The recent idling of two refineries in southeastern Pennsylvania and previously announced plans to idle an additional refinery in the region by mid-2012 would, taken together, reduce operating refinery capacity along the entire East Coast by 27 percent. This reduction in refinery activity, if fully implemented and made permanent, looks set to reverse recent declines in U.S. gasoline imports even if end-user demand for gasoline continues to edge lower, as expected by the U.S. Energy Information Administration (EIA). On its face, any short-term increase in aggregate East Coast import requirements that may result from the closures would not cause East Coast gasoline imports to exceed peak levels recorded in 2006. The need for alternate supply, however, may be felt most acutely in the region surrounding the idled plants, which is currently ill-equipped to handle larger product import volumes. Price increases relative to other markets could be required to overcome short-term logistical hurdles.
On the back of strong demand for products in Latin America and other emerging markets and sagging demand at home, U.S. exports of refined products surged to record levels in 2011, while imports fell to levels not seen since early last decade. As a result, U.S. exports of petroleum products exceeded imports in 2011 for the first time since at least 1949. The East Coast was no exception; total product imports into the region were lower (through October) than any annual average since 1999.
The sustainability of this trend is not assured, however, particularly on the East Coast. With the idling of ConocoPhillips' Trainer refinery and Sunoco's Marcus Hook refinery, East Coast refining capacity dropped by 27 percent since the end of September. Sunoco has said that, in the absence of a buyer, it would also shut its Philadelphia refinery by mid-2012. Increased imports would likely comprise a major portion of replacement product supplies, particularly for gasoline.
The East Coast is by far the largest gasoline market in the United States. Gasoline accounts for most product imports into the region. In 2010, the East Coast imported 760,000 barrels per day (bbl/d) of gasoline, or 24 percent of all gasoline consumed regionally, but only 198,000 bbl/d of distillate fuel (17 percent of consumption) and 46,000 bbl/d of jet fuel (8 percent of consumption). However, products shipped by pipeline from the U.S. Gulf Coast provide the largest share of products consumed along the East Coast.