Understanding the petroleum product supplied – our proxy for consumption

In-Depth Analysis September 19, 2024 Data Source: US Energy Information Administration EIA does not directly survey petroleum consumption; Instead, we calculate a similar concept of product supplied from our surveys spanning the US petroleum industry. Although we use petroleum product interchangeably with petroleum consumption, the two are not the same. Consumption is the same as end-user purchases at the point of final sale, such as gasoline from the pump. We survey 1,000 of 100,000 US retail gasoline stations to estimate retail gasoline prices. We collect information on motor gasoline and other petroleum products by surveying a more limited number of respondents in the primary supply chain—refiners, blenders, importers, pipelines, and bulk terminal storage operators—before the products are transferred to distributors and retailers. By surveying the entire population of these primary suppliers, we determine the volume of refined petroleum inputs and production, imports, inventories, and shipments available for domestic consumption. Most petroleum products leave the primary supply chain when they are sold to distributors, retailers and end users and are consumed after they are produced and transferred through primary suppliers. How do we calculate the product supplied? We use product supplied as a proxy for consumption because it measures the volume of petroleum products that leave the primary supply chain before distribution. Using the example of finished motor gasoline, we define supplied product as: net production (from refineries, blenders, and biofuel plants) + imports + supply adjustment – change in primary storage inventory – exports We calculate the finished motor gasoline product supplied in 2023. Completed net production in the United States came from 9.65 million barrels per day (b/d) from refiners, blenders and biofuels plants and 118,000 b/d from imports. Disposals of finished motor gasoline included a 3,000 b/d increase in primary inventories and finished motor gasoline exports of 816,000 b/d. Disposal accounts for how crude oil and petroleum products are transferred, distributed, or removed from the supply stream, including stock changes, refinery inputs, exports, and products supplied for domestic consumption. We also include a supply adjustment, a balance item that reconciles the production of finished gasoline with the supply and disposal of its two major components, motor gasoline blending components (MGBCs, derived from petroleum) and fuel ethanol (a biomass-based fuel commonly derived from corn in the United States). MGBCs and fuel ethanol are not used separately in engines, but they are blended into gasoline to meet specifications for octane, sulfur levels and other standards. Because we collect supply and disposal of these products from several surveys, survey and statistical errors lead to natural differences between supply and disposal. The adjustment will act as a balancing item, reducing motor gasoline supply by 7,000 b/d in 2023. Taken together, 8.95 million b/d of finished motor gasoline consumed in the United States in 2023 is the remaining amount. The primary supply chain and remained in the United States. What is the difference in product supplied in EIA publications? In the Petroleum Supply Annual we publish our most definitive set of finalized petroleum statistics. This report corrects any errors or missing data from the previous calendar year. We release this report every August. Our Petroleum Supply Monthly (PSM) provides comprehensive and highly timely petroleum statistics. We release the PSM report on the last business day of the month and it provides the figures for the previous two months. The PSM report derives its data from a survey of all companies that produce, import, transport, or hold in storage any petroleum product in the United States. We do not survey exports but instead receive export statistics from the US Census Bureau. Our Weekly Petroleum Status Report (WPSR) provides more timely but less comprehensive information than PSM because WPSR surveys fewer respondents. While PSM surveys the entire primary supply chain, WPSR surveys only the largest respondents, covering approximately 90% of the most recent monthly volume for each supply source. WPSR product supplied data can experience large changes from week to week, in part because PSM surveys a subset of respondents and in part because imports or exports can change quickly depending on the commodity when it clears US customs. We recommend data users analyze the four-week moving average of the product provided to better understand underlying trends in US petroleum consumption. Data Source: US Energy Information Administration Because calculating supplied output involves several components, each component is subject to sampling error, measurement error, and time variations. Sampling errors may occur for each supply or disposal unit and result in differences between the WPSR estimate and the reported product supplied for the month in the PSM. Differences may result from our estimating weekly export data for petroleum products using unedited weekly export figures from US Customs and Border Protection. Generally, the supplied WPSR product is within +/-2% of the PSM. In the long term, these differences may approach 0%, as they did from 2018 to June 2024. We rely on PSM and WPSR data for other EIA publications and forecasts. We use the terms petroleum consumption and petroleum product interchangeably in these reports, such as the Monthly Energy Review, Short-Term Energy Outlook, and Annual Energy Outlook, to consistently label the data with other energy consumption such as natural gas, coal, nuclear, and more. , renewable and electricity. In the absence of significant errors, omissions or natural disasters, we never revise the data published on WPSR. Historical WPSR estimates of supplied product become less relevant when we publish PSM because we capture residual data that we do not survey in the WPSR. The PSM data serve as a definitive historical benchmark and the WPSR as a near-term estimate of recent history. Unadjusted historical WPSR data is still useful, however, especially for users who want to understand weekly variation in petroleum market activity among all primary supply chain components. What other motor gasoline consumption data sources are available? The Federal Highway Administration publishes monthly data on vehicle miles traveled (VMT) and the Motor Fuels Report, which displays motor gasoline sales by state. Although VMT’s report is published with a lag like PSM’s (about two months), data users must make assumptions about vehicle fuel efficiency to determine motor gasoline consumption. The Motor Fuels Report tracks motor gasoline consumption closely with PSM but can lag between six and nine months. Commercial data providers such as the Oil Price Information Service (OPIS) and GasBuddy provide estimates of gasoline consumption from a sample of retail gasoline stations. Data source: US Energy Information Administration, Petroleum Supply Monthly; US Federal Highway Administration, Monthly Motor Fuels Report; and Bloomberg LP Principal Contributor: Jeff Barron