Gasoline Demand Update
This is really, really cool. Look at my post of July 16, 2015 -- the graph. Today, RBN Energy provides a really nice post on this subject: New Demand Brings Gasoline Back to Life. (archived)
Only a few short years ago the double punch of fuel efficiency and ethanol mandates had put U.S. gasoline demand on the ropes. But in the past year demand has jumped by 0.5 MMb/d (per data from the Energy Information Administration - EIA). This surge in demand – presumably driven by cheaper prices – has kept refineries running full pelt this summer. Today we discuss the fall and rise of gasoline demand. U.S. gasoline is a complex product that refiners blend to meet local quality and regulatory specifications using a number of components from what is known as the gasoline blending pool.
We’ll start this post with a recap of previous blogs on the various moving parts in the gasoline business that you can refer back to. We covered refinery processes to produce gasoline in our “Complex Refining 101 Part I and Part II” series. We covered the Reid Vapor Pressure (RVP) quality characteristic of gasoline in “Regulatory Gas Pressure Party”. RVP levels are mandated by the Environmental Protection Agency (EPA) and apply during the summer driving season. We’ve covered the production and use of the complex blending components called alkylate - that (among other qualities) helps refiners meet lower RVP mandates during summer months - and reformate . We covered the opposite quality of butane blended into gasoline during the winter months that increases RVP.
We have also covered the Renewable Fuels Standard (RFS) that requires refiners to blend ethanol into gasoline. We’ll talk more about ethanol in a minute. Then there are the regulations that mandate how much sulfur is allowed in gasoline.
Aside from the various components and regulatory mandates of gasoline we have posted numerous blogs on the refining industry in general – covering for example the Gulf Coast gasoline and diesel export boom and recent booming refinery margins. Most recently we started a series on the refined product distribution system. In this post we look at the recent turnaround in U.S. demand for gasoline – previously considered a market in perpetual decline.