Energy Indicators - December 2024

December 18, 2024

Gasoline and diesel prices have come down since 2022. While motor gasoline consumption was low compared with historic trends, distillate fuel consumption was significantly weak in 2024. Inventories for crude, gasoline and distillate remained in line with historic trends. However, refining margins continued to trend downward partially due to low distillate fuel consumption.

Consumption

Gasoline and diesel real prices decline

Retail diesel and gasoline prices have been steadily declining since 2022 (Chart 1). On-highway diesel fell to $3.52 per gallon for the November monthly average, down 2.1 percent from the previous month. Regular gasoline dropped to $3.05 per gallon, down 3.0 percent from October.

According to the Energy Information Administration (EIA), the cost of crude oil is the largest factor in the retail price of diesel fuel, accounting for roughly half of the cost. On-highway diesel peaked seasonally in September 2023 at $4.69 per gallon. In September 2023, Brent peaked seasonally at $2.29 per gallon, aided by voluntary supply cuts from OPEC+ that briefly propped up oil prices.

U.S. motor gasoline consumption relatively low

Monthly product supplied-a proxy for consumption-of finished motor gasoline in the U.S. has stayed near the lower bound of the six-year historical range (excluding the pandemic period) in 2024 (Chart 2). In September, 9 million barrels per day (mb/d) were supplied-0.2 mb/d below the six-year average for that month. Since September, weekly estimates for consumption indicate that motor gasoline supplied rose by 0.1 mb/d in October to only fall back down in November by 0.3 mb/d-totaling 8.8 mb/d in November. Over the past two years, gasoline consumption has held steady around 5.6 percent below prepandemic levels due mainly to the rise of remote work.

Distillate fuel consumption weakens

Distillate fuel consumption has proved anemic in 2024 when compared with the historical six-year trend (Chart 3). There was 3.7 mb/d of distillate supplied for the month of September-0.2 below the six-year average (excluding the pandemic period). According to the EIA's Short-Term Energy Outlook, this was due in part to a slight decline in U.S. manufacturing activity. However, the EIA forecasts manufacturing activity to increase in 2025 and projects U.S. distillate consumption to increase by 4 percent (150,000 barrels per day).

Inventories

U.S. days of cover (the number of days domestic inventories would likely last at the recent pace of consumption) for crude, gasoline and distillate have remained stable compared with the six-year average, excluding the pandemic period (Chart 4). There were 31.5 days of cover for distillate at the end of November-0.4 days above the six-year average (excluding the pandemic period) for that month. Crude oil was slightly below normal at 25.7 days in November-1.8 days below the six-year average. Motor gasoline supplies were 24.5 days-just 0.1 days below the six-year average.

Refining

Volume of crude oil processed by refiners rises slightly

Refiners on the U.S. Gulf Coast processed 9.2 mb/d of crude oil over the four weeks ending Nov. 29, while the rest of the U.S. processed 7.3 mb/d (Chart 5). Compared with this time last year, Gulf Coast processing was up 2.3 percent, and the rest of the U.S. was up 4.7 percent.

Refining margins continue trending down

The 3:2:1 spread-a rough proxy for how much refiners would net by processing a barrel of crude oil into gasoline and diesel fuels-fell about 27 percent and 25 percent year over year for New York Brent and U.S. Gulf Coast West Texas Intermediate crudes, respectively (Chart 6). U.S. Gulf Coast Mars Coker margins dropped 29 percent year over year while U.S. Gulf Coast Mars fluid catalytic cracking (FCC) fell 15 percent year over year.

According to the EIA, refinery margins have fallen partially because of low demand for petroleum products such as distillate fuel oil. Looking at global factors, petroleum products have also been affected by slowing economic activity in China and Europe along with the increasing adoption of electric vehicles, biofuel and liquefied natural gas usage in trucking industries.

This is more apparent when looking at different components of the refinery complex. The implied margins for U.S. Gulf Coast delayed coker units-high-margin refinery components that rely on heavy crudes and tend to yield more distillates-have seen steeper declines over the past two years compared with FCCs-components that are geared to yield more gasoline output.

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