Reductions in Northeast Refining Activity: Potential Implications for Petroleum Product Markets

摘要

Reduction in refining activity in the Northeast, as reflected in recently announced plans to idle over 50% of the regional refining capacity, is likely to impact supplies of petroleum products. The transition period as supply sources shift could be problematic for Ultra-Low Sulfur Diesel (ULSD), gasoline, and jet fuel supplies. Prolonged uncertainty over the coming months with regard to the disposition and operation of important logistical assets such as pipelines, ports and storage would compound adjustment challenges. Reduced short-term product supply flexibility due to longer delivery times and potential transportation bottlenecks for sources outside the region could also increase price volatility. Finally, an increase in demand for ULSD due to changing State requirements could further exacerbate supply issues. The U.S. Energy Information Administration (EIA) has received a number of inquiries concerning these developments. These inquiries have focused on: alternative supply options, available pipeline capacity, the implications for regional transportation fuels markets, heating oil supply and prices in the Northeast, and fuel security for the military. This note reflects EIAs initial effort to provide information and analysis on those specific topics. A more in-depth paper providing additional detail and analysis regarding the regional petroleum product market will be issued in January.