## API: US petroleum demand down, gasoline demand up in March

##### 20 April 2012

While total petroleum deliveries (a measure of demand) slipped 1.3% in March compared with March 2011, gasoline deliveries were up 3%, according to the latest report from the American Petroleum Institute (API). This marked the second month in a row gasoline demand increased while total petroleum demand declined.

March distillate demand was up very slightly over a year ago to almost 4 million barrels per day, driven by a 5.5% rise in demand for ultra-low sulfur diesel used by trucks.

The mixed demand picture shows the economy is still laboring to move forward, reflecting relatively weak employment conditions. However, the rise in gasoline demand occurred in spite of higher gasoline prices, which actually pushed down demand for reformulated gasoline used in urban areas and encouraged more use of public transit.

—API chief economist John Felmy

US gasoline production of 9.3 million barrels per day set a record for any March and for any comparable year-to-date period. Distillate fuel production at 4.4 million barrels per day also set March and year-to-date records. Refinery utilization increased in March, compared with March a year ago. Total refinery inputs rose 2.3% in March.

With US refinery production at high levels and overall domestic demand falling, exports of refined petroleum products increased by 2.6%. Imports of crude oil and refined products fell in March by 6.6% to average 10.6 million barrels per day. Canadian crude imports rose by 1.9% to average almost 2.16 million barrels per day.

Higher domestic crude oil production in March offset lower crude import levels. Crude oil production rose by 4.7% to average almost 5.9 million barrels per day. Rising North Dakota production at 551 thousand barrels per day in March continued to close in on declining Alaska production of 591 thousand barrels per day.

Rather than dock oil tankers in L.A. and feed refineries then to haul the gasoline to various cities, I think it would be good to have natural gas to DME to gasoline fuel plants closer to the point of use.

Every major city could have several of them close by supplying all the fueling stations without driving all those miles on the open highways with huge amounts of gasoline in tanker trucks. It would be safer and more energy efficient.

Instead of GTL, we want to convert the vehicles.  Here's why:

• Both CNG and LNG burn cleaner than diesel.
• CNG and LNG avoid the losses of GTL (about 55% losses in the Indonesian GTL plant covered by Robert Rapier).
• The USA burns about 3.8 million bbl/d of distillate, roughly 22 trillion BTU/d or 8.1 quads/yr.  The USA also consumes about 24 trillion ft³ of natural gas, or about 25 quads' worth.  It's much easier to increase gas production by about 32% for CNG/LNG than to boost it by 72% for GTL.
• Market conditions can change very rapidly, and it makes far more sense to invest in a rig conversion with a 15-year lifespan than major chemical installations with 50-year lifespans.
• CNG/LNG remain viable options even if LNG exports bring North America gas prices up to the ~$14/mmBTU they'd merit on the world market.$14/mmBTU gas is still under $2/gde before compression/liquefaction costs. At those prices, GTL diesel at 45% conversion efficiency would have a feedstock cost of$4.35/gallon before amortization plus O&M.
Really, there's no question about it.

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