All the Way from America - U.S. Refineries Key to Balancing Global Gasoline Market

Global demand for motor gasoline is on the rise, and U.S. refineries—as a group, still the most sophisticated in the world—are poised to play a critical role in providing much of the needed incremental gasoline supply to Asia, Latin America and other growing markets. This important topic was the focus of a recent talk at the Center for Strategic and International Studies (CSIS) by our good friend, Dr. Fereidun Fesharaki, chairman of international energy consultant FGE, who also discussed the International Maritime Organization’s (IMO) new (and controversial) decision to limit sulfur in bunker fuel to 0.5% by January 2020—a move that will test the capabilities of refineries worldwide. Today’s blog provides highlights from this presentation.

The Shale Revolution’s impact on energy markets extends far beyond increased U.S. production of crude oil, natural gas and natural gas liquids. The new ability to wring vast volumes of valuable hydrocarbons from shale also has had a profound effect on refined-products economics, and on U.S. self-sufficiency regarding gasoline, diesel, and jet fuel. As shown in Figure 1, in only 11 years, the U.S. has flipped from being a major importer (2005 net imports of refined products totaled 2.5 MMb/d) to its new status as a major exporter (2016 net exports totaled 2.5 MMb/d).  Consequently, there has been a 5.0 MMb/d reversal in U.S. refined product flows.  Before the Shale Revolution took hold in 2008-09, the U.S. depended on imports from a variety of sources, including Latin America (yellow bar segments), Europe (green) and Africa (light blue). By 2011, the U.S. had become a net exporter of refined products, with exports to Latin America (yellow) leading the way, and with exports to Asia (dark blue) and Europe (green) on the rise as well.

That flow reversal in refined-product flows is extraordinary, and it’s likely that (to quote from Bachman-Turner Overdrive), “You ain’t seen nothin’ yet,”.  Figure 1 indicates that net product exports are expected to grow to a total of almost 3.5 MMb/d by 2025, and what is most significant is that much of that growth will come from gasoline exports. 

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