Last year was the third year in a row that North American refineries showed considerably higher profitability than European refineries as measured by earnings per barrel processed. While many factors contribute to refinery profitability, lower North American crude oil prices compared with world prices have been a key factor driving this outcome. North American refiners' earnings per barrel processed were more than $7 per barrel (bbl) higher than their European competitors in 2013, based on an analysis of 26 energy companies with refinery operations that submit financial and operating information by segment in annual reports to the U.S. Securities and Exchange Commission.

Financial data by segment allow comparisons of just the refining business of global integrated companies—those that explore and drill for oil as well as refine it—with those that only refine crude oil into products. Earnings per barrel processed (Figure 1) takes a company's earnings from its refining and marketing segment and divides it by its annual refinery runs, which is a useful measure for comparing large companies with smaller ones.

Gas and diesel prices down nationwide

As North American crude oil production increased from new tight oil plays, U.S. imports of crude oil steadily decreased. Production increases since 2011 led to bottlenecks in the Midcontinent, depressing U.S. average refiner acquisition costs compared with Brent (North Sea), with discounts averaging more than $9/bbl from 2011 to 2013 (Figure 2). This crude discount tended to benefit companies with refineries in the interior of the United States and Canada.

In 2013, Gulf Coast refiners began to see increased earnings because of lower crude costs after some of the infrastructure bottlenecks to move crude oil to the Gulf Coast were removed and prices of Light Louisiana Sweet (LLS) crude began to trade at a discount to Brent. Product prices in North America, however, continued to be driven by international crude oil prices and petroleum product markets. Crack spreads, the difference between the purchase price of crude oil and the wholesale selling price of refined products, on the Gulf Coast increased in late 2013, and have remained high in 2014.

Gas and diesel prices down nationwide

Gasoline prices mostly decrease, diesel fuel prices down nationwide
The U.S. average retail price of regular gasoline decreased by two cents this week to $3.67 per gallon as of May 14, 2014, up seven cents from this time last year. Prices decreased in all regions except the Rocky Mountains, where the average rose one cent to $3.51 per gallon, and the Midwest, which increased by less than a penny to remain at $3.60 per gallon. The West Coast and Gulf Coast prices each decreased by three cents, to $4.02 and $3.44 per gallon respectively. The East Coast price is now $3.68 per gallon, down two cents from last week.

The national average diesel fuel price decreased two cents to $3.95 per gallon, up eight cents from the same time last year. Prices declined in all regions of the nation, led by a two-cent drop in the Gulf Coast to $3.80 per gallon. The East Coast, Midwest, West Coast, and Rocky Mountains each decreased one cent, to $4.04, $3.92, $4.04, and $3.97 per gallon respectively.

Propane inventories gain
U.S. propane stocks increased by 2.5 million barrels last week to 37.7 million barrels as of May 9, 2014, 4.1 million barrels (9.7%) lower than a year ago. Gulf Coast inventories increased by 1.4 million barrels and Midwest inventories increased by 0.8 million barrels. East Coast inventories increased by 0.2 million barrels and Rocky Mountain/ West Coast inventories increased by 0.1 million barrels. Propylene non-fuel-use inventories represented 9.5% of total propane inventories.