Where Did All the Fuel Go?

Diesel inventories have fallen to historic lows, and this week’s meager gain in diesel stocks doesn’t undo months of declining supplies. Fuel prices are at historic levels, trading at hefty premiums above already elevated crude costs. Those premiums, called “crack spreads”, should incentivize refiners to produce more fuel. Indeed, refiners have been producing at over 90% utilization over the past few months – at or above the pre-COVID level. So where is all the fuel?


One of the big challenges for fuel supplies is the total amount of refining capacity. Although refinery utilization is high, refiners have 1 MMbpd (42 million gallons) less throughput capacity compared to early 2020. Several refiners shut completely during the pandemic due to reduced fuel demand and poor economics. Others announced planned conversions to producing renewable diesel, though the turnaround time can take months or years.


Last year, the EIA reported six refineries closing, spread across every region. The biggest drop was the loss of the Philadelphia Energy Solutions refinery in PADD 1 (East Coast) – which closed after a fire exacerbated financial woes. There are many diverse reasons why the East Coast is facing such enormous supply pressure, but losing 14 million gallons of daily fuel output certainly has not helped.

  • The Philadelphia Energy Solutions refinery in Philadelphia, Pennsylvania: 335,000 b/cd
  • The Shell refinery in Convent, Louisiana: 211,146 b/cd
  • The Tesoro (Marathon) refinery in Martinez, California: 161,000 b/cd
  • The HollyFrontier refinery in Cheyenne, Wyoming: 48,000 b/cd
  • The Western Refining refinery in Gallup, New Mexico: 27,000 b/cd
  • The Dakota Prairie refinery in Dickinson, North Dakota: 19,000 b/cd



Market Condition Report - Disclaimer
The information contained herein is derived from sources believed to be reliable; however, this information is not guaranteed as to its accuracy or completeness. Furthermore, no responsibility is assumed for use of this material and no express or implied warranties or guarantees are made. This material and any view or comment expressed herein are provided for informational purposes only and should not be construed in any way as an inducement or recommendation to buy or sell products, commodity futures or options contracts.

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