RBN Energy

The Nederland/Beaumont crude oil hub has been somewhat overshadowed recently by other Gulf Coast crude export hubs despite hosting America’s largest refinery, a handful of export terminals and pipeline links to the prolific Permian Basin. But while plans to build one or more deepwater crude export terminals could mean big changes for the Gulf Coast hubs, the Nederland/Beaumont area isn’t standing still. In today’s RBN blog, we discuss what’s ahead for the region and its emergence as a leader in NGL exports. 

Analyst Insights

Analyst Insights are unique perspectives provided by RBN analysts about energy markets developments. The Insights may cover a wide range of information, such as industry trends, fundamentals, competitive landscape, or other market rumblings. These Insights are designed to be bite-size but punchy analysis so that readers can stay abreast of the most important market changes.

By Jeremy Meier - Friday, 6/21/2024 (3:00 pm)

US oil and gas rig count declined for the third consecutive week, falling to 588 for the week ending June 21 according to Baker Hughes, a decline of two vs.

By Jason Lindquist - Friday, 6/21/2024 (3:00 pm)

A long-duration energy storage (LDES) project being developed in Alaska was awarded $5.5 million in federal funding this month, allowing work to begin on the project’s Phase 1.

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Daily Energy Blog

The price of the Tier 3 gasoline sulfur credit hit $3,600 in October, up by a factor of 10 from two years ago and roughly in line with the all-time highs seen in late 2019. This tradable credit allows refiners to sell gasoline that exceeds the sulfur specification on gasoline sold in the U.S. In today’s RBN blog, we examine what’s behind the credit’s steep and steady rise — and why it matters. 

Florida is entirely dependent on others for the vast amounts of refined products it consumes — every gallon of gasoline, diesel and jet fuel that’s pumped into cars, SUVs, trucks, locomotives and airplanes in the Sunshine State needs to be either shipped or trucked in. Now, a midstream company is planning a project that would enable large volumes of refined products to be railed into Florida by unit trains to three new storage and distribution terminals — and eventually several more. In today’s RBN blog, we discuss the plan. 

Many governments around the world are looking for ways to incentivize reductions in greenhouse gas (GHG) emissions and two approaches have received the most attention: cap-and-trade and a carbon tax. The European Union (EU) has chosen the former, Canada has opted for the latter, and the U.S. — well, that’s still to be determined. It’s logical for oil and gas producers, refiners and others in carbon-intensive industries to wonder, what does it all mean for us? In today’s RBN blog, we look at Canada’s carbon tax (which it refers to as a “carbon price”), explain how it works, and examine its current and future impacts on oil sands producers, bitumen upgraders and refiners. 

Just as homeowners in parts of the Northeast are thinking about turning on the heat again, the market for heating oil, diesel and other middle distillates in PADD 1 is unusually tight. Inventories are hovering near their five-year lows; prices are up sharply; and the near-term prospects for rebuilding stocks are modest at best. For one thing, the import-dependent region can’t rely on them as much as it used to; for another, at least a couple of in-region and nearby Canadian refineries the Northeast counts on are offline for major turnarounds. In today’s RBN blog, we discuss the latest developments in PADD 1’s distillates market.

The world consumes about 100 MMb/d of liquid fuels, which are critically important to every segment of the global economy and to nearly every aspect of our daily lives. The size and scope of this market means it’s impacted by all kinds of short-term forces — economic ups and downs, geopolitics, domestic developments and major weather events, just to name a few — some of which are difficult, if not impossible, to foresee. But while these events can sometimes come out of nowhere, there are some long-term forces on the horizon that will shape markets in the decades to come, even if the magnitude of these changes might be up for debate. One is a move to prioritize alternative fuel sources rather than crude oil, but a meaningful shift won’t happen as quickly as many forecasts would indicate — and that has big implications for liquid fuel demand and the outlook for U.S. refiners. In today’s RBN blog, we discuss these issues and other highlights from the recent webcast by RBN’s Refined Fuels Analytics (RFA) practice on their newly released update to the Future of Fuels report.

A wide range of ever-changing economic and other forces — domestic and international — are constantly impacting the U.S. refinery complex, for good and for bad. Fluctuations in crude oil supply and prices. Ups and downs in demand for refined products. Refinery closures and expansions. And don’t forget this: the pace of the much-discussed transition to lower-carbon energy sources. There’s a lot at play in the world of gasoline, middle distillates and resid — renewable fuels too — and while industry players can’t fully anticipate what’s next in the refined-product roller coaster ahead, it’s critically important to keep up with the latest developments and to have a deep understanding of the many factors influencing crude oil and fuel markets — and the relationships among those drivers. In today’s RBN blog, we discuss the key findings in a newly released update to Future of Fuels, an in-depth report by RBN’s Refined Fuels Analytics (RFA) practice on everything you need to know about U.S. and global supply and demand for gasoline, diesel, jet fuel and biofuels over the short, medium and long term.

It seems logical that shifting over time to aviation fuel with a lower carbon footprint would represent the most practical way for the global airline industry to reduce its greenhouse gas (GHG) emissions. But for that shift to happen, there needs to be an economic rationale for producing sustainable aviation fuel and, despite a seemingly generous production credit for SAF in the Inflation Reduction Act (IRA), that rationale is a least a little shaky when compared to renewable diesel (RD) credits available today. In today’s RBN blog, we conclude our two-part series on SAF with an examination of RD and SAF economics (which are remarkably similar), the degree to which existing SAF incentives may fall short of RD, and what it all means for SAF producers and production.

As environmental protection and decarbonization efforts have ramped up in the past few decades, policymakers around the world have come up with a variety of schemes to lower industrial emissions. The Kyoto Protocol in 1997 committed developed nations to reduce their greenhouse gas (GHG) emissions by a defined amount from 1990 levels by 2012. The treaty was never brought up for ratification in the U.S. Senate, which unanimously opposed it because developing nations — such as China — weren’t included. Across the Atlantic, the Kyoto Protocol was received much more favorably, with all 15 members (at the time) of the European Union (EU) ratifying the treaty in 2002. In 2005, the EU launched the Emissions Trading System (ETS) as a mechanism to help reduce emissions from power plants, industrial facilities and commercial aviation, covering nearly half of total EU emissions. In today’s RBN blog, we explain the European cap-and-trade system, examine how the ETS is affecting the EU’s refining industry as a whole, and drill down to the refinery level to discuss disparities in carbon-cost exposure from one refinery to the next.

The world is full of paradoxes and apparent contradictions, like the phrase “this page intentionally left blank” on an otherwise empty page in a government report, and the energy sector is no different. The U.S. is the world’s largest exporter of the “Big 3” petroleum products — gasoline, diesel/gasoil and jet fuel/kerosene — but it still imports significant volumes of those very same products. That paradox, which is not unlike the U.S.’s need to both export and import various grades of crude oil, is tied to a mismatch between where the product is produced and where it is consumed. In today’s RBN blog, we look at the factors that contribute to that mismatch and what it means for U.S. “Big 3” production and exports going forward.

At first glance, the Environmental Protection Agency’s (EPA) proposal to facilitate increased sales of E15 — an 85/15 blend of gasoline blendstock and ethanol — by putting it on the same summertime regulatory footing as commonly available E10 in eight Midwest/Great Plains states might seem like a boon to corn farmers and ethanol producers. But as we discuss in today’s RBN blog, there are a number of economic, practical and even psychological barriers to broadened public access to — and use of — E15 that go well beyond the specific regulatory issue the EPA proposal addresses. As a result, as we see it, EPA’s plan is unlikely to boost E15 demand in any meaningful way, at least for now.

Over the next couple of years — and the next couple of decades — global supply/demand dynamics in refined products markets will be driven by two critically important factors. The first is the understandable reluctance of refiners to expand capacity in the face of climate policy and ESG headwinds. The second is a growing gap between policymakers’ aggressive energy-transition goals and the global pivot to a renewed focus on energy security brought about by the Russia-Ukraine war and worries about China’s global ambitions. These factors, which will fuel the prospects for constrained supply and higher-for-longer demand, have far-reaching implications, not only for refinery owners but also for E&Ps, midstreamers, exporters, energy industry investors and policymakers, all of whom need to gain a clearer understanding of what’s just ahead — and what’s over the horizon, just out of sight. In the encore edition of today’s RBN blog, we discuss key findings in “Future of Fuels,” a new, in-depth report by RBN’s Refined Fuels Analytics practice on everything you need to know about U.S. and global supply and demand for gasoline, diesel, jet fuel and biofuels over the short-, medium- and long-term.

Over the next couple of years — and the next couple of decades — global supply/demand dynamics in refined products markets will be driven by two critically important factors. The first is the understandable reluctance of refiners to expand capacity in the face of climate policy and ESG headwinds. The second is a growing gap between policymakers’ aggressive energy-transition goals and the global pivot to a renewed focus on energy security brought about by the Russia-Ukraine war and worries about China’s global ambitions. These factors, which will fuel the prospects for constrained supply and higher-for-longer demand, have far-reaching implications, not only for refinery owners but also for E&Ps, midstreamers, exporters, energy industry investors and policymakers, all of whom need to gain a clearer understanding of what’s just ahead — and what’s over the horizon, just out of sight. In today’s RBN blog, we discuss key findings in “Future of Fuels,” a new, in-depth report by RBN’s Refined Fuels Analytics practice on everything you need to know about U.S. and global supply and demand for gasoline, diesel, jet fuel and biofuels over the short-, medium- and long-term.

Refineries with hydrofluoric acid alkylation units account for about 40% of total U.S. refining capacity. Many in the refining sector are concerned that an Environmental Protection Agency (EPA) proposal to compel refineries to conduct exacting studies of newer, alternative alkylation technologies could be leveraged to discourage and effectively ban HF alkylation, and as a result, potentially lead to more refinery closures. The U.S. already has lost more than 1.3 MMb/d of refining capacity since 2019 — losses that exacerbated the run-up in motor fuel prices through the first half of last year — and the specter of another round of refinery closures on the horizon looms large. In today’s RBN blog, we consider the challenges that refineries with HF “alky” units might face if they were required to replace them.

If you buy premium gasoline, you’ve probably noticed its price differential versus regular has been increasing in recent years. That is a sign of the rising value of octane, the primary yardstick of gasoline quality and price. In this blog series we’ve examined a new gasoline sulfur specification called Tier 3, which is causing complications for U.S. refiners looking to balance octane and gasoline production while still meeting the regulatory limits on sulfur. In today’s RBN blog, the fourth and final on this topic, we provide an analysis of the obscure Sulfur Credit Averaging, Banking and Trading (ABT) system, which allows refiners to buy credits to stay in compliance with the Tier 3 specs. The price of these credits quintupled in 2022, another sign of a tight octane market that will be attracting increased attention in the months and years ahead.

Senior refining executives were called to Washington, DC, in June, around the time U.S. gas prices hit their high-water mark for the year, as the government sought recommendations about how to increase the supply of gasoline. One suggestion made to Secretary of Energy Jennifer Granholm was to relax sulfur specifications on fuels, including the Tier 3 gasoline sulfur specifications. But what is the connection between those rules and the U.S. refining system’s ability to produce gasoline? In today’s RBN blog, we explain how the Tier 3 rules constrain gasoline supply capacity in the U.S. and discuss ways to break free from those chains.