Over the past five years, the price differential between regular and premium gasoline has been widening steadily. According to the Energy Information Administration (EIA), as of July 2017 the premium -vs.-regular differential reached $0.53/gallon — more than double the differential in 2012. This has produced cringe-worthy experiences at the pump for consumers requiring the premium grade and an incentive for refiners to optimize the gasoline pool. Consequently, refiners have been making operational adjustments and capital investments to squeeze additional high-octane components out of their feedstocks. Today we examine the premium-regular gasoline differential, provide a primer on gasoline blendstocks and octane levels, and discuss some contributing factors to the widening divide between the pump prices of 87- and 93-octane gasoline.
On December 18, 2015, Congress and President Obama ended the 40-year ban on U.S. crude oil exports to countries other than Canada. Today the arbitrage window doesn’t make much economic sense for most exports – Light Louisiana Sweet on the Gulf Coast is about the same price as Brent in the North Sea. But the prospect of selling crude abroad remains tantalizing for a depressed U.S. upstream, and U.S. producers have begun to consider the possibilities for more significant export volumes. But does the U.S. have the right stuff? Will the qualities of U.S. crudes be competitive in global markets? In today’s blog, we begin a series to consider the qualities of U.S. crudes that are likely to be favored by international crude buyers.
The U.S. refining industry appears to be transitioning from an era of high margins and record throughputs. Falling crude prices at first increased refining margins – especially as demand for cheap refined products like gasoline expanded. Now product inventories are brimming and margins are squeezed. As we explain today the industry can look forward to an extended period of low crude prices while regulatory requirements and the pace of economic growth largely drive refined product trends.
Alkylate is a valuable blending component that accounts for about 12 percent of the US gasoline pool. Alkylate is manufactured by combining elements derived from NGLs and crude oil refining and is an important link between these two hydrocarbon markets. Alkylate has critical qualities required to meet complex modern gasoline quality specifications. Today we look at the qualities and manufacture of alkylate.
US Complex refining capacity leads the world and US Gulf Coast refineries are enjoying an export led boom. As lower cost crude starts to become available to these refineries they should be in a strong position to compete even more efficiently in global markets. What makes these complex refineries competitive? Today we conclude our two part refining tutorial by explaining refinery upgrading processes.
If you haven’t already read the first part of this tutorial then you can review it here. In Part 1 we provided an overview of the refining process described the fractions that make up crude oil and ran through the refined product outputs of a complex refinery. We looked at the first refinery process – atmospheric distillation that breaks crude down into its component fractions. Today we turn to the processes refiners use to upgrade the heavier residual fuel oil outputs from atmospheric distillation.