Analysis: EIA Data Reveals Regional Vulnerabilities


   
Karim Bastati
DTN Analyst

   VIENNA (DTN) -- U.S. refined fuels supply is significantly less vulnerable 
to the ongoing oil supply disruption from the Middle East than Europe and Asia, 
who heavily rely on crude oil and product flows from the region. According to 
data from the Energy Information Administration, less than 8% of imported crude 
and 3% of refiner inputs stemmed from the Persian Gulf last year. EIA PADD- and 
company-level import data, however, reveal that fuel supply in some pockets of 
the country is much more exposed to the Mideast turmoil than the national 
average suggests.

   Close to half of U.S. crude imports from the Persian Gulf last year went to 
the West Coast, where it makes up nearly 20% of imports and more than 11% of 
crude inputs. For two import-dependent refiners in California, who together 
account for more than a third of the state's refining capacity, Iraqi crude oil 
in particular represents a major part of their diet.

   According to EIA company-level monthly data, Marathon's Los Angeles refinery 
in December received 2.94 million bbl of heavy sour crude from Iraq. Basrah 
heavy and medium made up more than a third of the refinery's crude mix that 
month. Chevron's 245,000 bpd capacity Richmond refinery received 3.25 million 
bbl from Iraq and Saudi Arabia, accounting for more than 40% of its crude diet 
in December.

   A mix of Latin American and domestic oil would make for a good substitute 
for these mostly heavy sour grades, but South American barrels on the spot 
market remain limited, as does PADD 5's capability of receiving oil from other 
parts of the country. Given the lack of pipeline connections to the rest of the 
country as well as different fuel specifications, the U.S. West Coast relies on 
imports and regional production to meet fuel needs, as the Jones Act renders 
domestic shipments via tanker economically unviable. This week's suspension of 
the Jones Act, in place for 60 days, opens the window to domestic deliveries by 
tanker and, while not shielding the consumer from rising costs, is set to 
strengthen fuel supply safety on the West Coast.

    




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