Recent data analysis reveals a notable decrease in U.S. distillate consumption for the current year, attributable to a combination of factors including milder winter temperatures, diminished industrial activity, and the ongoing substitution of biofuels for petroleum distillates, particularly evident on the U.S. West Coast (PADD 5).
According to findings outlined in the Weekly Petroleum Status Report (WPSR), the four-week average of U.S. distillate consumption, tracked through product supplied metrics, has consistently fallen below the previous five-year range (2019–23) throughout much of 2024, spanning from January 1 to April 19. While fluctuations in product supplied can be influenced by various survey collection nuances, such as the timing of import cargo clearance by U.S. Customs, the sustained low consumption of U.S. distillate fuels this year suggests underlying trends warrant attention.
Distillate fuel oil, encompassing both diesel fuel for transportation and home heating oil, experienced reduced usage in the initial quarter of 2024, primarily due to exceptionally mild winter conditions. Typically, heating oil constitutes a significant portion of U.S. distillate fuel consumption during the first quarter, ranging from 10% to 15%, contingent upon weather patterns. However, the winter of 2023–24, recognized as the warmest on record, witnessed a 5% increase in temperatures compared to the preceding year, resulting in an estimated 6% decline in heating oil consumption nationwide.
Furthermore, indicators reflecting economic activity show subdued performance, correlating with diminished U.S. distillate fuel consumption. Industrial production, encompassing manufacturing, mining, and utilities output, sustained annual declines in both February and March 2024, while the American Trucking Association’s truck tonnage index reported a 1% drop in March 2024 compared to the same period in 2023, marking the 13th consecutive month of year-over-year decreases.
In parallel, on the West Coast, the persistent substitution of biofuels, notably renewable diesel, for petroleum distillates is contributing to a decline in petroleum-based distillate fuel consumption. Biofuels like renewable diesel and biodiesel offer viable alternatives to petroleum distillate fuel oil, with renewable diesel, in particular, being chemically identical to petroleum diesel and thus seamlessly substitutable. This trend is bolstered by clean-fuel initiatives dating back to 2011, which incentivize the utilization of biofuels.
Recent data releases highlight a notable surge in combined renewable diesel and biodiesel consumption on the West Coast, reaching an average of 141,000 barrels per day (b/d) in January 2024, closely approaching the all-time high of 152,000 b/d recorded in December 2023. In contrast, petroleum distillate fuel consumption on the West Coast averaged 330,000 b/d in January, marking the lowest monthly figure since May 1996.
Although renewable diesel consumption currently represents a modest 4% of the combined U.S. petroleum and biofuel distillate consumption, projections suggest continued growth in the coming years. This trajectory is expected to further displace petroleum distillate fuel consumption as biofuel adoption gains momentum.