API: Jet fuel production at record-setting levels

The chief economist of the American Petroleum Institute told members of a US House of Representatives subcommittee on aviation Wednesday that US refinery utilization rate of 94% is pushing jet fuel production to a 'record-setting pace.'


Jet fuel production has been pushed to a "record-setting pace" as the US's 155 crude oil refineries, running "flat out" to keep up with demand, have reached an average total utilization rate of 94%, the American Petroleum Institute told members of Congress Wednesday in Washington DC.

"During 2000, we've been making about 12% more kerosine jet fuel than the yearly average production through the 1990s," said John Felmy, senior economist for API, while addressing members of the House Transportation and Infrastructure Committee's subcommittee on aviation. "In fact, if we keep making it at the current rate for the rest of the year, we could set a record for total output."

In response to the growing concern over the high cost of petroleum products, Felmy said, the industry has responded by producing fuel at record or near-record levels in virtually all categories.

"Putting as much product on the market as possible is the best way to keep people well supplied with fuel and keep prices as affordable as possible," Felmy noted. Despite record production, inventories remain low and prices high, Felmy said, because the cost of crude oil has remained high throughout the year.

The price of crude oil has tripled in about 2 years. "When you compare crude prices with product prices, such as the price of jet fuel, they track almost perfectly," Felmy said. "When crude becomes more expensive, then so do products. There's no way around it."

To further increase supplies and moderate prices, Felmy said, domestic oil production should be raised and regulations surrounding exploration and production streamlined. Domestic crude production has declined 40% since its peak in 1970. Meanwhile, demand over that time rose 36%.

"That's why we now import more than 55% of our crude oil, up from only 23% in 1970," Felmy added. "We as a nation should be producing and can produce more of the crude oil we consume." The current amount of oil the US imports puts the country "at the mercy of world markets," he said.

Felmy said that restrictions on oil and gas production in the US due to environmental concerns should be reexamined, adding that technological improvements have made possible exploration and production that doesn't have a detrimental impact on the environment. Having access to affordable domestic energy sources also would support economic growth.

"Over the years, we have asked refiners to make a growing mix of specialty fuels that have strained the refining and distribution network that serves virtually all Americans," said Felmy.

More sensible regulations would ease constraints and keep petroleum fuels flowing to consumers, the API official said. Improved regulations would also facilitate expansion of US refining capacity, which has not kept up with demand.

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