On April 27, 2020, the U.S. average regular retail gasoline price was $1.77 per gallon (gal), the lowest price since February 2016. On May 4, the U.S. average gasoline price increased slightly to $1.79/gal. The United States declared a national emergency on March 13 in response to concerns regarding spread of the 2019 novel coronavirus disease (COVID-19). From March 16 to May 4, the U.S. average regular retail gasoline price fell by $0.46/gal. The lower gasoline prices reflect low crude oil prices, low gasoline demand, and rising gasoline inventories.
As a result of reduced economic activity and stay-at-home orders aimed at slowing the spread of COVID-19, consumption of petroleum products and the price for crude oil (the primary input for producing gasoline) have both declined. The Brent crude oil price, which is generally more closely correlated than the West Texas Intermediate (WTI) price to the price of U.S. gasoline, settled at $18 per barrel (b) on May 1, down $15/b (45%) since March 13 and $53/b (74%) less than a year ago (Figure 1).
Falling crude oil prices have coincided with decreasing transportation fuel demand, placing further downward pressure on gasoline prices. U.S. gasoline consumption (as measured by the four-week rolling average of product supplied) fell from 9.3 million barrels per day (b/d) the week ending March 13 to 5.3 million b/d the week ending on April 24.
As consumption has decreased, gasoline inventories have risen to record levels despite refinery run cuts. On April 17, total U.S. gasoline inventories reached 263.2 million barrels, the highest level recorded since the U.S. Energy Information Administration (EIA) began collecting these data in 1990 (Figure 2). Gasoline inventories have since fallen slightly to 256.4 million barrels as of May 1. Although EIA does not collect weekly demand data on a regional basis, low refinery runs and high gasoline inventories indicate low demand in each region. As a result, gasoline prices have decreased in each region. In addition, the U.S. Environmental Protection Agency’s (EPA) temporary waiver of the requirement to switch to summer-grade gasoline is putting further downward pressure on gasoline prices.
From March 16 to May 4, the average regular retail price of gasoline in the West Coast (Petroleum Administration for Defense District, or PADD, 5) fell $0.58/gal to $2.44/gal, the lowest price since March 2016. The West Coast retail gasoline price is typically higher than the average U.S. price because of the region’s tight supply and demand balance, geographical isolation from other U.S. refining centers—such as the Gulf Coast (PADD 3)—because of very limited gasoline transportation infrastructure, and gasoline specifications that are more costly to manufacture. Although the May 4, 2020, West Coast gasoline price is $0.65/gal higher than the U.S. average, it is $1.27/gal less than West Coast gasoline price for the same time last year.
Total West Coast motor gasoline inventories increased by 5.0 million barrels from March 13 (when the national emergency was declared) to 35.0 million barrels on April 10, the largest inventory since 2013 (Figure 3). More recently, inventories have begun to decline, reflecting low refinery runs as gasoline inventories are drawn down. In the week ending May 1, weekly gross inputs into West Coast refineries fell to 1.7 million b/d, the least on record. The five weeks from April 3 through May 1 had the five lowest levels of West Coast refiner gross production of gasoline on record (going back to June 2010, when EIA began collecting these data). West Coast gasoline inventories have fallen during the past three weeks, but they are still higher than the previous five-year (2015–19) maximum.
Gasoline inventories in the U.S. Gulf Coast have also increased. From March 13 to May 1, Gulf Coast gasoline inventories increased by 6.8 million barrels (8%) to 89.5 million barrels. Because of refinery run cuts and decreasing refinery yields of gasoline, Gulf Coast refinery gross production of motor gasoline fell to 2.9 million b/d for the week of April 24, the lowest level on record since June 2010, when EIA began collecting these data. The week of May 1, Gulf Coast refinery gross production of motor gasoline increased slightly to 3.0 million b/d. The high inventory levels are putting downward pressure on the price of Gulf Coast gasoline, which fell to $1.49/gal on May 4, down $0.48/gal since March 16 and the lowest price since 2004. The Gulf Coast typically has the lowest retail gasoline price in the country because it has more than 50% of U.S. refining capacity and produces more gasoline than it consumes. However, the Midwest (PADD 2) had the country’s lowest gasoline price from March 30 to April 27 (Figure 4), reflecting lack of demand for gasoline in the region.
The price of motor gasoline in the Midwest was $1.57/gal as of May 4, down $0.46/gal since March 16. Midwest gasoline prices were lower than Gulf Coast prices for five consecutive weeks, the first time Midwest prices have remained lower than Gulf Coast prices for more than two consecutive weeks since December 2008. As Midwest inventories have begun to decline and Gulf Coast inventories continue to build, the Gulf Coast price has again fallen below the Midwest price.
The East Coast (PADD 1) and Rocky Mountain (PADD 4) regions have also seen falling gasoline prices. As of May 4, the East Coast price was $1.79/gal, down $0.40/gal since March 16. The Rocky Mountain price was $1.77/gal on May 4, down $0.55/gal since March 16. Like the rest of the country, both the East Coast and Rocky Mountain regions have experienced gasoline inventories higher than the previous five-year maximum.
U.S. average regular gasoline price rises, diesel price falls
The U.S. average regular gasoline retail price rose nearly 2 cents per gallon from the previous week to $1.79 per gallon on May 4, $1.11 lower than the same time last year. The Midwest price rose nearly 10 cents to $1.57 per gallon. The Rocky Mountain price fell nearly 4 cents to $1.77 per gallon, the East Coast price fell nearly 2 cents to $1.79 per gallon, the Gulf Coast price fell 2 cents to $1.49 per gallon, and the West Coast price fell more than 1 cent to $2.44 per gallon.
The U.S. average diesel fuel price fell nearly 4 cents to $2.40 per gallon on May 4, 77 cents lower than a year ago. The Rocky Mountain price fell more than 6 cents to $2.37 per gallon, the West Coast, East Coast, Midwest, and Gulf Coast prices each fell nearly 4 cents to $2.90 per gallon, $2.51 per gallon, $2.25 per gallon, and $2.17 per gallon, respectively.
Propane/propylene inventories rise
U.S. propane/propylene stocks increased by 2.5 million barrels last week to 59.4 million barrels as of May 1, 2020, 7.5 million barrels (14.5%) greater than the five-year (2015-19) average inventory levels for this same time of year. Gulf Coast inventories increased by 1.2 million barrels, Midwest inventories increased by 0.9 million barrels, and East Coast and Rocky Mountain/West Coast inventories each increased by 0.2 million barrels.
Something interesting to share?
Join NrgEdge and create your own NrgBuzz today
Pioneering technology expert tells ADIPEC Energy Dialogue up to 80 per cent of plant shutdowns could be mitigated through combination of advanced electrification, automation and digitalisation technologies
Greater use of renewables in power management processes offers oil and gas companies opportunities to create efficiencies, sustainability and affordability when modernising equipment, or planning new CAPEX projects
Abu Dhabi, UAE – XX August 2020 – Leveraging the synergies created by the convergence of electrification, automation and digitalisation, can create significant cost savings for oil and gas companies when making both operational and capital investment decisions, according to Dr Peter Terwiesch, President of Industrial Automation at ABB, a Swiss-Swedish multinational company, operating mainly in robotics, power, heavy electrical equipment, and automation technology areas.
Participating in the latest ADIPEC Energy Dialogue, Dr Terwiesch said up to 80 per cent of energy industry plant shutdowns, caused by human error, or rotating machinery or power outages, could be mitigated through a combination of electrification, automation and digitalisation.
“Savings are clearly possible not only on the operation side but also, using the same synergies between dimensions, you can bring down the cost schedule and risk of capital investment, especially in a time when making projects work economically is harder,” explained Dr Terwiesch.
A pioneering technology leader, who works closely with utility, industry, transportation and infrastructure customers, Dr Terwiesch said despite the increasing investment by oil and gas companies in renewables and the growing use of renewables to generate electricity, both for individual and industrial uses, hydrocarbons will continue to have an important role in creating energy, in the short to medium term.
“If you look at the energy density constraints, clearly electricity is gaining share but electricity is not the source of energy; it is a conduit of energy. The energy has to come from somewhere and that can be hydrocarbons, or nuclear, or renewables.” he said.
Nevertheless, he added, the greater use of renewables to generate electricity offers oil and gas companies the option of integrating a higher share of renewables into power management processes to create efficiencies, sustainability and affordability when modernising equipment, or planning new CAPEX projects.
The ADIPEC Energy Dialogue is a series of online thought leadership events created by dmg events, organisers of the annual Abu Dhabi International Exhibition and Conference. Featuring key stakeholders and decision-makers in the oil and gas industry, the dialogues focus on how the industry is evolving and transforming in response to the rapidly changing energy market.
With this year’s in person ADIPEC exhibition and conference postponed to November 2021, the ADIPEC Energy Dialogue, along with insightful webinars, podcasts and on line panels continue to connect the oil and gas industry, with the challenges and opportunities shaping energy markets in the run up to, and following, a planned three-day live stream virtual ADIPEC conference taking place from November 9-11.
An industry first of its kind, the online conference will bring together energy leaders, ministers and global oil and gas CEOs to assess the collective measures the industry needs to put in place to fast-track recovery, post COVID-19.
To watch the full ADIPEC Energy Dialogue series go to: https://www.youtube.com/watch?v=QZzUd32n3_s&t=6s
Utility-scale battery storage systems are increasingly being installed in the United States. In 2010, the United States had seven operational battery storage systems, which accounted for 59 megawatts (MW) of power capacity (the maximum amount of power output a battery can provide in any instant) and 21 megawatthours (MWh) of energy capacity (the total amount of energy that can be stored or discharged by a battery). By the end of 2018, the United States had 125 operational battery storage systems, providing a total of 869 MW of installed power capacity and 1,236 MWh of energy capacity.
Battery storage systems store electricity produced by generators or pulled directly from the electrical grid, and they redistribute the power later as needed. These systems have a wide variety of applications, including integrating renewables into the grid, peak shaving, frequency regulation, and providing backup power.
Most utility-scale battery storage capacity is installed in regions covered by independent system operators (ISOs) or regional transmission organizations (RTOs). Historically, most battery systems are in the PJM Interconnection (PJM), which manages the power grid in 13 eastern and Midwestern states as well as the District of Columbia, and in the California Independent System Operator (CAISO). Together, PJM and CAISO accounted for 55% of the total battery storage power capacity built between 2010 and 2018. However, in 2018, more than 58% (130 MW) of new storage power capacity additions, representing 69% (337 MWh) of energy capacity additions, were installed in states outside of those areas.
In 2018, many regions outside of CAISO and PJM began adding greater amounts of battery storage capacity to their power grids, including Alaska and Hawaii, the Electric Reliability Council of Texas (ERCOT), and the Midcontinent Independent System Operator (MISO). Many of the additions were the result of procurement requirements, financial incentives, and long-term planning mechanisms that promote the use of energy storage in the respective states. Alaska and Hawaii, which have isolated power grids, are expanding battery storage capacity to increase grid reliability and reduce dependence on expensive fossil fuel imports.
Source: U.S. Energy Information Administration, Form EIA-860, Annual Electric Generator Report
Note: The cost range represents cost data elements from the 25th to 75th percentiles for each year of reported cost data.
Average costs per unit of energy capacity decreased 61% between 2015 and 2017, dropping from $2,153 per kilowatthour (kWh) to $834 per kWh. The large decrease in cost makes battery storage more economical, helping accelerate capacity growth. Affordable battery storage also plays an important role in the continued integration of storage with intermittent renewable electricity sources such as wind and solar.
Additional information on these topics is available in the U.S. Energy Information Administration’s (EIA) recently updated Battery Storage in the United States: An Update on Market Trends. This report explores trends in battery storage capacity additions and describes the current state of the market, including information on applications, cost, market and policy drivers, and future project developments.