In addition to refiners, merchant terminal operators, such as Westway Terminals, NuStar Energy, and Plains All American, are also investing in new rail-to-barge and rail unloading facilities. Global Partners LP, a midstream energy logistics and marketing company, recently purchased an existing petroleum products terminal in Portland, Oregon, that is linked via rail to Global-owned crude-by-rail loading facilities in North Dakota.
As the First Transcontinental Railroad united the West with the eastern railroad system in 1869, railroads are now doing the same for crude oil markets in the East and West, overcoming great distances and the Continental Divide to deliver crude production to markets where it is most highly valued.
Background on PADD 5 Refining
There are three major refining centers in PADD 5: Washington state, San Francisco, and Los Angeles. Historically, the refineries in Washington and California were supplied from PADD 5 crude oil production and imports (Figure 2). Alaska and California production is transported by marine vessel and pipeline, respectively, to refineries. However, production in both Alaska and California has been in decline over the past decade. In 2012, PADD 5 production represented 48 percent of crude runs at the region's refineries, down from 59 percent in 2005. As PADD 5 production declined over this period, waterborne imports of crude oil increased. In 2012, imports were 51 percent of total PADD 5 crude supply, an increase from 40 percent in 2005. The major sources of crude imported into the West Coast thus far in 2013 are Canada, Saudi Arabia, Iraq, and Ecuador. Because the West Coast relies so much on imports of crude oil, similar to the United States overall, crude prices in the region, including those for Alaska and California, have historically been linked to seaborne Brent crude oil prices rather than to inland West Texas Intermediate prices at Cushing, Oklahoma.
Gasoline and diesel fuel prices both decrease again
The U.S. average retail price of regular gasoline decreased seven cents to $3.56 per gallon as of August 12, 2013, 16 cents lower than last year at this time. Prices decreased in all regions except the Rocky Mountains, where the price increased one cent to $3.64 per gallon. The largest decrease came in the Midwest, where the price fell 11 cents to $3.48 per gallon. The East and Gulf Coast prices both fell six cents, to $3.57 per gallon and $3.39 per gallon, respectively. Rounding out the regions, the West Coast price declined five cents to $3.84 per gallon.
The national average diesel fuel price decreased one cent to $3.90 per gallon, seven cents lower than last year at this time. Prices decreased in all regions, led by two-cent drops in the Midwest and the Gulf Coast, to $3.86 per gallon and $3.82 per gallon, respectively. On the East and West Coast the price is down one cent, to $3.91 per gallon and $4.05 per gallon, respectively. Rounding out the regions, the Rocky Mountain price declined less than one cent to remain $3.93 per gallon.