Imported gasoline blend stocks help keep US prices lower: EIA

Washington (Platts)--6Jul2006

While many Americans see virtue in not depending on foreign countries for
petroleum, the reality is that without gasoline imports, domestic prices would
likely be even higher than current levels, the US Energy Information
Administration said in a report released Thursday.

"Sometimes, getting help from others can be a good thing," according to
the agency's publication, "This Week in Petroleum."

The report notes that for the week ending June 30, spot prices for
gasoline rose earlier in the week on expectations of a significant drop in
total gasoline inventories. "However, with total gasoline imports rising from
just under one million b/d for the week ending June 23 to nearly 1.3 million
b/d for the week ending June 30, total gasoline inventories actually rose
slightly," the report said. "This increase in gasoline imports was sufficient
to keep inventories from falling, and likely kept spot prices from rising even
further that they would have."

With changing gasoline specifications over the last decade, it has become
more economical for both foreign refiners and US wholesalers to trade lower
cost blending components and have US wholesalers do the necessary blending to
turn it into finished gasoline, the report said. "This enables foreign
refiners to continue to supply the US gasoline market without making major
capital investments in their refineries necessary to meet US finished gasoline
specifications, thus keeping their costs down and keeping the cost lower in
the US."

However, should the European gasoline market tighten for any reason,
exports will diminish, "potentially causing a drop in gasoline supply in the
US, which would likely lead to higher gasoline prices."

--Gerald Karey, gerry_karey@platts.com

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