Seasonal surges in gasoline demand along the US East Coast will bring only temporary relief to the crisis-hit European refining industry, as refiners in the US and Europe struggle to stay afloat, according to a new report by energy experts GlobalData.
The new report* shows that the US East Coast is considered to be the largest market for gasoline in the US, and depends on gasoline supplies from the international market to meet surges in demand during the summer season. According to the Energy Information Administration (EIA), the East Coast region imported a total of 760 thousand barrels (Mbbl) of gasoline per day during 2010; accounting for around a quarter of the region’s annual gasoline consumption.
The prospects of supplying gasoline to the East Coast from the Gulf Coast region are limited due to infrastructure constraints. Refiners on the US East Coast depend on costly light and sweet crude oil imports from countries in the Middle East and Africa, but the high expense of this feedstock has affected the competitiveness of these refiners. As a result, the US East Coast has seen closure of about 22% of its total refining capacity since September 2011. Another refinery in the region is also expected to be idled in July this year, taking around 40% of the remaining regional refining capacity offline.
The US East Coast has traditionally been importing gasoline from countries such as Canada, the UK, Virgin Islands, Netherlands, Spain and France. The Virgin Islands represent a major source of gasoline supply to the East coast, but refinery closures have also affected the petroleum industry of the islands. The development has positioned European refiners from Netherlands, the UK, France and Spain at an advantageous position to supply gasoline to meet the expected surge in demand in the US East Coast.
The European refining industry has also been experiencing a difficult phase, as the Euro zone debt crisis has affected credit availability and lowered the demand for refined products. This has led to widespread refinery closures, and caused regional pure-play refining major Petroplus to seek administration, as the company’s revenue was consumed by rising crude oil costs. Many companies are either selling their refineries or turning them into storage units and oil terminals, as industrial output in Europe saw a decline of about 1.46% in Q4 2011 over the previous quarter, leading to a 5.6% decline in the consumption of petroleum products over the same period.
Increasing imports from international markets seems to be the only viable option to meet the impending increase in gasoline demand along the US East Coast, and Europe look to benefit greatly from this.
NOTES TO EDITORS
*Crisis-hit European Refiners to Export Gasoline to the US East Coast after US Refinery Closures Create Shortage
This report is an essential source of information and analysis on the upcoming seasonal surge in gasoline demand in the US East Coast, which is expected to bring some relief to the crisis-hit European refining industry.
This report is built using data and information sourced from proprietary databases, primary and secondary research, and in-house analysis by GlobalData’s team of industry experts.
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