Colorado refinery outage continues to cause higher gasoline prices
Published by Bella Weetch,
Editorial Assistant
Hydrocarbon Engineering,
The only petroleum refinery in Colorado, US, shut down in late December 2022 after sustaining damage from extremely cold weather, and it is expected to remain offline for months to repair, the refinery owner and operator, Calgary-based Suncor, stated. The refinery outage may tighten the supply of gasoline and diesel in Colorado and, more broadly, the Rocky Mountain region, leading to higher retail prices for both. From the end of December 2022 to 20 February 2023, the average retail gasoline price increased 51% in Colorado and 27% in the Rocky Mountain region, according to the EIA's 'Gasoline and Diesel Fuel Update', compared with a 9% increase in the US overall.
On 24 December 2022, Suncor shut down its 103 000 bpd oil refinery in Commerce City, Colorado, just outside of Denver. Suncor announced that extreme cold weather earlier in the month had damaged equipment and that the repairs would require a full shutdown of the facility and delay operations until the end of 1Q23.
Since 26 December 2022, the average retail gasoline price in Colorado increased by US$1.39/gal. to US$4.10/gal., as of 20 February 2023.
According to the EIA's 'Refinery Capacity Report', the Commerce City refinery is the only active refinery in Colorado, the most populous state in the Rocky Mountain region. It is estimated that Colorado accounted for 41% of total gasoline sales and 25% of total distillate sales (including both jet fuel and diesel) in the Rocky Mountain region in 2021.
The Commerce City refinery outage means that the region must draw from existing regional inventories and transfer petroleum products from other out-of-state refineries. Colorado has greater pipeline connectivity to other US regions than other states in the Rocky Mountain region. So, transfers from the Midwest and Gulf Coast should minimise withdrawals from regional inventories.
Rocky Mountain inventories of gasoline and diesel fuel started 2023 well below the five-year average. Existing low inventories present an additional source of uncertainty for prices in the Rocky Mountain region because withdrawals are likely to continue until production at Commerce City resumes. Higher prices may stimulate increased refinery operations in Utah and Wyoming to compensate for the outage and backfill production that would have come from Commerce City.
Read the article online at: https://www.hydrocarbonengineering.com/refining/28022023/colorado-refinery-outage-continues-to-cause-higher-gasoline-prices/
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