US Gulf Coast unduly responsible for falling gasoline demand in 2017
New York (Reuters)—Even with Americans on track to drive a record number of miles this year, government data shows that US gasoline demand has been lackluster, and the South is to blame.
If US Energy Department data is correct, the US Gulf Coast (USGC) is having an unusual influence on the overall decline in gasoline usage so far this year. However, analysts and traders said the region's status as a global refining hub may be skewing both the national and regional numbers.
US gasoline demand in 1Q was down 2.7% from a year earlier, according to the latest monthly data from the US Energy Information Administration (EIA). The Gulf Coast accounted for 71% of the decline.
Gulf Coast gasoline demand, which ranks behind the East Coast and the Midwest, was down 11% in 1Q, EIA data showed.
The EIA uses "product supplied" as a proxy to measure US gasoline demand. Product supplied measures the changes in volume of gasoline and other products at primary sources, such as refineries and storage terminals.
The Gulf Coast is the US refining hub, sending products all over the country and the globe. This makes it the most difficult region in which to track the flow of products, analysts and traders said. This means, for example, if the EIA overestimates exports, it would underestimate US demand.
"The Gulf Coast has a lot of statistical noise," said Robert Campbell, head of oil products markets at consultancy Energy Aspects.
Mr. Campbell said he was not certain the EIA figures will be revised upward down the road, but he said the Gulf Coast market is showing no evidence that demand is down. The federal agency puts out final numbers in about a year.
"The cash gasoline market continues to be strong, refineries are running at high rates, and there have only been modest inventory builds," Campbell said. "There are no signs of distress, so that is telling."
USGC refineries processed a record 9.45 MMbbl of crude oil last week, according to the EIA, marking the third consecutive week above 9 MMbbl. Meanwhile, gasoline inventories have remained near 5-yr highs, despite robust exports, EIA data showed.
US driving volumes in the Gulf Coast also suggest that gasoline demand remained strong during 1Q.
Texas motorists log the second-most miles in the US, trailing only California. Texas drivers traveled 1.9% more miles on the state's roads and highways through March than they did last year, according to the latest figures from the US Department of Transportation.
Overall, motorists logged 272 B mi (438 B km) on US roads and highways in March, up 0.8% from a year earlier, the Transportation Department said. US vehicle miles traveled were up 1.5% year-over-year through the first three months of 2017.
(Reporting by Jarrett Renshaw and Devika Krishna Kumar; editing by David Gregorio)
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