EIA sees record U.S. gasoline use this summer
The U.S. Energy Information Administration expects record gasoline demand in the U.S. this summer.
It said, "Higher than average income growth, low prices, and rising consumer confidence are setting the stage for an expected 3.8% surge in highway travel and an increase of 2.8% in gasoline demand, compared with 1997, for the period from April to September
"That would bring summer travel on U.S. highways to about 1.37 trillion miles and gasoline use to nearly 65 billion gal. In the summer of 1980, these figures were 0.79 trillion miles and 51 billion gal."
EIA said that, due to lower crude oil prices, the U.S. is likely to experience the lowest prices ever (adjusted for inflation) for a summer driving season.
Its latest short-term energy outlook predicts average U.S. retail prices (all grades and services) will be $1.20/gal for the second and third quarters, equivalent to about $1.10/gal for unleaded regular. The price was about 10¢/gal higher last summer.
EIA said crude and gasoline prices are expected to remain at low levels because the warmest winter in 23 years has caused drastic drops in demand for heating fuels.
It said inventories of virtually all petroleum products are relatively high, with product stocks and crude oil stocks averaging about 5% above last year's levels at this time.
"World oil production is likely to continue to grow substantially this year, despite agreements among producing countries to restrain output and shore up sagging prices."
And EIA said economic problems in Asia have slowed oil demand growth there.
Production tight
The forecast said U.S. gasoline production (including ethanol for blending into gasoline) is expected to average a record 8.13 million b/d during the summer season, an increase of about 95,000 b/d.It said that last summer output expanded by more than 286,000 b/d, substantially higher than the demand increase.
"During peak periods this summer, refiners are expected to operate at close to full capacity. Thus, higher imports will be required to meet the full gasoline demand increase."
EIA said, with little additional capacity coming, refiners will operate at very high utilization rates, averaging 97.5% vs. 97.2% last summer.
It said higher gasoline production can be achieved with higher yields at the expense of distillate output, because distillate stocks are abundant.
"But the high operable utilization rates are expected to limit refiners' flexibility in responding to unexpected supply or demand change.
"On the positive side, refiners may have more capacity this summer than is assumed in the base case. One report indicated distillation capacity at operating refineries might increase 280,000 b/d over 1997 and that the TransAmerican Refining Corp. refinery in Louisiana might start up, which could boost distillation capacity another 200,000 b/d in 1998. However, BP Oil Co.'s Lima, Ohio, refinery (with a distillation capacity of 162,000 b/d) may be shut down."
EIA said gasoline imports are expected to increase 96,000 b/d from last summer to average 275,000 b/d this summer. Blendstock imports could average 165,000 b/d, similar to levels seen in the second half of last summer.
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