Unintended Consequences Of Bakken Shale + High Gasoline Demand -- July 21 2015

Remember reading this?

One interesting side effect of U.S. refineries running flat out to produce more gasoline is a shortage of the blending components required to boost the octane rating in summer gasoline – alkylate and reformate. The shale crudes being processed in greater volumes by U.S. refiners these days contain lighter naphtha components that make fewer octanes. That means refiners have to buy in expensive alkylate and reformate – increasing prices at the pump – especially if your Beamer only runs on premium gas.

This very issue was discussed (and predicted) in their Sunday, July 19, 2015, blog that was posted Monday, July 20, 2015.

Now Platts is reporting: High octane RBOB premium surges on US Atlantic Coast.

The premium for 91.4 octane RBOB on the US Atlantic Coast Tuesday held on to gains made late Monday as prompt supplies became tight, market participants said.

Premium RBOB (H2) loading July 23 on the Buckeye Pipeline traded at NYMEX August RBOB plus 59.00 cents/gal late Monday, up 8 cents from Monday's assessment. Trading was limited early Tuesday, but market participants said the premium has held on to gains from late Monday.

The current spread between the standard 83.7 octane RBOB and the high octane RBOB has widened to 48.5 cents/gal, the widest differential since September 19, 2012.

The market for high octane RBOB on the Atlantic Coast is particularly tight for prompt loading.

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