Gasoline Supplies in the Coming Months Gasoline Production by U.S. Refineries Natural Gas Supply for the Future Natural Gas Distribution ExpansionFor More Information
Gasoline Supplies in the Coming Months
Gasoline supply data from the Energy Information Administration (EIA) data indicate that supplies are more than adequate to meet demand. Consumption of gasoline in the United States tapered over the last few years as the improved fuel efficiency of newer vehicles and recession-related factors have restrained demand.
Gasoline supplies also can be affected by weather and natural disasters. Flooding, as seen last year along the Mississippi River, can slow movement of petroleum-bearing barges and force production curtailments at nearby refineries. In the Gulf of Mexico, hurricanes can require shutdowns of production, transportation and refining operations.
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Gasoline Production by U.S. Refineries
The United States has nearly 150 refineries owned by 60 companies operating in 33 states. On average, these facilities produce nearly 370 million gallons of gasoline a day in order to meet consumer demand. But there are limits to how much gasoline these refineries can produce, based on the type of crude oil a particular refinery is using and its processing equipment. In general, gasoline makes up about half of the total output.
To some extent, refineries can shift the mix of products they make to emphasize the production of gasoline over other fuels, such as diesel or heating oil. In the fall, after gasoline demand has peaked, refiners increase production of heating oil in preparation for winter demand. In the spring, the emphasis shifts to building inventories of gasoline for the upcoming driving season.
Over the years, low profit margins in the refining business – along with major environmental restraints and Not-In-My-Backyard sentiments – have discouraged construction of new refineries. Imports of gasoline and gasoline blending stocks from Caribbean, Canadian and European refineries have made up the difference between what U.S. refineries could produce and total gasoline demand.
No new grassroots refinery has been constructed in the U.S. since 1976, although smaller expansions at existing facilities have helped boost capacity in recent years. In addition, improved profitability in the industry in the 2005-07 period prompted several companies to undertake large capacity expansions, which are now completed or underway.
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Natural Gas Supply for the Future
Up through 2008, higher prices for natural gas encouraged drilling for new supplies. Nearly 32,000 natural gas wells were drilled in 2008 – almost 4,500 more wells than were drilled in 2005. However, a steep drop in natural gas prices that accompanied the global recession discouraged drilling in 2009. Although the economic slowdown has reduced drilling from previous high levels, gas production is still expected to grow slightly this year.Experts are confident that the United States is not "running out" of natural gas, but many of the highest potential areas such as the eastern Gulf of Mexico are off-limits to energy exploration by federal or state mandates. There are areas of the country, both onshore and offshore, with excellent prospects for new natural gas discoveries. Gas producers are finding most new gas reserves in the Rocky Mountain region and in the San Juan Basin of New Mexico, where innovative technology permits gas production from underground coal beds. The North Slope of Alaska also holds significant natural gas reserves. Several proposals have been developed to bring these supplies to the Lower 48 states, but governmental and financial issues have slowed progress.
Liquefied natural gas (LNG) imported from other countries promises to be a growing source of natural gas supply for the United States. Today, LNG provides about 3 percent of U.S. natural gas supply. But more LNG is exepcted to be needed in the future because domestic production and gas pipelined from Canada may not keep pace with demand. Improvements in technology and economies in transportation have set the stage for LNG to become a more important contributor to the nation’s gas supply over next several years, providing about 6 percent of total gas supply by 2015, according to EIA long-range forecasts.
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Natural Gas Distribution Expansion
Large scale use of natural gas for home heating began in the 1940s and ‘50s in the Midwest when long-distance pipelines were constructed from fields in Texas and Oklahoma. Eventually, pipelines and distribution systems fanned out to western and southern states. The Northeast, however, because of its distance from gas-producing areas and its well-established heating oil market, has lagged behind the rest of the nation in its consumption of natural gas.
Logistical issues also have been a deterrent to residential gas use in the Northeast and elsewhere. Long-distance transmission pipelines and underground municipal distribution systems are expensive to build and can be disruptive during construction in densely populated areas. Despite these obstacles, pipeline systems have steadily expanded to meet increased gas demand for residential use, industrial needs and clean-burning electric power generation. Pipeline construction was especially strong in 2008.
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For More Information
Report on Hurricane Impacts on U.S. Energy, a frequently updated report by the Energy Information Administration on the effects of hurricanes on oil and gas operations.
This Week in Petroleum, a weekly overview of factors influencing the price and supply of gasoline, diesel (distillates), propane and crude oil, compiled by the U.S. Energy Information Administration.
Short Term Energy Outlook, a monthly report by the U.S. Energy Information Administration that outlines the federal government's price and supply predictions for gasoline, natural gas, heating oil and other fuels.
Natural Gas Supply and Demand, in which the American Petroleum Institute (API) summarizes key factors influencing natural gas prices.
U. S. Annual Energy Outlook prepared by the U.S. Energy Information Administration, containing projections on U.S. price and supply conditions through 2030 for all types of energy.
International Energy Outlook, presenting the outlook for international energy markets through 2030 as forecast by the U.S. Energy Information Administration.
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