According to the U.S. Energy Information Administration (EIA) website article published in April 2023, EIA updated the U.S. refinery capacity forecast in the April STEO. In mid-March, ExxonMobil announced that it had completed expansion of capacity at its Beaumont refinery. In last month’s STEO forecast EIA expected that this expanded capacity would come online by the end of May. In the April STEO, EIA also incorporated smaller capacity additions, including additional processing capacity at Marathon Petroleum’s Galveston Bay refinery, which EIA expect to be operational by the second half of 2023 (2H23), and additional capacity at Chevron’s Pasadena refinery in 2024. LyondellBasel has also announced the closure of its Houston refinery at the end of 2023, and EIA had already included this closure in the previous forecast.
Although EIA increased refining capacity in the April STEO, EIA reduced the outlook for refinery throughput for the rest of the forecast compared with the March STEO. The reduced throughput forecast was the result of higher crude oil prices in the April STEO, in response to OPEC production cuts, which reduce refinery margins and lower runs, along with a reduced outlook for net exports. EIA expect U.S. refinery utilization to average 90% this year and in 2024, when EIA expect less net U.S. petroleum product exports will be offset by more domestic petroleum consumption.
Petroleum product net exports
U.S. exports of petroleum products set a new record in 2022. The record exports were the result of higher demand for U.S. exports amid shifting international trade as a result of policy initiatives associated with Russia’s invasion of Ukraine. Russia had been a major supplier of diesel to Europe. Following Europe’s ban on seaborne imports of petroleum from Russia, Europe struggled to find new sources of diesel, which raised demand for U.S. diesel exports. Less petroleum exported from China also increased demand for U.S. exports to meet global demand for gasoline and diesel.
In 2023, EIA estimated refinery production of gasoline will increase by more than U.S. consumption, raising stocks, lowering prices, and increasing net exports compared with 2022. In the forecast, net exports of gasoline average 810,000 b/d in 2023, up from 780,000 b/d in 2022, in response to increased U.S. gasoline production and more consumption globally. EIA expects similar trends for distillate, with net exports averaging 1.1 million b/d in both 2023 and 2024. Calls on U.S. distillate exports to replace sanctioned volumes in Europe are likely to increase U.S. distillate exports in 2023.
Many refiners have already switched to producing more expensive summer-grade gasoline to comply with seasonal Reid vapor pressure (RVP) requirements on gasoline. EIA expects regular-grade retail gasoline prices in the summer (April through September) to average about $3.50 per gallon, almost 20% lower than retail gasoline prices last summer. The Perspectives supplement, released alongside the April STEO, discusses the forecast for gasoline expenditures and alternative scenarios for gasoline prices this summer.
