EIA Now Publishes Additional U.S. Biofuel & Distillate Forecasts

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Biofuels are making up an increasing share of whole distillate gas oil consumed in america. Starting within the September 2024 Short-Term Energy Outlook (STEO), we started publishing forecasts for a number of new sequence that assist to higher seize how biofuels are being consumed and total demand for distillate gas oil, a classification of petroleum products that features diesel, gas oil, and heating oil.

We made these modifications to make clear how a lot biofuel is included in petroleum merchandise, notably distillate gas. These updates are largely based mostly on knowledge sequence we had been already reporting in our Petroleum Supply Monthly (PSM) and forecasting in STEO. The brand new knowledge can be found in STEO Table 4d.

What’s new within the September STEO?
Probably the most notable of the brand new sequence is whole distillate gas oil consumption. The whole distillate gas oil consumption calculation consists of distillate gas oil product equipped (printed in PSM and STEO) and two new knowledge sequence:

• Biodiesel product equipped
• Renewable diesel product equipped

How did we beforehand account for diesel consumption in STEO?
Beforehand, we solely printed distillate gas oil product equipped (the proxy we use for consumption) in STEO Table 4a. These knowledge included volumes of biodiesel and renewable diesel reported to EIA as refiner and blender web inputs. Web inputs are the volumes of those fuels that refiners and blenders report that they blended with petroleum distillate. We embody these volumes in our distillate gas oil product equipped knowledge as a result of they’re commingled with the petroleum distillate gas provide. Nevertheless, distillate gas oil product equipped doesn’t embody the biofuel consumption that we report as standalone biodiesel product equipped and renewable diesel product equipped, though a lot of those volumes are probably blended with petroleum-based distillate gas additional downstream of the information captured in our surveys. As a result of distillate gas oil product equipped doesn’t embody important volumes of biodiesel and renewable diesel, it doesn’t seize the entire volumes of gas being consumed as distillate gas oil.

What are biomass-based diesel fuels?
Renewable diesel and biodiesel are the 2 biomass-based diesel fuels that can be utilized instead of petroleum-based distillate.

Renewable diesel is a transportation and heating gas that’s chemically equal to petroleum-based distillate gas however is produced utilizing fat, oils, or greases quite than petroleum. Renewable diesel can be utilized in diesel engines in any focus.

Biodiesel is made with the identical feedstocks as renewable diesel, however it’s sometimes blended with petroleum distillate at concentrations of 20% or much less for car consumption due to some chemical variations from petroleum distillate. No matter whether or not renewable diesel or biodiesel are blended with petroleum distillate or consumed immediately, they often serve the identical finish makes use of and may displace volumes of petroleum-based distillate.

Why are we publishing a brand new whole distillate gas oil sequence?
We selected to publish a complete distillate gas oil consumption sequence as a result of biofuels are making up a noticeable and rising share of distillate equipped to the market. Most of this development is happening on the West Coast due to state-level insurance policies in that area, most notably California’s Low Carbon Fuel Standardthat add to the incentives from federal clean-fuel applications such because the Renewable Fuel Standard and biodiesel tax credit.

We estimate the common share of biofuels in whole distillate gas oil consumption was about 4% from 2016 to 2020. Just lately, rising manufacturing of renewable diesel has elevated the biofuels share of whole distillate gas oil consumption from 5% in 2021 to 7% in 2023.

Renewable diesel product equipped has greater than tripled from practically 70,000 barrels per day (b/d) in 2021 to 240,000 b/d thus far this yr, as an influx of private investment helped increase production capacity. We count on the biofuels share of whole distillate gas oil consumption will enhance to 9% in 2024.

Complete distillate gas oil consumption higher measures distillate consumption out there due to the rising share of biofuels in distillate equipped to finish customers. Distillate product equipped knowledge (which seize petroleum-based distillate gas and solely the portion of biofuel blended as web inputs) over the previous 5 years recommend distillate consumption has not recovered to 2019 ranges. Nevertheless, the whole distillate gas oil consumption sequence that extra totally accounts for biofuels exhibits distillate consumption surpassing 2019 ranges in 2022.

A number of macroeconomic indicators that drive distillate consumption (together with U.S. actual GDP, U.S. actual imports of products, and manufacturing exercise as measured by the Federal Reserve’s Industrial Production Index) all surpassed 2019 ranges by 2022, lending help to whole distillate gas oil consumption as a extra applicable measure for distillate consumption.

Within the first half of 2024, distillate gas oil product equipped suggests consumption declined 5% in contrast with the previous five-year (2019–23) common. Complete distillate consumption over the identical interval exhibits consumption was successfully the identical because the five-year common. The distinction between the 2 displays the biofuels share of distillate consumed out there.

We now have revised our forecasting methodology for distillate consumption to higher account for biofuels in distillate equipped to the market. We now forecast whole distillate gas oil consumption utilizing macroeconomic indicators to find out total consumption by finish customers. We forecast distillate gas oil product equipped by subtracting our forecast for renewable diesel product equipped and biodiesel product equipped from our whole distillate gas oil consumption forecast.

Principal contributors: Jimmy Troderman, Alex de Keyserling. Courtesy of the EIA’s Today in Energy.