Brian L. Milne, Energy Editor, Schneider Electric
December finished with a sixth consecutive weekly increase in domestic gasoline stocks, rebuilding from a four-year low plumbed in October amid a host of unexpected refinery outages in 2012 heading into the fourth quarter, and exacerbated by the destruction and resultant infrastructure disruptions in the Northeast and Mid-Atlantic caused by Superstorm Sandy.
At 225.7 million barrels, national gasoline inventories ended 2012 at a 9-1/2 month high and 5.5% above the five-year average, data from the Energy Information Administration (EIA) shows. Last year’s drawdown in stocks came despite weak gasoline demand, with preliminary EIA data indicating a 3.3% decline in gasoline supplied to market in 2012 compared with 2011. For December, implied demand was down 2.3% versus year prior.
On pricing, 2012 also marked the second consecutive year in which the national average price for retail gasoline and diesel fuel in the U.S. held above $3 gallon continuously throughout the year. The EIA shows in 2012 retail gasoline prices averaged at $3.62 gallon, and at a $3.97 gallon for diesel fuel.
The U.S. retail gasoline average fell to a 2012 low on Dec. 17 at $3.254 gallon, and averaged at $3.298 gallon on Dec. 31.
View Schneider Electric’s Weekly and Historical Gasoline Price Index.
U.S. gasoline found pricing strength on low supply during the second half of 2012, with the Bank of America Merrill Lynch noting, too, lower US gasoline imports limited stock rebuilding. EIA data shows U.S. gasoline imports down 26% in 2012 versus 2011, and 32% lower than the five-year average, with the vast majority of US gasoline imports entering the country along the East Coast; primarily at the New York Harbor.
In its Energy Outlook for 2013, the bank said the lower gasoline imports were due in large part to “A dearth of gasoline exports from Europe,” highlighting “the gasoline-centered refinery closures there.” In its forecast for this year, Bank of America Merrill Lynch said it has turned “less negative” on their gasoline outlook for 2013, saying “Gasoline refining capacity fell sharply in 2012 on refinery closures in Europe and the U.S., providing much-needed capacity rationalization.”
The bank also points to refiners reconfiguring their yield configuration towards more distillates and less gasoline, adapting to a global trend in which diesel demand continues to grab a larger share of the transportation fuel market.
Tempering its less bearish outlook for gasoline in 2013 are expectations for lower gasoline demand in Europe amid recession and greater fuel efficiency for vehicles.
About the Author
Brian L. Milne is the Energy Editor for Schneider Electric—a leading business-to-business provider of real-time commodity information services among many other activities. Milne has been focused on the energy industry for 17 years as an analyst, journalist and editor. He can be reached at email@example.com.