RBN Energy

It took a while, but domestic air travel is finally returning to pre-pandemic levels and international travel to and from the U.S. is showing signs of recovering too. As a result, U.S. production of jet fuel has been rising steadily in recent months and, since most jet fuel needs to be transported long distances from refineries to airports, so have flows of jet fuel on U.S. refined products pipelines. All of that is good news, but as pipeline flows rise, so may the stresses on some elements of the U.S. refined products/jet fuel distribution network, including pipelines, storage facilities and “last mile” jet fuel delivery trucks. In today’s RBN blog, we continue our look at jet fuel, this time with a look at the extensive web of U.S. refined products pipelines.

Over the past few weeks, many U.S. refiners reported even-stronger-than-expected first-quarter results, and it’s likely their good fortune will continue. Why? Despite the skyrocketing price of crude oil — refiners’ primary feedstock — the prices of the gasoline and diesel they produce have risen even more. And it’s that now-yawning gap between crude oil and refined-products prices that’s been driving refining margins — and refiners’ profits — to near-historic levels. Refining margins, like the character and capabilities of thoroughbreds like “Rich Strike” in Saturday’s amazing Kentucky Derby, are unique to each refinery because of their different sizes, equipment and crude slates (among other things), but there’s a tried-and-true way to estimate the refining sector’s general profitability, as we discuss in today’s blog on U.S. refiners’ sky-high crack spreads.

California has a long history of leading the U.S. in environmental regulations and of taking federal environmental rules to the next level. Back in the 1960s, for example, the state became the first to regulate emissions from motor vehicles. In more recent decades, it has led the way in reducing greenhouse gas emissions. Many of these progressive regulations migrate to other states over time, which adds significance to a Northern California environmental agency’s recent decision to put stricter limits on emissions from refinery fluidized catalytic cracking units, or FCCUs. In today’s blog, we discuss the new regulation and its potential implications.

The U.S. and Canada make quite a team. Friends for most of the past century and a half — and best buddies since World War II — the two countries have highly integrated economies, especially on the energy front. Large volumes of crude oil, natural gas, NGLs, and refined products flow across the U.S.-Canadian border, and a long list of producers, midstreamers, and refiners are active in both nations. One more thing: since the mid-2000s, the development of U.S. shale and the Canadian oil sands in particular has enabled refiners in both countries to significantly reduce their dependence on overseas oil — a big victory for North American energy independence. However, due to its smaller population and economy, Canada typically gets far less attention than its southern neighbor, so in today’s blog we try to right that wrong by discussing highlights from a new, freshly updated Drill Down Report on Canada’s refining sector.

Canada, like the U.S., is in the enviable position of having vast crude oil reserves as well as a robust domestic refining sector capable of satisfying national needs for gasoline, diesel, and other petroleum products. Refiners in both countries have also benefited in recent years from increasing oil production within their borders. Growth in the Alberta oil sands in particular has given refineries in both Western and Eastern Canada increased access to domestically sourced bitumen and upgraded synthetic crude oil. Today, we continue our series on Canada’s refining sector with a look at the refineries in the eastern half of the nation, and their increasing use of Canadian oil.

Canada may be the land of backyard hockey, lacrosse, and loonies, but Canadians have many similarities to folks in the U.S. The same holds true for Canada’s refining sector, which like its American counterpart has been adjusting to big changes in domestic crude oil production, a declining need for imported oil, and, most recently, a period of severe refined-product demand destruction caused by the pandemic. What Canadian refiners lack, though, is the attention they deserve. After all, nearly 2 MMb/d of crude oil flows through their 17 refineries. And, by the way, they now turn to U.S. producers for virtually all their oil imports — a far cry from where things stood before the Shale Era. Today, we kick off a three-part series that examines Canada’s refining sector in greater detail.

For a few years now, refineries in the eastern part of PADD 2 — feedstock-advantaged and capable of producing far more refined products than their regional market can consume — have been eyeing the wholesale and retail markets to their east in PADD 1. Their thinking has been, if they could just pipe more of their gasoline and diesel into Pennsylvania, upstate New York, and adjoining areas, they could sell the transportation fuels at a premium and take market share. Well, things are looking up for PADD 2 refineries pursuing this strategy. Not only has new pipeline access to the east been opening up, but PADD 1’s refining capacity has been shrinking fast, leaving East Coast refineries less able than ever to meet in-region demand. Today, we discuss recent developments in the battle for refined-product market share in the Mid-Atlantic region.