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

Recent Fuel Price Trends & Market Developments

Petroleum Market Advisory Committee Meeting California Energy Commission

Sacramento, California February 8, 2016

Gordon Schremp Energy Assessments Division

California Energy Commission [email protected]

• CA retail gasoline prices are slowly dropping

• California – Down 33.8 cents per gallon

(cpg) since last month and down 6.7 cpg since last week

– 0.7 cpg higher than same time last year

• Washington – Down 34.9 cpg since last

month and down 6.8 cpg since last week

– 6.1 cpg lower than same time last year

2/8/2016 2

Washington Average Prices

California Average Prices

National Average Prices

Snapshot - Retail Prices Continue Declining

Prices updated as of 2/5/2016 5:15amRegular Mid Premium Diesel

Current Avg. $1.763 $2.048 $2.281 $2.030

Yesterday Avg. $1.773 $2.057 $2.288 $2.036

Week Ago Avg. $1.813 $2.098 $2.331 $2.059

Month Ago Avg. $1.993 $2.271 $2.502 $2.240

Year Ago Avg. $2.151 $2.349 $2.531 $2.802


Current Avg. $2.534 $2.675 $2.769 $2.412

Yesterday Avg. $2.545 $2.688 $2.782 $2.424

Week Ago Avg. $2.601 $2.740 $2.839 $2.461

Month Ago Avg. $2.872 $3.001 $3.103 $2.647

Year Ago Avg. $2.527 $2.624 $2.721 $2.984


Current Avg. $2.113 $2.307 $2.417 $2.261

Yesterday Avg. $2.127 $2.323 $2.434 $2.266

Week Ago Avg. $2.181 $2.375 $2.495 $2.303

Month Ago Avg. $2.462 $2.621 $2.735 $2.543

Year Ago Avg. $2.174 $2.295 $2.399 $2.779

California Retail Gasoline Regional Comparisons

• Southern California price premium relative to Northern California persists due to continued non-operation of ExxonMobil’s gasoline producing process units at Torrance

• San Francisco retail gasoline now less expensive than Orange County compared to a normally higher position

• Prices through 2/5/2016

2/8/2016 3

Source: GasBuddy.com – customize chart tools.

21.1

16.9

27.0 26.8

20.2

23.728.1

26.7

32.5 30.9 29.5

41.6 38.1 38.7

74.0

80.1

0

10

20

30

40

50

60

70

80

90

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Y-T-D2016

Cent

s Per

Gal

lon

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 February 1, 2016

2/8/2016 4

2015 average differential was highest year over data series that goes back to January 1995.

13.310.5

17.618.3

13.715.5

21.919.9

24.522.7

20.1

27.725.1 26.3

53.9

58.5

0

10

20

30

40

50

60

70

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Y-T-D2016

Cent

s Per

Gal

lon

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 February 1, 2016

2/8/2016 5

2015 average differential was highest year over data series that goes back to January 1995.

262.8

388.4

253.4

106.6

143.9

71.850

100

150

200

250

300

350

400

45012

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2014

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California Gasoline Price ChangesRetail, Rack and Refinery Wholesale

California Regular Grade Retail Gasoline

Refinery Wholesale - CA Average

Rack Wholesale - Los Angeles

Crude Oil

Source: CEC analysis of AAA and OPIS prices.

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

2/8/2016 6

Prices through 2/5/2016

129.2 129.0 120.6 121.3146.9 145.0

115.684.9 72.6

32.362.4

117.889.2

134.7

100.1

79.9

88.3

67.0

10.2

10.0

10.0

10.1

10.2

10.3

10.3

10.3

36.0

30.0

30.0

30.0

43.8

15.7

31.2

42.2

24.2

25.2

27.6

23.2

43.0

268.0280.2

343.9326.7

381.0

345.3

291.4

264.8253.4

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450

12/2

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3/23

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12/1

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2/4/

16

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LCFS Valuation

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

2/8/2016 7

LCFS Costs Included As New Component

2/8/2016 8

• Low Carbon Fuels Standard (LCFS) valuation has increased • Size of valuation was less than one cent per gallon during most of 2015 • Averaged about 0.8 cents per gallon (cpg) during 2015

• 2016 compliance period for regulation requires further carbon intensity reduction or lower carbon intensity targets for gasoline

• Coupled with higher carbon credit costs, the LCFS valuation is greater than 2015 • 2016 Y-T-D valuation has averaged 4.3 cpg (through 2/4/16) • According to OPIS, the valuation is either included in the wholesale

price posted at the distribution terminal or listed as a line-item fee • OPIS publishes these valuations each business day for gasoline and

diesel fuel • Energy Commission is using the valuation calculated by OPIS for

California gasoline containing ethanol at 10 percent by volume

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2016

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LCFS Valuation CARB E10LCFS Carbon Credit

Source: Oil Price Information Service

CARB E10 CPG = OPIS Carbon Credit value x (Current CI of CARBOB –Target CI of CARBOB) x Energy Density of CARBOB x 10^-6 x 0.90.

Jump in LCFS valuation due to a lowering of the target carbon intensity for gasoline for the 2016 calendar year compliance schedule.

LCFS Daily Valuation – CARB E10

2/8/2016 9

Refinery Operations

2/8/2016 10

• 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 – December averaged nearly 170 thousand barrels per day (TBD) greater than the same period in 2014 o October – 205 TBD more, November 240 TBD, and December 295

TBD more than previous year

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

Refinery Operations – Look Ahead

2/8/2016 11

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

production equipment until 2Q 2016 – Sale to PBF announced • West Coast planned maintenance activity that is primarily related to

gasoline is still heavier-than-normal through 1Q 2016

Sources: Industrial Information Resources (IIR) Refinery Off-line Report & DOE Review.

2/8/2016 12

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

California Gasoline Production Current vs. 5-year High-Low Band

Data through January 29, 2016

Gasoline output higher-than-normal on a seasonal basis.

2/8/2016 13


Southern Calif. Gasoline Production Current vs. 5-year High-Low Band


Extended period of lower-than-normal output due to ExxonMobil idle gasoline production equipment. Recent rebound due to completed refinery work and influx of additional gasoline imports.

2/8/2016 14


Northern Calif. Gasoline Production Current vs. 5-year High-Low Band


Northern California refineries continue to produce higher-than-normal quantities of gasoline to partially compensate for continued downtime for ExxonMobil’s gasoline-producing equipment.

2/8/2016 15


California Gasoline Inventory Levels Current vs. 5-year High-Low Band

California gasoline inventories continue rising, aided by marine imports.


2/8/2016 16


Southern Calif. Gasoline Inventory Current vs. 5-year High-Low Band

Heavy influx of gasoline imports continues for Southern California.


2/8/2016 17


Northern Calif. Gasoline Inventory Current vs. 5-year High-Low Band


Rising inventories following typical seasonal pattern.

0

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27 3/6

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2510

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712

/412

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812

/25

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arre

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r Day

2016 Total Gasoline Imports2015 Total Gasoline Imports2014 Total Gasoline Imports

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

3/27/15-1/1/16 averaged 60.7 thous. bbls per day (TBD)18.3 TBD same period during 2014Highest quantity since 2007

Y-T-D 2016 averaged 45 TBD, 6.4 TBD same period 2014

2/8/2016 18

West Coast Foreign Gasoline Imports

Marine Imports of Gasoline Continue

2/8/2016 19

• Not all reported gasoline cargoes end up being discharged in California • During 2015

• Histria Perla departed anchorage outside Port of Los Angeles on 6/16/15 without off-loading - ended up discharging cargo in Mazatlan, Mexico.

• SR American Progress departed inner harbor anchorage Port of Long Beach on 9/22/15 without off-loading - ended up discharging cargo in Port Everglades, Florida.

• During 2016 • Orion departed Port of Long Beach on 1/18/16 without off-loading -

diverted to Lazaro Cardenas & Manzanillo, Mexico, so far.

• Majority of reported gasoline cargoes were successfully discharged in Southern California. • At least 39 cargoes between May and December 2015 • At least 8 cargoes so far since 12/30/15, 3 more pending

33.7

6.3

9.8

30.2

60.4

26.123.6

29.8

21.7 22.0

28.9

36.938.5

21.223.3

14.812.9

33.3

0.3

18.5

0.2

8.1

0

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30

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60

70

Janu

ary

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uary

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ch

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st

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embe

r

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ober

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embe

r

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s of B

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ay

2014 2015

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

2/8/2016 20

California Foreign Gasoline Exports

2015 exports have averaged 18.8 TBD vs. 26.8 TBD during 2014.

98.4 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

18.5

39.7

16.6

13.415.4 16.5 16.1 16.9

13.0

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0

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ary

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Mar

ch

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st

Sept

embe

r

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ober

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embe

r

Thou

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s of B

arre

ls P

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ay

2014 2015

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

2/8/2016 21

Pacific Northwest Foreign Gasoline Exports

2015 exports have averaged 18.7 TBD vs. 24.0 TBD during 2014.

36

37

38

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43

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Mill

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of G

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ay

2010-2014 High Range

2010-2014 Low Range

2015

2/8/2016 22

Calif. Mogas Demand 2015 vs. Seasonal Range

Source: Board of Equalization & CEC analysis.

2015 Y-T-D demand thru October up 2.87 percent versus previous period. Demand increase for rest of U.S. nearly identical over same period.

Most recent 3 months demand up 2.92 percent versus previous period.

0.08

-0.20

-0.45

-2.14

-0.17

0.13

-0.70

-0.44

0.260.44

1.16

5.34.9

5.5

7.8

11.4

12.1

11.5

10.1

8.7

7.5

6.2

-2.5

-2.0

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-0.5

0.0

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0

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4

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14

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2006

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2014

*201

5

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ay

Cal

iforn

ia U

nem

ploy

men

t Rat

e (P

erce

nt)

Change in Gasoline Demand

CA Unemployment Rate

2/8/2016 23

Gasoline Demand Change & Unemployment

Sources: Board of Equalization & U.S. Bureau of Labor Statistics.

*Full year projection of 15.13 billion gallons based on data through October. Would be highest level of consumption since the 15.66 billion gallons during 2007.

Fuels-Under-the-Cap (FUTC) Tracking

2/8/2016 24

• 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

77.1

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55.3

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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 38.8 cpg between 12/31/14 and 2/5/16.Premium to WA has increased 31.3 cpg.Premium to OR has increased 42.9 cpg.Premium to NV has increased 15.6 cpg.Premium to AZ has increased 29.2 cpg.

OPIS FUTC assessment for gasoline has averaged 10.2 cpg thru 2/4/16.

As of 2/4/16:FUTC - 10.34 cpgLCFS Valuation - 4.53 cpg

2/8/2016 25

-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


California average refinery spot price premium to NYMEX gasoline contract has averaged 29.3 cpg between 2/18/15 and 2/4/16. During the same period in 2014 the premium averaged 3.9 cpg.

Refinery wholesale gasoline prices premiums have declined as significant refinery work during December 2015 & January 2016 was completed and gasoline imports arrived.

2/8/2016 26

8.3

38.2

3.1

15.1

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35.7

10.9 12.317.7

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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 29.9 cpg between 12/31/14 and 2/5/16.Premium to WA has increased 12.0 cpg.Premium to OR has increased 17.8 cpg.Premium to NV has increased 1.4 cpg.Premium to AZ has increased 26.1 cpg.

OPIS FUTC assessment for diesel fuel has averaged 13.0 cpg thru 2/4/16.

As of 2/4/16:FUTC - 13.17 cpgLCFS Valuation - 3.52 cpg

2/8/2016 27

-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


California average refinery spot price premium to NYMEX diesel contract has averaged 1.8 cpg between 2/18/15 and 2/4/16. During the same period in 2014 the premium averaged 2.1 cpg.

2/8/2016 28

Retail Fuel Price Tracking Observations

2/8/2016 29

• Gasoline • From December 31, 2014 to February 5, 2016 the gap between the California

retail gasoline price and other Western states has ranged between an increase of 15.6 to 42.9 cents per gallon

• The calculated FUTC assessment by OPIS has averaged 10.2 cents per gallon over the same period and lies below 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 February 5, 2016 the gap between the California

retail diesel fuel price and other Western states has ranged between an increase of 1.4 to 26.1 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

Additional Questions?

2/8/2016 30

Source: Huffington Post

Documents

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