February 2021

PETROLEUM WATCH CALIFORNIA ENERGY COMMISSION

INSIDE REFINERY NEWS

Gasoline Retail Prices by Brand • Chevron El Segundo: • Valero Wilmington: Diesel Retail Prices by Region On January 27 and 28, process Between January 29 and upsets occurred resulting in February 25, planned flaring Crude Oil Inputs unplanned flaring according to is scheduled to take place regulatory filings with theSouth relating to turnaround activity Crude Oil Supply Sources Coast Air Quality Management according to regulatory filings Foreign Crude Oil Imports District (AQMD) and California with the South Coast Air Quality 2018-2020 Governor's Office of Emergency Management District (AQMD). Services (Cal OES). Share of Foreign Crude Oil Imports 2019 vs 2020 Featured Topic: Foreign Crude Oil Imports Decline in 2020

CALIFORNIA GASOLINE RETAIL PRICES BY BRAND

January 2021 vs. 2020 $4.60 (Percentage Change) $4.40 $4.20 76 7% lower $4.00 ARCO 5% lower $3.80 $3.60 Chevron 4% lower $3.40 Hypermart 7% lower $3.20 Shell 6% lower $3.00 $2.80 Unbranded 6% lower $2.60 Valero 6% lower $2.40 Dollars per Gallon (Nominal) Gallon per Dollars $2.20 January 2021 Averages $2.00

76 $3.39 Jul-20 Apr-20 Oct-20 Jun-20 Jan-21 Mar-20 Feb-20 Feb-21 Nov-20 Dec-20 Aug-20 Sep-20 May-20 ARCO $3.11 76 ARCO CHEVRON HYPERMART SHELL UNBRANDED Chevron $3.54 VALERO Hypermart $2.98 Source: California Energy Commission (CEC) analysis of Oil Price Information Service (OPIS) data Shell $3.46 Unbranded $3.18 Valero $3.30

CALIFORNIA DIESEL RETAIL PRICES BY REGION

January 2021 vs. 2020 $4.40

(Percentage Change) $4.20

Northern CA 8% lower $4.00

Central CA 10% lower $3.80 Southern CA 12% lower $3.60

January 2021 Averages $3.40

Northern CA $3.47 $3.20 Central CA $3.29 $3.00

Southern CA $3.41 (Nominal) Gallon per Dollars $2.80

$2.60 Jul-20 Apr-20 Oct-20 Jun-20 Jan-21 Mar-20 Feb-20 Feb-21 Nov-20 Dec-20 Aug-20 Sep-20 May-20

Northern Central Southern Source: CEC analysis of OPIS data

CRUDE OIL INPUTS 2019 VS 2020 QUARTER 1 TO QUARTER 3 (Q1-Q3)

ABSOLUTE CHANGE RELATIVE CHANGE

0 0%

PADD 4 -5,000 -5%

-10,000 -10% PADD 2 PADD 1 PADD 2 PADD 4 -15,000 PADD 5 -15% PADD 3

-20,000 -20% PADD 5

-25,000 Decrease Percent -25% Thousands of Barrels

-30,000 -30%

-35,000 PADD 3 -35% PADD 1

-40,000 -40%

Source: CEC analysis of U.S. Energy Information Administration (EIA) data Notes: Petroleum Administration for Defense Districts (PADD)

CRUDE OIL SUPPLY SOURCES TO CALIFORNIA

100%

90%

80%

70%

60%

50%

40%

30% Percent of Crude Oil by Source by Oil of Crude Percent 20%

10%

0% Jul-20 Jul-19 Apr-20 Apr-19 Oct-19 Jun-20 Jun-19 Jan-20 Jan-19 Mar-20 Mar-19 Feb-20 Feb-19 Nov-19 Dec-19 Aug-20 Sep-20 Aug-19 Sep-19 May-20 May-19 Alaska California Foreign

Source: CEC analysis of EIA data Notes: California totals may also include minor amounts from North Dakota and Gulf Coast States

FOREIGN CRUDE OIL IMPORTS TO CALIFORNIA 2018-2020 (Q1-Q3)

40,000

35,000

30,000

25,000

20,000

15,000 Thousands of Barrels 10,000

5,000

0 Jan Feb Mar Apr May Jun Jul Aug Sep

2018 2019 2020

Source: CEC analysis of Port Import/Export Reporting Service (PIERS) data and State Lands Commission (SLC) data

SHARE OF FOREIGN CRUDE OIL IMPORTS TO CALIFORNIA 2019 VS 2020 (Q1-Q3)

FOREIGN CRUDE IMPORTS IN 2019

Colombia 10.3% 14.5% 3.3% 4.5%

Mexico 1.7% 17.2% Other Other 30.1% 10% 3.9%

Brazil 7% 27.9%

FOREIGN CRUDE IMPORTS IN 2020

Kuwait Nigeria 2.3% 1.7% Iraq 20.4% 8.4%

Mexico 3.2% Other Ecuador Other 8% 21.2% 25.0% Canada 4.7% 5% Saudi Arabia 25.1%

Source: CEC analysis of PIERS data and SLC data

FEATURED TOPIC

FOREIGN CRUDE OIL FOREIGN CRUDE OIL IMPORTS 2019 VS. 2020 (Q1 - Q3) IMPORTS DECLINE IN 5,000 2020 Canada 0 The effects of COVID-19 on travel Iraq Mexico and general economic activity have -5,000 significantly reduced demand for Kuwait transportation fuels and crude oil. Ecuador -10,000 Nigeria Refineries across the Brazil have processed less crude oil to Colombia meet the reduced demand. As -15,000 California’s refineries purchased

less crude oil, imports decreased Thousands of Barrels -20,000 and changed the refiner’s mix of foreign and domestic crude oils. -25,000

U.S. CRUDE OIL TRENDS Saudi Arabia -30,000

Refineries across the United States Source: CEC analysis of PIERS data and SLC data processed less crude oil in 2020. oil from January through September (8.6 million barrels), and Ecuador Crude Oil Inputs 2019 VS 2020 shows comprised 51.5 percent of total crude (6.8 million barrels). The only the declining monthly average of net inputs, a 10 percent increase from increase in foreign oil imports is crude oil inputs by PADD (Petroleum 2019. During the same time period, from Canada. California refiners Administration for Defense Districts) share of foreign crude oil fell from imported an extra million barrels, over the first three quarters of 2019 58.4 percent of crude oil inputs to taking advantage of the temporary and 2020. The greatest cuts occurred 48.5 percent. Crude oil produced in discount when Canadian crude oil in PADD 3 at an average of 33.4 California and Alaska now supplies prices hit -$37.00 a barrel in April. million barrels less per month than a larger share of the shrinking crude in 2019. Viewing these numbers as Share of Foreign Crude Oil Imports oil demand at California refineries. a percent change, PADD 3 is down To California shows the market 12.4 percent since 2019 while PADD Foreign Crude Oil Imports To California share of crude oil by country of 1 has the largest decrease of 34.5 Quarter 1 to Quarter 3 shows the origin in the first three quarters percent since 2019 input levels. PADD foreign crude oil imports over 3 of 2019 and 2020. The top three 3, with its large refining capacity and quarters. Since imports can fluctuate countries that California imports oil access to cheaper domestic crude, based on supply, demand, and other from, Saudi Arabia, Ecuador, and supplies most of the east coast market forces, this graph includes Iraq, collectively accounted for 66.7 (PADD 1) via pipeline connections. 2018 to provide another example percent of foreign crude oil imports PADD 1 refining capacity is much of fluctuations during a normal in the first three quarters of 2020. smaller in comparison to PADD 3, but year. The largest decreases in 2020 This increases their relative market covers the remaining demand not occurred in April and July. Since share by 7 percent over 2019. This supplied by PADD 3. With reduced 2019, crude oil imports dropped by is despite the fact that California demand, the baseline of products 60.2 percent in April at the start of refineries imported collectively 35.2 supplied by PADD 3 covers most travel restrictions, then dropped by million barrels less in 2020 than in products needed, decreasing the 66.6 percent in July. There were 2019. This increase in market share necessity of refining from PADD 1. no significant travel restrictions came at the expense of the market in July, however this chart shows share of other countries, particularly CALIFORNIA CRUDE OIL TRENDS large demand destruction during Colombia, Brazil, and Argentina. a time where it is historically peak Large oil producers cut back The decrease in crude oil demand has travel during the summer months. altered where California sources its production to reduce the oversupply crude oil. Crude Oil Supply Sources To CRUDE OIL TRENDS BY COUNTRY and inventory created by the reduced California shows the monthly ratios demand during the pandemic. Foreign Crude Oil Imports 2019 VS of crude oil sources to California The Organization of Petroleum 2020 (Q1 – Q3) shows how much refineries. Prior to COVID-19, Exporting Countries (OPEC) currently foreign crude oil California refiners California refineries processed a maintains a multilateral agreement have imported compared to 2019 majority of foreign crude oil, followed to limit production and Saudi Arabia over the first three quarters. Foreign by California crude oil, and then announced additional voluntary crude imports are down, led by Alaska crude oil. In 2019, domestic production cuts for February and Saudi Arabia with a decrease of crude oil (both Alaska and lower March. California refiners' demand 27.4 million barrels. Other countries 48 states) from January through for more foreign crude oil will depend with significant reductions include September comprised 41.6 percent on how quickly California recovers Colombia (11.6 million barrels), of total crude inputs to California from COVID-19 and fuel demand Brazil (8.9 million barrels), Nigeria refineries. In 2020, domestic crude returns to pre-pandemic levels.

Gavin Newsom Karen Douglas, J.D. CALIFORNIA Governor Siva Gunda ENERGY J. Andrew McAllister, Ph.D. David Hochschild Patty Monahan COMMISSION Chair Commissioners Drew Bohan Executive Director FOR MORE INFORMATION Instagram California's Petroleum Market Twitter LinkedIn Weekly Fuels Watch Subscribe

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