Refineries are already running at 84% of capacity, rising above 15 million barrels a day for the first time in more than a year. Midwest oil processing plants are running at 88.7% of capacity. More operators are restarting units needed to make gasoline that were idled last year. Phillips 66’s Borger refinery in Texas recently fired up a fluid catalytic cracker that had been shut since mid-December and a catalytic reformer that was idled since August.
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With jet fuel demand still lagging and the diesel market oversupplied, refiners must hang their hopes on gasoline for a strong comeback near term. The summer driving season is about six weeks away and more people are getting the Covid vaccine, making travel less risky. The rolling 4-week average for gasoline demand is the highest since September. Last week brought the most gasoline imported since May of 2019.
Margins are stronger. But refiners who don’t do their own blending of ethanol into gasoline to meet federal biofuel requirements aren’t seeing fatter profits. That’s because the cost to meet their biofuel obligations is about 16 cents for every gallon of gasoline, or about $6.70 a barrel, up from less than 7 cents in early October, according to data from Nuevo Partners.
As they raise rates, refiners also have to be mindful that they are asking a lot of equipment after a year of delaying some maintenance to save costs, running at lower rates and after deadly freezes that weakened multiple processing units.
Total Port Arthur, one of 18 Texas refineries shut by a February crippling cold blast, has its sole FCC shut for several weeks repairs related to the freeze, forcing it to idle one of its crude units. Exxon Mobil Corp.’s Baton Rouge, La., refinery shut one of its FCC units Thursday for what is expected to be two weeks of repairs.
Some refineries have taken themselves out of the race to chase profits for now. BP’s Cherry Point refinery in Washington — the largest supplier of jet fuel to the Seattle, Portland and Vancouver airports — shut units the end of March for two months of multiple turnarounds.
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