United States exports distillate from the Gulf Coast while importing it on the East Coast
U.S. distillate exports increased 85,000 barrels per day (b/d) in 2015, reaching nearly 1.2 million b/d. Distillate exports in the first six months of 2016 have averaged 50,000 b/d more than in the first half of 2015. U.S. distillate imports, which are relatively fewer, averaged 200,000 b/d in 2015 and 157,000 b/d in the first half of 2016. Patterns of U.S. distillate trade can be explained by regional supply and demand imbalances within the East Coast and Gulf Coast regions.
Exports of distillate are the largest component of U.S. petroleum product exports and have averaged at least 1 million b/d since 2012. The United States exported distillate fuel to 88 countries in 2015, with the largest portion heading to countries in Central and South America. Unlike motor gasoline, which is used almost exclusively for transportation, distillate fuel has a variety of uses, including as a heating fuel in homes and businesses, as a fuel for certain industrial processes, and as a transportation fuel for both light- and heavy-duty vehicles.
The U.S. Gulf Coast (Petroleum Administration for Defense District, or PADD, 3) is the largest petroleum refining region in the country, accounting for more than half of U.S. refining capacity in 2015. Distillate production on the U.S. Gulf Coast exceeds regional demand, making the region a net supplier to other U.S. regions and foreign markets. In 2015, refineries in the region produced nearly 2.8 million b/d of distillate, while regional demand was only 792,000 b/d. The Gulf Coast accounted for 87% of U.S. distillate exports in 2015.
East Coast distillate production is below regional demand, and the region accounted for 85% of total U.S. distillate imports in 2015. Demand for distillate (which includes heating oil) is seasonal in the Northeast, where 23% of households use oil for space heating (compared to 5% of households nationwide that use heating oil). The East Coast typically imports distillate in the winter months to meet higher demand but may export distillate in the warmer summer months.
A significant portion of East Coast distillate demand is met with product produced on the Gulf Coast, and movement of distillate from the Gulf Coast to the East Coast (881,000 b/d in 2015) represents the largest inter-PADD movement of distillate within the United States. However, movement of distillate is affected by transportation constraints and shipping regulations. Pipelines between the Gulf Coast and East Coast already operate at or near full capacity, while maritime regulations add to the cost of marine movements between U.S. ports.
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