President Joe Biden’s administration is pressing US refiners to rebuild inventories of gasoline and diesel as the production-disrupting Atlantic hurricane season heats up, rather than increasing record-high volumes of product exports.
US energy secretary Jennifer Granholm, in a letter sent to refiners on 18 August, said historically low inventories of gasoline and diesel posed “heightened risks” to sustained supply ahead of the approaching peak of the hurricane season. The US has already put 2mn bl of emergency product reserves on standby, Granholm said, but the most effective response is for refiners to use this “critical window” of time to prioritize building inventories, particularly on the US east coast where inventories are low.
“Given the historic levels of US refined product exports, I again urge you to focus in the near term on building inventories in the United States, rather than selling down current stocks and further increasing exports,” Granholm wrote to ExxonMobil, Chevron, Shell, BP, Marathon Petroleum, Valero Energy and Phillips 66.
If companies do not proactively address the shortages, the “… administration will need to consider additional federal requirements and other emergency measures,” she wrote.
Oil industry officials have said they appreciate the discussions with administration officials on inventories and tight energy markets, but they worry any potential emergency measures focused on domestic stocks would end up restricting exports.
US exports of gasoline, diesel and other products hit a record four-week average of nearly 6.4mn b/d in the week ending 19 August, an increase of more than 1mn b/d from a year ago, according to the US Energy Information Administration (EIA). Latin America in particular has been a major destination for US products.
US gasoline inventories fell to 215.6mn bl that same week, the lowest since 2015. US distillate inventories are nearly 25pc below five-year averages and are especially low in the central Atlantic region that includes New York, where the 11.5mn bl in stocks is nearly 60pc below the five-year average for this time of year, according to EIA data.
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