Refiners Boost Output Ahead of Summer – Optimistic outlook

Valero carefully manages supply chain as summer approaches Equipment breakdowns plague sites as they push output higher

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It’s not quite pedal to the metal yet but U.S. refiners are inching up production ahead of a summer driving season that might boost profits more than a year after the pandemic decimated gasoline demand.

U.S. gasoline supplies were at a seven-week high in the week ended April 16 as refineries ran at 85%, the highest rate since March 2020, according to government data. Rates are still below the same period in 2019 when refineries ran at 90% as they were stocking up on summer-grade gasoline for the driving season.

“We’re not completely running at max because we are still being very careful with our supply chain,” Valero Energy Corp. told analysts during its first quarter earnings call April 22.

Some refineries like Exxon Mobil Corp. Beaumont and Total SE Port Arthur on the Texas Gulf Coast are pushing rates higher toward full production for the first time in more than a year. But after 12 months of running at reduced rates, postponing maintenance and enduring winter storms, some units like the gasoline-making fluid catalytic crackers are balking at producing normally again.

Total Port Arthur, Marathon Petroleum Corp.’s Galveston Bay Refinery in Texas and Phillips 66 Alliance in Louisiana have struggled to either get their FCC units to restart after shutdowns or keep them in operation. At other refineries like BP Plc.’s Whiting plant in Indiana, other units like cokers are breaking down. Still, if refiners don’t try and run full out, they risk missing out on improved demand and better margins.

“Refiners will come and run and if they break, if they break, that is the risk,” said Amrita Sen, head of research and co-founder of London energy consultancy Energy Aspects.

It’s also not clear how robust of a summer driving season refiners can expect. Demand is already looking stronger than 2020 with more people getting vaccines, returning to the office and planning long-postponed vacations. Energy Aspects says margins are still not near five-year averages and predicts U.S. gasoline supplies, which refineries try to manage to keep pace with demand expectations, won’t peak until December.

About Stu Turley 2288 Articles
Stuart Turley is President and CEO of Sandstone Group, a top energy data, and finance consultancy working with companies all throughout the energy value chain. Sandstone helps both small and large-cap energy companies to develop customized applications and manage data workflows/integration throughout the entire business. With experience in implementing enterprise networks, supercomputers, and cellular tower solutions, Sandstone has become a trusted source and advisor in this space. Stuart has led the “Total Corporate Digital Integration” platform at Sandstone and works with Sandstone clients to help integrate all aspects of modern digital business. He is also the Executive Publisher of, the best source for 24/7 energy news coverage and is the Co-Host of the energy news video and Podcast Energy News Beat. Stuart is on Board Member of ASN Productions, DI Communities Stuart is guided by over 30 years of business management experience, having successfully built and help sell multiple small and medium businesses while consulting for numerous Fortune 500 companies. He holds a B.A in Business Administration from Oklahoma State and an MBA from Oklahoma City University.