Report details petroleum market in five states in the Northeast

A new report examining gasoline markets is designed to help officials in five states analyze what factors influence price changes, and in turn, help consumers, according to the attorneys general in those five states. The states are: Maine, Massachusetts, New Hampshire, New York, and Vermont.

The report includes a close study of the gasoline market within the five states, with the aim of developing an accurate understanding of the present and recent history of product distribution, industry participants and market structure. It examines how and from where petroleum products are transported into the five states, how gasoline and home heating oil ultimately make their way to consumers, and how ownership and control of various elements of the supply chains are structured. In addition, the report includes a discussion of the role of futures markets in determining prices.

The report was commissioned by the attorneys general of Maine, Massachusetts, New Hampshire, New York, and Vermont to provide policy makers and constituents with a better background understanding of petroleum product markets in their states.

The following lightly edited excerpt from the report deals with petroleum distribution from refineries to the five states. [Editor’s note: The five states are referred to in this excerpt as “the states.”]

As there are no petroleum refineries in the states, refined petroleum products sold in these states are necessarily imported into the area from facilities elsewhere. Refineries in the Mid-Atlantic, Midwestern, and Gulf Coast regions of the U.S. provide a substantial portion of the refined petroleum products shipped by pipeline into New York, but a large part of the product bound for the states originates from refineries in Canada, Venezuela, and the Virgin Islands.

Waterway shipments are of particular importance to each of the states other than Vermont (which has no imports via water), as petroleum products imported via ship or barge amount to approximately 90% of total consumption in the states. (Not all waterway imports into the States are consumed in the states approximately 18% are shipped to other U.S. states.)

Waterway shipments from U.S. ports, Canada, and other foreign countries account for approximately 31%, 15%, and 43%, respectively, of total consumption in the states.

After importation by pipeline, truck, rail, or waterway, refined petroleum products are stored in terminals. According to recent data, there are 161 terminals that distribute refined petroleum products in the states (14 in Maine, 30 in Massachusetts, 7 in New Hampshire, 107 in New York, and 3 in Vermont). The products distributed at these terminals range from jet fuel to gasoline to home heating oil, and different terminals are equipped for the storage and distribution of different types of refined products. After entering the states via pipeline or through a port, refined products are offloaded and stored at major bulk terminals. Product is often shipped from the major terminals through smaller pipelines to regional terminals throughout the states. Regional terminals are equipped with specialized loading stations (racks) that load refined products into tanker trucks for distribution to end users such as retail gasoline stations or individual homes in the case of home heating oil. In the case of gasoline, any required oxygenates or special additives used to differentiate one brand from another are often blended into the gasoline in the tank of the delivery truck itself.

This report will be further explored in coming issues.