Assuming stocks are kept at base case levels in the high demand case, either net imports would have to jump about 55.5% from base case projections or refinery output would have to be 1.9% higher than expected.

Even a year to year surge in summer gasoline imports of 83% under a high demand case this year would not top the 4 month seasonal high of 420,000 b/d in 1988 or the monthly seasonal record of 560,000 b/d in May 1990.

EIA expects Europe will be able to provide more gasoline for export than last summer because of continuing high refinery output during a recession that has swollen stocks there. In addition, Caribbean export refineries are upgrading as much as 100,000 b/d of catalytic cracking capacity.

SUPPLY OPTIONS

Under a scenario in which the incremental summer demand in the high case is met entirely by increased refinery output, refiners would boost production by 3.7% from year ago levels, still below peak levels of last fall.

And U.S. refineries have undertaken debottlenecking and upgrading projects to add as much as 150,000 b/d to downstream capacity this summer.

Under a scenario in which stock draws would be put to maximum use, refinery output still would have to climb by more than 100,000 b/d and net imports by 140,000 b/d.

That assumes total gasoline inventories would be drawn down to the minimum operating inventory (MOI) required to avoid spot shortages. Even at that, the MOI probably would not be reached until sometime in August.