Gross U.S. refinery inputs in October averaged 15.4 million bbl/d, 800,000 bbl/d below the average for June through September (Figure 1). Even with the recent decline in refinery runs, gross inputs remain above the five-year range for this time of year and gasoline prices have continued to move downward. Strong global demand for diesel fuel and other distillates is resulting in high prices for these products, keeping overall refinery margins attractive and refinery runs robust compared with seasonal norms, despite anemic gasoline margins.
Robust runs at Gulf Coast (PADD 3) refineries, which account for more than 50% of U.S. capacity, are driving the high national utilization rate. Through November 1, Gulf Coast gross inputs were above the region's five-year range in all but six weeks of 2013. Refiners in the region are running at record levels to meet strong global demand for distillate, particularly in Latin America. With access to discounted U.S. crude oil, relatively low-priced natural gas as a feedstock and fuel source, and geographic proximity to demand in Latin America, Gulf Coast refineries are well suited to serve those markets.
Some of the recent reduction in refinery runs can be attributed to planned maintenance. Refineries typically schedule turnaround activities for periods of relatively low demand, such as during the autumn after the summer driving season has ended, and in the early spring, after the home heating season but before the driving season begins. Trade press indicates that several maintenance projects are currently underway or were recently completed. Phillips 66's Ponca City, Oklahoma (198,000 bbl/d); Motiva's Norco, Louisiana (234,000 bbl/d); and Tesoro's Golden Eagle, Martinez, California (166,000 bbl/d) all recently completed work on units. Units at Marathon's Garyville, Louisiana (522,000 bbl/d); Philadelphia Energy Solutions's Philadelphia, Pennsylvania (335,000 bbl/d); and Valero's Three Rivers, Texas (93,000 bbl/d), are currently undergoing planned maintenance.
Planned refinery maintenance is typically scheduled well in advance to ensure availability of specialized maintenance staff. In addition, refiners typically arrange for alternate sources of product supply during shutdowns, including purchases and exchanges with other refiners, which reduce supply disruptions and blunt the impact of shutdowns on prices of gasoline and other petroleum products. In addition, product inventories are often built ahead of refinery maintenance, providing yet another source of alternate supply.