American oil refineries are working harder than ever before

American oil refineries are running full tilt to meet insatiable demand for gasoline and diesel at home and ...

Posted: Aug 14, 2018 6:55 PM
Updated: Aug 14, 2018 6:55 PM

American oil refineries are running full tilt to meet insatiable demand for gasoline and diesel at home and abroad.

Refineries processed a record-high 18 million barrels of crude per day in early July, according to government statistics. Full-year refinery activity is expected to hit a record in 2018 for the second year in a row.

The flurry of refinery activity reflects a big increase in driving this summer as the US and global economy strengthens.

"Gasoline demand is strong because of full employment. The economy is chugging along pretty well," said Matt Smith, director of commodity research at ClipperData.

The amount of motor gasoline delivered in the United States is expected to match the record-high of the last two summers, according to the US Energy Information Administration. A near-record 9.7 million barrels per day of motor gasoline was delivered in early August.

The good news for American drivers is that the surge of refining -- and a recent drop in oil prices -- has kept gasoline below $3 a gallon. The national average is currently sitting at $2.86 per gallon, according to AAA. While that's up about 22% from a year ago, it's down from the peak of nearly $3 ahead of Memorial Day weekend.

'Run as hard as they can'

Refineries have a major financial incentive to process as much oil as possible. The profit margin on gasoline -- the difference between crude oil and gas prices -- has risen sharply over the past year. Ditto for the profit margin on diesel.

"Profitability is strong. That is encouraging these guys to run as hard as they can," said Smith.

The US Gulf Coast, the epicenter of America's refineries, reached a new record in early July by processing 9.5 million barrels per day.

Some of that gasoline and diesel fuel is getting shipped overseas. That's despite the eruption of trade tensions and tariffs between the United States and major trading partners such as China and the European Union. The government said US exports of diesel and other fuels reached a four-week average of 1.2 million barrels per day in early August.

The spike in refinery activity wouldn't be possible without the US shale oil boom. The United States is pumping more oil than ever and may soon surpass Saudi Arabia and Russia as the world's No. 1 producer.

"There's no shortage of crude barrels to put into refineries and turn into valuable products," said Dylan White, an oil markets analyst at energy research firm Genscape.

Not hurting from Tesla

US refineries are not maxing out just yet. The EIA noted that refinery utilization as a percentage of capacity has yet to surpass the record set in 1998. Instead, the increase in activity reflects expansions made to existing refineries in recent years.

Refineries typically take a breather after August for scheduled maintenance as the summer driving season winds down. Last August, the Gulf Coast was hit by a wave of refinery outages following damage caused by Hurricane Harvey.

The fact that refineries have never produced so much gas shows that the industry has yet to get squeezed by the rise of Tesla and electric vehicles broadly.

Global sales of electric vehicle sales have more than tripled since 2014, but they still account for just 1.2% of total vehicle sales, according to the International Energy Agency.

"Electric vehicles are the future," said ClipperData's Smith. "It's just not going to happen in the next few years."

Mississippi Coronavirus Cases

Data is updated nightly.

Cases: 514171

Reported Deaths: 10285
CountyCasesDeaths
Harrison34920557
DeSoto33270432
Hinds32652642
Jackson24876391
Rankin22516404
Lee16366245
Madison14932283
Jones14129247
Forrest13785260
Lauderdale12279324
Lowndes11314193
Lamar10663140
Pearl River9720244
Lafayette8855143
Hancock7839132
Washington7553169
Oktibbeha7216138
Monroe7036179
Pontotoc7003109
Warren6872178
Panola6768135
Neshoba6732210
Marshall6686142
Bolivar6451151
Union640898
Pike5933156
Alcorn5887107
Lincoln5533136
George510380
Prentiss505385
Tippah492783
Itawamba4857107
Scott478199
Adams4771125
Tate4765117
Leflore4736144
Copiah457095
Yazoo456692
Simpson4554117
Wayne443172
Covington434695
Sunflower4315106
Marion4279112
Coahoma4238109
Leake414090
Newton395782
Tishomingo384894
Grenada3777109
Stone365766
Jasper340866
Attala338790
Winston317892
Chickasaw316167
Clay312578
Clarke301295
Calhoun285949
Holmes271889
Smith269452
Yalobusha244247
Tallahatchie232053
Greene224749
Walthall221866
Lawrence219141
Perry213456
Amite209857
Webster206248
Noxubee188743
Montgomery181857
Carroll174941
Jefferson Davis173843
Tunica163339
Benton153139
Kemper145041
Choctaw136727
Claiborne134439
Humphreys132139
Franklin126029
Quitman107628
Wilkinson106139
Jefferson96934
Sharkey65321
Issaquena1957
Unassigned00

Alabama Coronavirus Cases

Cases: 845761

Reported Deaths: 16119
CountyCasesDeaths
Jefferson1161862004
Mobile742411381
Madison53315732
Shelby38351369
Baldwin38104589
Tuscaloosa36052641
Montgomery34492781
Lee25590263
Calhoun22598518
Morgan22459406
Etowah20026518
Marshall18790316
Houston17741425
St. Clair16904358
Limestone16153219
Cullman16067303
Elmore15912294
Lauderdale14991306
Talladega14209299
DeKalb12985269
Walker12067380
Blount10729192
Autauga10526157
Jackson10170194
Coffee9425192
Colbert9341208
Dale9024192
Tallapoosa7273201
Russell708865
Chilton7042170
Escambia6956143
Covington6943195
Franklin6338108
Chambers5785142
Marion5413130
Dallas5295209
Pike5123109
Clarke484886
Lawrence4831129
Winston4780110
Geneva4643136
Bibb434594
Barbour369980
Butler3439100
Marengo342393
Monroe337466
Randolph334867
Pickens333988
Fayette330085
Henry320766
Hale318489
Cherokee318363
Crenshaw260777
Washington256952
Cleburne254560
Lamar251953
Clay251169
Macon245064
Conecuh193162
Coosa185547
Lowndes178268
Wilcox177638
Bullock152545
Perry141840
Sumter139241
Greene130245
Choctaw93228
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Columbus
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Above normal temperatures will be the rule for our area over the next several days. We will stay on the dry side until this weekend.
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