Jet, Part 2 - Jet Fuel Market Recovery Highlights Challenges of Transporting Fuel to Airports

Just over two years ago, the jet fuel market experienced an almost existential shock. In the space of only six or seven weeks, demand for the refined product plummeted by more than 70% as COVID-related lockdowns and air-travel restrictions were implemented. Fortunately, life in the U.S. has been returning to normal — albeit with some bumps along the way — and demand for jet fuel (a.k.a. “jet”) has been rebounding to near pre-pandemic levels. That re-emphasizes a nagging challenge, though, namely transporting large volumes of jet from refineries and import docks to hundreds of major and minor airports. In today’s RBN blog, we continue our look at jet fuel, this time with an examination of where it's produced and consumed, and how it gets from refineries to airports.

As we said in Part 1, the jet fuel market has been on a wild ride since the pandemic started in early 2020. First, demand, prices and production tanked. Then came a slow, uneven recovery that continued through this past winter, when Russia’s war on Ukraine and other factors caused spikes in crude oil and jet fuel prices just as air-traffic volumes were finally returning to normal. We also explained that jet fuel is produced from crude oil at refineries through atmospheric distillation, followed by a series of treatments to remove unwanted elements such as sulfur, nitrogen and metals. And we noted that the U.S. is by far the world’s largest producer of jet fuel, and that while the U.S. is essentially self-sufficient regarding jet fuel — producing about as much as it consumes — we export and import relatively modest (and roughly equal) volumes, mostly because it’s more economic to import jet fuel to some parts of the U.S. than to transport it there from domestic refineries.

Today, we start where we left off. In 2019, the last year before COVID hit, U.S. production of jet fuel averaged a hair below 1.8 MMb/d, with just over half of that output (940 Mb/d, or 52%) occurring in PADD 3 (Gulf Coast; gray line in Figure 1) and the rest split among, in order, PADD 5 (West Coast; light-blue line), with 452 Mb/d, or 25%; PADD 2 (Midwest; orange line), with 272 Mb/d, or 15%; PADD 1 (East Coast; dark-blue line), with 99 Mb/d, or 6%; and PADD 4 (Rockies; yellow line), with 31 Mb/d, or 2%, all according to the Energy Information Administration (EIA).

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