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Biofuels are making up an growing share of complete distillate gas oil consumed in the US. Starting within the September 2024 Quick-Time period Vitality Outlook (STEO), we started publishing forecasts for a number of new collection that assist to higher seize how biofuels are being consumed and general demand for distillate gas oil, a classification of petroleum merchandise that features diesel, gas oil, and heating oil.
We made these modifications to make clear how a lot biofuel is included in petroleum merchandise, significantly distillate gas. These updates are largely primarily based on information collection we have been already reporting in our Petroleum Provide Month-to-month (PSM) and forecasting in STEO. The brand new information can be found in STEO Desk 4d.
What’s new within the September STEO?
Probably the most notable of the brand new collection is complete distillate gas oil consumption. The complete distillate gas oil consumption calculation contains distillate gas oil product equipped (revealed in PSM and STEO) and two new information collection:
- Biodiesel product equipped
- Renewable diesel product equipped
How did we beforehand account for diesel consumption in STEO?
Beforehand, we solely revealed distillate gas oil product equipped (the proxy we use for consumption) in STEO Desk 4a. These information included volumes of biodiesel and renewable diesel reported to EIA as refiner and blender internet inputs. Internet 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 information 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 seemingly blended with petroleum-based distillate gas additional downstream of the info 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 overall 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 rather than 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 slightly 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 instantly, they often serve the identical finish makes use of and might displace volumes of petroleum-based distillate.
Why are we publishing a brand new complete distillate gas oil collection?
We selected to publish a complete distillate gas oil consumption collection as a result of biofuels are making up a noticeable and growing share of distillate equipped to the market. Most of this progress is happening on the West Coast due to state-level insurance policies in that area, most notably California’s Low Carbon Gas Customary, that add to the incentives from federal clean-fuel packages such because the Renewable Gas Customary and biodiesel tax credit score.
We estimate the common share of biofuels in complete distillate gas oil consumption was about 4% from 2016 to 2020. Not too long ago, rising manufacturing of renewable diesel has elevated the biofuels share of complete 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 up to now this 12 months, as an inflow of personal funding helped improve manufacturing capability. We anticipate the biofuels share of complete distillate gas oil consumption will improve to 9% in 2024.
Whole 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 information (which seize petroleum-based distillate gas and solely the portion of biofuel blended as internet inputs) over the previous 5 years counsel distillate consumption has not recovered to 2019 ranges. Nevertheless, the complete distillate gas oil consumption collection 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 Manufacturing Index) all surpassed 2019 ranges by 2022, lending help to complete 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. Whole 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’ve revised our forecasting technique for distillate consumption to higher account for biofuels in distillate equipped to the market. We now forecast complete distillate gas oil consumption utilizing macroeconomic indicators to find out general 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 complete distillate gas oil consumption forecast.
Principal contributors: Jimmy Troderman, Alex de Keyserling. Courtesy of the EIA’s Immediately in Vitality.
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