Understanding petroleum product supplied – a proxy for consumption

By surveying the entire population of these primary suppliers, EIA determines 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 not long after they are produced and moved through primary suppliers.

EIA uses product supplied as a proxy for consumption because it measures volumes of petroleum products that leave the primary supply chain prior to distribution. Using the example of finished motor gasoline, it defines product supplied as: net production (from refineries, blenders, and biofuels plants) + imports + supply adjustment - primary storage inventory change - exports. EIA calculates that, in 2023, finished motor gasoline product supplied in the US came from 9.65 million bpd of finished net production by refiners, blenders, and biofuels plants plus 118 000 bpd of imports. Disposition of finished motor gasoline included a 3000 bpd increase in primary inventories and 816 000 bpd of finished motor gasoline exports. Disposition 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.

EIA also includes a supply adjustment, a balancing item that reconciles product supplied of finished gasoline with the supply and disposition of its two major components, motor gasoline blending components (MGBCs, derived from petroleum) and fuel ethanol (a biomass-based fuel typically derived from corn in the US). MGBCs and fuel ethanol are not used in engines individually, but they are blended into gasoline to meet specifications for octane, sulfur levels, and other standards. Because EIA collects supply and disposition of these products from several surveys, survey and statistical errors lead to natural differences between supply and disposition. The adjustment serves as a balancing item, which reduced finished motor gasoline supply by 7000 bpd in 2023. Taken together, 8.95 million bpd of finished motor gasoline was consumed in the US during 2023 because this was the amount that left the primary supply chain and remained in the US.

EIA publishes its most definitive set of finalised petroleum statistics in the 'Petroleum Supply Annual'. This report revises any errors or missing data for the previous calendar year. This report is released every August. 'Petroleum Supply Monthly' (PSM) provides comprehensive and more timely petroleum statistics. EIA releases the PSM report on the last business day of the month, and it provides statistics for the month two months before. The PSM report derives its data from surveying all companies that produce, import, transport, or hold in storage any petroleum product in the US. It does not survey exports but instead receives export statistics from the US Census Bureau. The 'Weekly Petroleum Status Report' (WPSR) provides even more timely but less comprehensive information than the PSM because the WPSR surveys fewer respondents. Whereas the PSM surveys the entire primary supply chain, the WPSR surveys the largest respondents only, covering around 90% of the latest monthly volume for each supply source. The WPSR product supplied data can experience large week-to-week swings, partially because of sampling errors from surveying only a subset of the PSM respondents and partially because imports or exports can quickly change depending on when cargoes clear US Customs. EIA recommends data users analyse the four week moving average of product supplied to better understand underlying trends in US petroleum consumption.

Because calculating product supplied involves several components, each component can be subject to sampling error, measurement error, and timing differences. Sampling errors can occur for each supply or disposition component and can result in differences between the WPSR estimate and the reported product supplied for the month in the PSM. Differences can also arise because EIA estimates weekly export data for petroleum products using unedited weekly export statistics from US Customs and Border Protection. Usually, the WPSR product supplied is within +/-2% of the PSM. Over longer periods, these differences can average close to 0%, as they did from 2018 through June 2024.

EIA relies on PSM and WPSR data for its other publications and forecasts. It uses the terms petroleum consumption and petroleum product supplied interchangeably in these reports, such as the 'Monthly Energy Review', 'Short-Term Energy Outlook', and 'Annual Energy Outlook', to label the data consistently with other fuel consumption such as natural gas, coal, nuclear, renewables, and electricity.

Absent significant errors, omissions, or natural disasters, EIA never revises the data published in the WPSR. Historical WPSR estimates of product supplied become less relevant when the PSM is published because EIA captures the remaining data that it did not survey in the WPSR. PSM data can serve as a definitive historical benchmark and the WPSR as a near-term estimate of recent history. The unrevised historical WPSR data are still useful, however, particularly for users that wish to understand weekly variability in petroleum market activity among all primary supply chain components.

The Federal Highway Administration publishes monthly data on vehicle miles travelled (VMT) and a motor fuels report that displays motor gasoline sales by state. Although the report on VMT is published with a similar lag as the PSM (about two months), data users would have to make assumptions about vehicle fuel efficiency to determine motor gasoline consumption. The motor fuels report tracks motor gasoline consumption closely with the PSM but can lag between six and nine months. Commercial data providers such as Oil Price Information Service (OPIS) and GasBuddy offer estimates of gasoline consumption from retail gasoline stations they sample.

Read the article online at: https://www.oilfieldtechnology.com/special-reports/20092024/understanding-petroleum-product-supplieda-proxy-for-consumption/