This Week In Petroleum |
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Released on June 20, 2007 Winter in June? As of June 2007, pursuant to Environmental Protection Agency (EPA) rules, fuel suppliers are no longer distributing distillate fuel containing more than 500 ppm sulfur for non-road diesel, locomotive, and marine use. (Some exceptions exist.) Instead, these markets are now supplied mainly with lower sulfur fuels. Using data from 2000 and 2001, EPA, during its rulemaking process, suggested that the markets affected by this rule represented more than half of the overall demand for high-sulfur distillate fuel. EIA analysts reached a similar result using more recent data from the 2005 fuel oil and kerosene sales. The significant reduction in overall demand for high-sulfur distillate fuel strongly impacts inventory needs. Indeed, if desired inventories are proportional to demand, it would not be surprising to see half of the high-sulfur distillate fuel inventories shift to lower sulfur categories over some time period. This means that comparing high-sulfur distillate fuel inventories to historical data, such as a 5-year average, will be misleading, as the high-sulfur market is dramatically smaller now compared to recent years. Conversely, historical comparisons involving the combination of less-than-15 ppm sulfur and 15 ppm-to-500 ppm sulfur distillate fuel will also be misleading, since with more demand shifted to these markets, one would now expect inventories to be significantly higher. For the time being, analysts seeking an undistorted perspective can focus on total distillate fuel inventories in doing any analysis related to heating oil or diesel fuel. As Figure 5 in the Weekly Petroleum Status Report indicates, current stocks of distillate fuel are in the upper half of the average range for this time of year. Gasoline Prices Down, Diesel Higher Retail diesel prices rose this week, climbing 1.3 cents to 280.5 cents per gallon. Prices are 11.0 cents per gallon lower than at this time last year. East Coast prices were up 1.1 cents to 280.0 cents per gallon. In the Midwest, prices increased 2.1 cents to 277.4 cents per gallon, while the Gulf Coast saw a rise of 1.1 cents to 275.3 cents per gallon. The Rocky Mountain region had the only drop in prices, down 3.0 cents to 290.7 cents per gallon. The West Coast price rose 1.7 cents to 295.8 cents per gallon. California prices grew 3.6 cents to 303.3 cents per gallon, but remain 15.2 cents per gallon lower than at this time last year. Propane Inventories Sharply Higher Text from the previous editions of �This Week In Petroleum� is now accessible through a link at the top right-hand corner of this page. |
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