Recent Fuel Price Trends & Market Developments Petroleum Market Advisory Committee Meeting California Energy Commission Sacramento, California December

Recent Fuel Price Trends & Market Developments

Petroleum Market Advisory Committee MeetingCalifornia Energy Commission

Sacramento, CaliforniaDecember 16, 2015

Gordon SchrempEnergy Assessments Division

California Energy [email protected]

California Energy Commission


• CA retail gasoline prices are slowly dropping

• California– Down 15.4 cpg since last

month and down 3.5 cpg since last week

– 22.1 cpg lower than same time last year

• Washington– Down 10.3 cpg since last

month and down 2.0 cpg since last week

– 42.5 cpg lower than same time last year

12/16/2015 2

Washington Average Prices

California Average Prices

National Average Prices

Snapshot - Retail Prices Declining in CA

Prices updated as of 12/15/2015 3:45amRegular Mid Premium Diesel

Current Avg. $2.013 $2.286 $2.515 $2.346 Yesterday Avg. $2.014 $2.291 $2.519 $2.353 Week Ago Avg. $2.027 $2.303 $2.533 $2.385

Month Ago Avg. $2.166 $2.436 $2.662 $2.472 Year Ago Avg. $2.545 $2.767 $2.951 $3.400







21.1

16.9

27.0 26.8

20.2

23.728.1

26.7

32.5 30.9 29.5

41.638.1 38.7

73.9

0

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20

30

40

50

60

70

80

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Y-T-D2015

Cent

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Retail Gasoline Price DifferencesCalifornia Less U.S. Average

Sources: California Energy Commission analysis of Energy Information Administration data.

Regular grade gasoline

Y-T-D data through December 14, 2015

California Energy Commission12/16/2015 3

13.310.5

17.618.3

13.715.5

21.919.9

24.522.7

20.1

27.725.1 26.3

53.9

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60

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Y-T-D2015

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Retail Gasoline Price DifferencesCalif. Less U.S. Reformulated Average

Sources: California Energy Commission analysis of Energy Information Administration data.

Reformulated gasoline

Y-T-D data through December 14, 2015


262.8264.8

150.9

177.5

83.5

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100

150

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250

300

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400

45012

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2014

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2015

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2015

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2015

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2015

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California Gasoline Price ChangesRetail, Rack and Refinery Wholesale

California Regular Grade Retail GasolineRefinery Wholesale - CA AverageRack Wholesale - Los AngelesCrude Oil

Source: CEC analysis of AAA and OPIS prices.

Refinery wholesale peaked July 10Rack wholesale peaked July 13Retail peaked July 16


129.2 129.0 120.6 121.3146.9 145.0

115.684.9

32.362.4

117.889.2

134.7

100.1

79.9

88.3

10.2

10.0

10.0

10.1

10.2

10.3

10.3

36.0

30.0

30.0

44.2

16.0

31.5

42.5

24.5

26.0

28.8

25.0

268.0280.2

343.9

326.7

381.0

345.3

291.4

264.8

0

50

100

150

200

250

300

350

400

450

12/2

9/14

2/17

/15

3/9/

15

3/23

/15

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/15

6/27

/15

10/1

2/15

12/1

5/15

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Distribution, Dealer Costs & Profits

Federal Excise Tax

State Excise Tax

Fuels Under the Cap Obligation

State & Local Taxes

UST Fee

Refiner Costs & Profits

Crude Oil Cost

Retail Price

Sources: California Energy Commission analysis of OPIS, EIA, and AAA data.


California Retail Gasoline Components

12/16/2015 6


Refinery Operations

12/16/2015 7

• Refinery problems – gasoline impact quantified• West coast gasoline production capability significantly degraded• Based on analysis of IIR data, the quantity of gasoline production

capacity off-line during April – November averaged nearly 148 thousand barrels per day (TBD) greater than 2014o October – 190 TBD more, November 230 TBD more and December

(Y-T-D) 215 TBD more than previous year

Source: Industrial Information Resources (IIR) Loss Gasoline Production Report.


Refinery Operations – Look Ahead

12/16/2015 8

• Other refinery issues:• ExxonMobil – Torrance refinery will not resume operation of gasoline

production equipment until 1Q 2016 – Sale to PBF announced• West Coast planned maintenance activity heavier-than-normal through

late December – mainly impacting gasoline production

Source: Industrial Information Resources (IIR) Refinery Off-line Report.


Source: California Energy Commission analysis of Petroleum Industry Information Reporting Act data.

California Gasoline ProductionCurrent vs. 5-year High-Low Band

Data through November 27, 2015



Southern Calif. Gasoline ProductionCurrent vs. 5-year High-Low Band


Extended period of lower-than-normal output due to ExxonMobil idle gasoline production equipment.



Northern Calif. Gasoline ProductionCurrent vs. 5-year High-Low Band




California Gasoline Inventory LevelsCurrent vs. 5-year High-Low Band

California gasoline inventories have recovered to normal range aided by marine imports.




Southern Calif. Gasoline InventoryCurrent vs. 5-year High-Low Band


Extended period of lower-than-normal inventory due to ExxonMobil idle gasoline production equipment.



Northern Calif. Gasoline InventoryCurrent vs. 5-year High-Low Band


0

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2/27 3/

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225/

29 6/5

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28 9/4

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ay 2015 Total Gasoline Imports

2014 Total Gasoline Imports

Source: California Energy Commission analysis of weekly import data from the Energy Information Administration.

3/27-12/4/15 averaged 61.9 thous. barrels per day (TBD)18.3 TBD same period during 2014Highest quantity since 2007


West Coast Foreign Gasoline Imports

33.7

6.3

9.8

30.2

60.4

26.123.6

29.8

21.7

36.938.5

21.223.3

14.812.9

33.3

0.3

18.5

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30

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70

January February March April May June July August September

Thou

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2014 2015

Source: California Energy Commission analysis of the International Trade Commission's Interactive Tariff and Trade DataWeb.


California Foreign Gasoline Exports

2015 exports have averaged 22.0 TBD vs. 27.1 TBD during 2014.

98.6 percent of shipments originated from Northern California during 2015.

50.4

36.9

27.7

4.0

21.0

7.3

22.8

9.6

26.5

16.6

13.415.4

16.5 16.1 16.9

13.0

27.2

13.3

0

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60

January February March April May June July August September

Thou

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ay 2014 2015

Source: California Energy Commission analysis of the International Trade Commission's Interactive Tariff and Trade DataWeb.


Pacific Northwest Foreign Gasoline Exports

2015 exports have averaged 16.5 TBD vs. 22.9 TBD during 2014.


Fuels-Under-the-Cap (FUTC) Tracking

12/16/2015 18

• Fuels-Under-the-Cap regulation went into effect January 1, 2015• The Oil Price Information Service (OPIS) calculates a value for the

FUTC obligation each business day, California Cap-at-the-Rack (CAR)• Assessment valuation uses price of carbon x carbon intensity of the

transportation fuel• Winter CARB reformulated gasoline with 10 percent ethanol• Summer CARB reformulated gasoline with 10 percent ethanol• CARB diesel fuel

• Majority of fuel providers have elected to use the daily OPIS CAR calculation for inclusion in their bills of lading at the distribution terminal• Either as a line item or embedded in the price

• Some marketers are calculating their own FUTC assessment and including in the overall price of the fuel

38.3

63.5

10.8

23.0

12.4

36.0

14.916.4

46.3

65.4

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Retail Gasoline Price DifferencesCalifornia vs. United States and Selected States

California Less United States California Less WashingtonCalifornia Less Oregon California Less NevadaCalifornia Less Arizona

Source: CEC analysis of AAA prices.

California retail gasoline price premium to U.S. has increased 25.2 cpg between 12/31/14 and 12/15/15.Premium to WA has increased 12.2 cpg.Premium to OR has increased 23.6 cpg.Premium to NV has increased 1.5 cpg.Premium to AZ has increased 19.1 cpg.

OPIS FUTC assessment for gasoline has averaged 10.2 cpg thru 12/15/15.


-8.3

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Gasoline Refinery Spot Price BasisCalifornia vs. Pacific Northwest

California CARBOB Los Angeles BasisCalifornia CARBOB Bay Area BasisPNW Sub-octane Basis

Source: Oil Price Information Service

California average refinery spot price premium to NYMEX gasoline contract has averaged 30.6 cpg between 2/18/15 and 12/15/15. During the same period in 2014 the premium averaged 5.3 cpg.

Refinery wholesale gasoline prices continue strong premium rebound due to unusually significant refinery issues during November


8.3

35.5

3.1

8.8

17.925.2

10.9 9.617.7

36.6

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Retail Diesel Fuel Price DifferencesCalifornia vs. United States and Selected States

California Less United States California Less WashingtonCalifornia Less Oregon California Less NevadaCalifornia Less Arizona

Source: CEC analysis of AAA prices.

California retail diesel fuel price premium to U.S. has increased 27.2 cpg between 12/31/14 and 12/15/15.Premium to WA has increased 5.7 cpg.Premium to OR has increased 7.3 cpg.Premium to NV has decreased 1.3 cpg.Premium to AZ has increased 18.9 cpg.

OPIS FUTC assessment for diesel fuel has averaged 12.9 cpg thru 12/15/15.



-7.5

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Diesel Fuel Refinery Spot Price BasisCalifornia vs. Pacific Northwest

California CARB ULSD Los Angeles Basis

California CARB ULSD Bay Area Basis

PNW EPA ULSD Basis

Source: Oil Price Information Service

California average refinery spot price premium to NYMEX diesel contract has averaged 1.9 cpg between 2/18/15 and 12/15/15. During the same period in 2014 the premium averaged 3.9 cpg.


Retail Fuel Price Tracking Observations

12/16/2015 23

• Gasoline• From December 31, 2014 to December 15, 2015 the gap between the California

retail gasoline price and other Western states has ranged between an increase of 1.5 to 23.6 cents per gallon

• The calculated FUTC assessment by OPIS has averaged 10.2 cents per gallon over the same period and lies within the range of retail price differential change

• Even greater differentials are attributed to increased tightness in the California gasoline market caused by refinery issues - crude oil prices have also rebounded and stabilized but are not a contributing factor to the retail price differential

• Diesel Fuel• From December 31, 2014 to December 15, 2015 the gap between the California

retail diesel fuel price and other Western states has ranged between a decrease of 1.3 and an increase of 18.9 cents per gallon

• The calculated FUTC assessment by OPIS has averaged 13.0 cents per gallon over the same period and lies within the range of retail price differential change

Questions?


Source: Michael Zwahlen, Sacramento Press

Additional Charts


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California Gasoline Rack PricesBranded less Unbranded

Northern CaliforniaSouthern California

Source: Oil Price Information Service (OPIS).

Gap between branded and unbranded prices has been increasing.Frequency of inversions (unbranded higher than branded) has increased during 2015 and been more prevalent in Southern California where unplanned refinery outages have been more severe.


Documents

Recent Fuel Price Trends & Market Developments Petroleum Market Advisory Committee Meeting California Energy Commission Sacramento, California December