ability of california to attract gasoline volumes from other markets december 2015 trusted...
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Trusted commercial intelligence 3 Trade flows follow netback price signals with a 4-6 week lag Gasoline in-flows to PADD 5 Source: EIA; Argus, Wood MackenzieTRANSCRIPT
Ability of California to attract gasoline volumes from other markets
December 2015
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Los Angeles premium to source markets does not necessarily imply volumes will be drawn to California
US dollars per gallon
Source: EIA; Argus, Wood Mackenzie
Jan-13
Mar-13
May-13
Jul-1
3
Sep-13
Nov-13
Jan-14
Mar-14
May-14
Jul-1
4
Sep-14
Nov-14
Jan-15
Mar-15
May-15
Jul-1
5
Sep-15-0.40
-0.20
0.00
0.20
0.40
0.60
0.80
1.00
LA - USGC
LA - Singapore
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3
Trade flows follow netback price signals with a 4-6 week lag
Gasoline in-flows to PADD 5
Source: EIA; Argus, Wood Mackenzie
Jan-13
Mar-13
May-13
Jul-1
3
Sep-13
Nov-13
Jan-14
Mar-14
May-14
Jul-1
4
Sep-14
Nov-14
Jan-15
Mar-15
May-15
Jul-1
5
Sep-150.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0
50
100
150
200
250
300
350Imports PADD LA - USGC
LA - Singapore
US$
per
gal
lon
Mill
ion
gallo
ns p
er m
onth
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Global gasoline supply/demand balance is tightening due to historically strong demand growth
Global gasoline demand growth (thousand barrels per day)
Source: IEA, Wood Mackenzie
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
-100
-
100
200
300
400
500
600
700
Trusted commercial intelligence
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5
Recent USWC gasoline stock days of coverage declined faster than USEC, another coastal import market
Gasoline days of coverage
Source: EIA; Wood Mackenzie
Jan-20
12
Mar-201
2
May-201
2
Jul-2
012
Sep-2012
Nov-201
2
Jan-20
13
Mar-2013
May-20
13
Jul-2
013
Sep-201
3
Nov-2013
Jan-20
14
Mar-20
14
May-201
4
Jul-2
014
Sep-20
14
Nov-2014
Jan-20
15
Mar-2015
May-201
5
Jul-2
015
Sep-2015
10
12
14
16
18
20
22
24
26
28
30
PADD I PADD V
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Price differentials are not enough to indicate when volumes might flow
towards California
After accounting for the costs of reaching California, the import
opportunity window is fairly limited
Days of coverage have declined, which is consistent with meeting the loss
in supply from Torrance
Attracting gasoline from other markets is challenged given the strength of
global gasoline demand, which likely continues in 2016-17
California’s supply response to the Torrance upset is consistent with microeconomic principles
Key takeaways
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Harold “Skip” York
Skip York is the Vice President of Integrated Energy in Wood Mackenzie’s America’s Research Team responsible for cross-segment integration of petroleum market issues for North America. With over 20 years of worldwide experience across the energy value chain, he has deep expertise in petroleum market economics and price-setting mechanisms including valuing non-fungible crudes across a number markets and leveraging technologies for competitive advantage. He is a frequent guest on news networks, such as, Bloomberg and CNBC and contributes a blog on www.Forbes.com. He can be followed on Twitter: @SkipYorkEnergy
Specializing in strategy and commercial optimization his recent focus is the implication of logistic and refining constraints on market-clearing dynamics and prices for the spectrum of North American crude oils from US tight oil to Canadian oil sands.
Prior to joining Wood Mackenzie, Skip worked for ExxonMobil in a variety of strategic planning assignments. He held roles as the global expert on joint venture negotiation best practices, managing new business development downstream opportunities in Asia Pacific, and leading research teams on studies of the economic impact of large-scale oil investments on the economy of Russia. He also has consulted for clients at McKinsey & Company and Charles River Associates.
Skip holds a PhD Economics from the University of Virginia, as well as, a Masters of Science and Bachelor of Science also in Economics from the University of Wyoming.
Vice President – Integrated Energy
T +1 713 470 1667
Twitter @SkipYorkEnergy
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Disclaimer
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The opinions expressed in this report are those of Wood Mackenzie. They have been arrived at following careful consideration and enquiry but we do not guarantee their fairness, completeness or accuracy. The opinions, as of this date, are subject to change. We do not accept any liability for your reliance upon them.
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