High refinery diesel margins – the difference between the acquisition price of crude oil and the wholesale price of diesel fuel – have provided an incentive for refiners to maintain high runs despite low gasoline refinery margins. The record-high US gross refinery input levels are driven in large part by refinery operations in the Gulf Coast and Midwest regions (Petroleum Administration for Defense Districts, or PADDs, 3 and 2, respectively).
In the Gulf Coast, which is home to more than half of all US refinery capacity, refinery runs averaged more than 9.2 million bpd in 2018, 8% higher than the previous five-year average for that region and the first time the annual average surpassed 9 million bpd. The Midwest has the second-highest refinery capacity, and refinery runs averaged 3.8 million bpd in 2018, or 6% higher than the previous five-year average.
Refinery utilisation as a percentage of operable capacity averaged 93.2% in 2018, an increase of about 2.1% from 2017. Despite record-high inputs, utilisation rates have not surpassed the record of 95.6% set in 1998. Rather than running at higher utilisation rates, refineries have increased their capacity: US refinery capacity increased by 783 000 bpd between December 2013 and December 2018.
In the March update of its Short-Term Energy Outlook, EIA expects US refinery runs in 2019 to be relatively flat compared with the record-high 2018 levels, partially as a result of expected high levels of refinery maintenance in 2019. Refinery runs are then expected to increase and reach a new record of 17.8 million bpd in 2020.
Principal contributors: Emily Sandys, Matthew French
