Slide 11 of 15
Notes:
- Why do stocks matter in the Northeast?
- Stocks are normally an important part of PADD 1 winter distillate supply. Over the last
5 years, they provided about 15% of supply during the peak winter months of January and
February. One of the biggest stock draws we have seen was in January 1994, when a
prolonged severe cold spell required 666 MB/D of stocks, covering almost 36% of demand for
that month.
- PADD 1 refineries meet about 25% of demand during January and February, and other PADDs
-- mostly PADD 3 -- supply 45-50% of the regions needs.
- Imports generally supply about as much as stocks during the peak months, with most of
the product coming from Canada, the Virgin Islands and Venezuela.
- Percentages do not tell the whole story. Stocks supply close to 300 MB/D on average in
January and a little less in February. That 300 MB/D is 9 million barrels in one month. At
current stock levels of 38 million barrels, we could draw down stock at the normal rate
for more than 1 month before hitting the minimum stock levels ever seen in the Northeast.
So what is the problem? Not all of the stock is located where it needs to be, and the
market worries about colder-than-average weather requiring even more stocks, as occurred
in January 1994.
- Fortunately refinery capacity is available for surge production in the Gulf Coast and
elsewhere to relieve the supply situation, but it may take several weeks for product to
arrive.