This Week In Petroleum | |
Released on December 3, 2008 Retrospective Look at Refinery Operations after Hurricanes The impacts of these hurricanes are evident in the Gulf Coast (PADD 3) refinery outages shown in the figure below. Initially, total outages from both sets of hurricanes were similar, though the September 2008 outage peak in the figure below is higher than the outages shown for 2005. This is because the figure represents monthly averages and the 2005 events spanned two months – with Hurricane Katrina reaching the Gulf Coast on August 29 and Rita hitting Louisiana on September 24 – while Hurricanes Gustav and Ike created large outages primarily during the single month of September when Gustav hit the Gulf Coast on September 1, followed less than two weeks later by Ike. Most of the outages in both cases were due to refinery shutdowns as the hurricanes hit the coastal regions. As the figure shows, unplanned outages following Katrina and Rita in 2005 lasted many months while repairs were being made to damaged refineries. In 2008, refineries did not experience nearly as much on-site damage, and many refinery shutdowns lasting from two to three weeks were primarily caused by disruption of their electricity supplies resulting from damage to electricity transmission infrastructure. By October 2008, most refineries were back on line, although not all at full production. At the end of August 2008, before the hurricanes, retail conventional gasoline prices were averaging $3.68 nationally. With refineries out of commission after both pairs of hurricanes, gasoline inventories plunged as they were drained to help meet demand. Gasoline inventories actually reached lower levels in 2008 than in 2005. In both cases, retail outages along the pipelines were mainly caused by the loss of refinery supply into the pipelines. Since tight supply often leads to higher prices, a large price jump, as occurred in 2005, might have been expected on top of already high prices. However, while prices did increase temporarily, particularly in areas of the South where retail outages were concentrated, national average gasoline prices did not spike as they did in 2005. Crude oil prices were already declining by this point in 2008, helping to keep retail prices in check. Furthermore, suppliers had learned from the 2005 hurricanes how to better manage supplies under similar conditions. All in all, implementation of lessons learned combined with good luck to make the impact of this year’s hurricane season much less than it might have been – something we can all be grateful for. Figure: PADD 3 Refinery Outages (Monthly Averages)
Source: Industrial Info Resources, Inc. Database, November 25, 2008. Residential Heating Fuel Prices Slow Their Decline The average residential propane price decreased 1.5 cents to reach 240.0 cents per gallon. This was a decrease of 6.1 cents from the 246.1 cents per gallon average for this same time last year. Wholesale propane prices gained 4.7 cents per gallon, increasing from 81.2 cents to 85.9 cents per gallon. This was a decrease of 70.1 cents from the December 3, 2007 price of 156.0 cents per gallon. Gasoline and Diesel Prices Continue Downward Descent The U.S. average diesel price slipped 4.9 cents to 261.5 cents per gallon, 80.1 cents below the price a year ago and the lowest since February 26, 2007. Once again, prices fell throughout the country. On the East Coast, the average price dipped 5.3 cents to 273.5 cents per gallon, 70.9 cents lower than the price a year ago. The price in the Midwest dropped 4.6 cents to reach 257.8 cents per gallon. The average price in the Gulf Coast slipped 4.2 cents to 255.6 cents per gallon. For the second week in a row, prices in the Rocky Mountains fell the most of any region, dropping 6.7 cents to hit 257.7 cents per gallon. On the West Coast, the average price fell 5.5 cents to 255.3 cents per gallon, the lowest of any region, and the lowest for the West Coast since January 2, 2006. In California, the average price shrank 6.7 cents to 253.8 cents per gallon. November Draw on Propane Inventories Nearly Flat Regional inventories fell in the East Coast and Midwest with similar 0.3 million-barrel declines, while on the Gulf Coast, inventories soared higher by 0.7 million barrels. The combined Rocky Mountain/West Coast region reported relatively flat inventories during this same time. Propylene non-fuel use inventories moved up by 0.2 million barrels to account for a higher 5.8 percent share of total propane/propylene inventories, up from the prior week’s 5.5 percent share. Text from the previous editions of “This Week In Petroleum” is now accessible through a link at the top right-hand corner of this page. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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