Record Fuel Exports From U.S. Gulf Coast Drain Tanks at Home
Record fuel exports from the U.S. Gulf Coast are eating into domestic supplies, leaving gasoline and diesel tanks on the East Coast emptier than they have been in decades.
As much as 2.09 million barrels a day of gasoline, diesel and jet fuel shipped out of the refining hub in April, the highest level since oil analytics firm Vortexa began tracking the data in 2016. The bulk of the exports went to Latin America.
The strong pull from overseas shows the world needs U.S. Gulf Coast refiners more than ever. But producers there will have to balance lucrative exports with domestic demand heading into the peak travel season this summer, with pump prices already at record highs for diesel and hovering just shy of peak for gasoline.
Export demand will likely stay strong through the next few months as countries in South America continue to burn diesel fuel for power generation during the Southern Hemisphere’s winter season, when hydropower supply falls. Mexico, the largest overseas buyer of U.S. gasoline by far, will likely draw more from the U.S. Gulf Coast as high crude prices derailed the country’s plans to produce more fuel at home.
Read more: U.S. Gulf Coast diesel exports soar amid wartime global shortage
When push comes to shove, U.S. consumers will be able to outcompete overseas buyers, said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “Demand destruction will happen overseas first,” he said in a phone interview.
Domestic fuel demand is expected to exceed 2019 levels this summer despite high prices, a government forecast shows. Meanwhile, the distillates segment of the largest U.S. domestic pipeline connecting fuelmakers on the Gulf Coast and consumers on the East Coast has been running below capacity since the beginning of the year.
