Refinery utilization, measures how much crude oil refineries are processing or “running” as a percentage of their maximum capacity. It tells us roughly how much of our refining muscle is being put to work manufacturing fuel. American refineries are running full-out, at about 95% of total capacity, contributing more fuel—gasoline, diesel, jet fuel, etc.—to the global market than any other country. In fact, U.S. refineries process more crude oil every day than the United States produces, and we make more finished fuels than the United States consumes.
The return of fuel demand to pre-pandemic levels and the slower rebound of crude oil and fuel production has created concerns about whether supplies of gasoline, diesel and jet fuel will be sufficient to meet global demand. U.S. refineries are up and running at near maximum utilization. Other major refining countries, for a variety of reasons, have not kept pace bringing their facilities back into operation or resuming sales of fuel to the market. As a result, wholesale fuel prices have increased and so have refinery “crack spreads."
AFPM President and CEO Chet Thompson issued the following statement: "AFPM applauds the United States Trade Representative (USTR) for elevating this important matter. Mexico’s policies toward American energy companies need to be addressed in the spirit of the United States-Mexico-Canada trade agreement (USMCA). American refiners have made significant investments in Mexico-based operations, jobs and infrastructure and we want our trade relationships with Mexico to remain healthy and mutually beneficial.”
A Strategic Petroleum Reserve (SPR) release—which basically involves making additional barrels of crude oil available for sale to the world market—is meant to increase global supply. Meeting today’s demand with more supply is a recipe for lower prices. The United States released millions of barrels from our SPR in the past several months, as did many other countries.
Russian crude oil accounts for just three percent of U.S. crude oil imports and about one percent of total crude oil processed by U.S. refineries. Even still, Russian crude oil imports are important to refineries on the West Coast and Gulf Coast for some distinct reasons. Read more on this topic from AFPM’s industry analysts in their recent assessment: “U.S. Imports of Crude Oil and Petroleum Products from Russia.”
AFPM supports the people of Ukraine against Russia’s unprovoked acts of war. These acts of aggression are unacceptable and should be met with fierce opposition. AFPM fully supports the suspension of all future purchases of crude oil and petroleum products from Russia. To protect consumers, however, any import prohibition should exempt products currently in transit to the United States.
The U.S. refining industry is the most competitive in the world, which is a benefit to American households. Our complex facilities are uniquely suited to handle difficult-to-refine crude oil and other petroleum feedstocks that refineries elsewhere cannot process. This creates competitive advantage. At the same time, the United States is able to sell some of our higher-quality crude to countries that need it. This combination is powerful.
Oil markets are famously sensitive to uncertainty. Global conflict can send prices higher on concerns that crude oil supplies could be disrupted. This is playing out in response to Russia’s unprovoked acts of war against Ukraine. Russia is a major supplier of crude oil and other energy products globally, though less so in the United States. In recent days, many market participants have committed to stop purchasing Russian oil. Shipping companies are concerned about loading cargoes from Russia and some shippers are finding the cost associated with such cargoes too high. These moves are tightening an already tight market.
All eyes are on Hurricane Ian, which is expected to approach Florida’s west coast later Wednesday and into Thursday bringing high winds and massive amounts of rain. Although our nation’s refiners and petrochemical manufacturers do not have facilities in the affected region, we’d like to urge the people in the area to prepare for the storm and heed all evacuation notices. Florida residents can get critical preparedness and evacuation information here.
“Our country has seen time and again that major storms and often-correlated runs on gas stations can have a swift impact on prices. Already in Florida, some key areas are functioning with roughly 20 percent of retail stations either out of gas or out of power. That means there is less supply overall and some temporary inability to access supplies in certain Florida communities where there is, at present, heightened local demand. The market is resilient and will work to fix this imbalance swiftly, but a return to normalcy will likely not be immediate as the supply chain is complex and buyers will need to return to their normal purchasing habits."
