April 24, 2023 [LAND LINE] – Fuel prices could see a stark change from last summer, said the latest Energy Information Administration’s weekly petroleum report.
This outlook comes just over one month after ExxonMobil announced capacity expansion at its Beaumont, Texas, refinery.
The Beaumont expansion was the first major refinery expansion since the COVID-19 pandemic, EIA’s outlook noted. By adding 250,000 barrels per day of capacity, ExxonMobil says the total capacity at the Beaumont refinery will be 630,000 barrels per day.
In addition, total crude oil refineries on the U.S. Gulf Coast have increased, according to EIA reports.
“New refinery capacity in the region capitalizes on growing U.S. crude oil production and benefits from existing infrastructure for shipping refined products to the East Coast,” EIA’s weekly petroleum report said. “The region also benefits from export infrastructure to Mexico and other destinations via the availability of coastal tanker loading facilities.”
AAA reported the highest ever recorded average diesel price of $5.816 per gallon on June 19, 2022.
The most recent diesel reports show 2023 average prices are well below that mark and could very well continue to trend downward.
EIA is forecasting that increased refinery capacity in the Gulf Coast combined with higher gasoline and diesel production should put downward pressure on this summer’s fuel prices.
Higher crude oil prices, increasing consumption and low inventories may counteract increased refinery production.
Even still, utilizing crack spreads (the pricing difference between a barrel of crude oil and the petroleum products refined from it), EIA said the diesel crack spread has decreased from $1.20 per gallon in January to 54 cents per gallon as of April 17.
Additional downward pressure on crack spreads is likely as expansions in the Middle East, Nigeria, India and China come online later this year, said EIA.
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