Slide 11 of 17
Notes:
- RFG production in total for Midwest has been somewhat low the past couple of months, but these production levels do not indicate a critical supply situation is likely in the near term.
- However, gasoline demand in Midwest seems to be growing more strongly in 2000 than it has for the past couple of years in this region. Weak production combined with strong demand can cause inventories to be drawn down faster than usual.
- Furthermore, in the Chicago and Milwaukee RFG areas, which account for over 2/3 of Midwest RFG consumption, the RFG is almost exclusively made by blending ethanol with blending components called “reformulated gasoline blendstock for oxygenate blending” or RBOB at local terminals. Most of the RBOB comes from about 7 refineries that serve that area. (Some additional RBOB comes from a few additional refineries on the Gulf Coast.)
- The summer-grade RBOB that gets blended with ethanol is fairly difficult to make, and not many refineries outside of the Chicago/Milwaukee area produce the product. With the Phase II RFG program, some refiners were unable to produce as much RBOB as last year, and others were able to produce more. This created a change in supply patterns to which the markets are adjusting.
