In addition, because of the relative isolation of the West Coast market, it can be costly to supplement supply from outside the region when a refinery outage occurs. Unlike other gasoline markets in the United States, the West Coast market does not receive or ship significant volumes of gasoline to or from other U.S. regions or abroad. Year-to-date through May in 2012, gasoline volumes shipped to the West Coast from other regions of the United States averaged about 130,000 bbl/d, or 9 percent of total regional supply. Most of this was shipped from the Gulf Coast via pipeline into Arizona; some additional barrels are shipped from the Rocky Mountain region. East of the Rockies, petroleum product markets are connected via extensive pipeline systems. These pipelines allow refineries on the Gulf Coast to efficiently ship additional products to the East Coast and Midwest to balance those markets when supply disruptions occur. In addition, the West Coast market is distanced from the actively traded physical markets in the Atlantic Basin, where price signals can divert cargoes in transit to locations where they are needed.
During a major refinery outage on the West Coast, one of the first sources of supply on which the market draws is likely to be reduced exports of gasoline. Gasoline exports from the West Coast have averaged just over 35,000 bbl/d year-to-date through May in 2012, but were as high as 90,000 bbl/d earlier in August 2011. The majority of exports from the region are shipped from San Francisco, and Mexico is the largest importer of West Coast gasoline. However, an increase in wholesale prices is necessary to bid this formerly-excess supply back into the domestic market and out of the export market.
Attracting imports also tends to be an expensive solution for supplying West Coast markets. The small stream of regular imports into the West Coast comes mainly from Canada. Occasionally, tight market conditions can open an arbitrage with Asia, but this happens only when prices are high enough to cover the cost of shipping products across the Pacific. This did happen earlier this year, when price differentials supported trans-Pacific trade and the West Coast pulled gasoline cargoes from South Korea and Singapore, among others. However, imports remain a small part of the region's supply, averaging 26,000 bbl/d in 2012, making up only about 2 percent of total supply.
Unique specification requirements for gasoline, particularly in California, also complicate bringing supplies into the region. California gasoline has a stringent Reid Vapor Pressure limit during the summer months, which California's refineries are designed to meet. However, domestic and global availability of gasoline meeting this specification is limited, making it difficult to find supplies, especially on short notice.
During prolonged refinery outages, like the Cherry Point shutdown that lasted from late February through May, West Coast gasoline inventories often fall sharply because of the difficulty in securing supplemental supplies. After the Cherry Point shutdown, West Coast gasoline stocks fell 22 percent (6.8 million barrels) between February 17 and May 18. This inventory reduction was much larger than the 1.9-million-barrel draw typically seen in West Coast stocks over this period. However, stock draws do not obviate the need for higher wholesale prices to attract supplies.