Slide 10 of 24
Notes:
Increased distillate fuel production sure seems to explain some of the January 2001 stock increase.
This graph shows the distillate yield pattern over the 1990’s. Generally yields rise in the fall to build stocks for winter distillate use. On average, the yield during the fourth quarter is about 2% higher than the average of the lowest yield months of June, July and August. (Recognize that a 1% change in yield is about a 150 MB/D change in distillate production, which is about 4% of winter demand.)
During the fall of 1996, the winter season began with very low stocks, but refiners pushed yields to very high levels and regained some of the lost ground. As we saw earlier, we entered last winter in a similar situation as 1996 with low stock levels. At last year’s SHOPP conference, Joanne Shore used this chart to show how high yields could go. And she was right!
As shown on this chart, yields are projected to be at more typical levels this upcoming winter. The current forecast is showing lower distillate production than last year, so there is room for more volume through refiners switching to higher yields than those being forecast. This will only happen if economic incentives evolve to encourage this change.