jet fuel prices

Since the century turned, there’s been a big buildup in refining capacity in the U.S. Midwest, primarily to process the increasing volumes of heavy sour crude being piped in from Western Canada. Over the same period, refining capacity in the Mid-Atlantic region has declined by more than half, mostly for economic reasons — including the lack of pipeline access to favorably priced U.S. shale oil — but also due to events, such as the devastating June 2019 fire at Philadelphia Energy Solutions’ 330-Mb/d refinery in Philadelphia, which led the facility’s owner to shut it down. In addition to spurring more refined product imports to the Mid-Atlantic and increased flows to the region on Colonial Pipeline, the changing market dynamics prompted a push to increase pipeline flows of gasoline and diesel east from the Midwest to markets in Pennsylvania and beyond. In today’s RBN blog, we continue a review of the U.S.’s still-morphing refined product pipeline networks with a look at recently added capacity from PADD 2 to PADD 1.

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.

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.

The jet fuel market has been on a wild ride the past two-plus years. First, demand for the refined product took an unprecedented, COVID-induced nosedive in February and March 2020. By May 2020, Gulf Coast prices for jet fuel had plummeted to less than 50 cents/gal (from just under $2 at the start of that year) and refiners had slashed production to 505 Mb/d (from just under 1.9 MMb/d). It was a tough few months — the recovery from the market’s bottom was neither quick nor consistent. Domestic air travel is finally back, but with international travel slower to rebound, total jet fuel supply and demand are still off of their pre-pandemic levels. Jet fuel prices are taking off, though, last week hitting their highest mark since July 2008. In today’s RBN blog, we discuss the jet fuel market: how it’s rebounding, how it works and how it’s changing.