Biofuels are becoming a larger part of the total distillate fuel oil used in the United States. Starting with the September 2024 Short-Term Energy Outlook (STEO), the Energy Information Administration (EIA) began providing forecasts for new data that better show how biofuels are used and the overall demand for distillate fuel oil. This category includes products like diesel, fuel oil, and heating oil.
These updates aim to clarify the amount of biofuel in petroleum products, especially in distillate fuel. The changes are based on data that the EIA has previously reported in its Petroleum Supply Monthly (PSM) and the STEO. The new data can be found in STEO Table 4d.
Key Changes in the September STEO
One of the main updates is the inclusion of total distillate fuel oil consumption. This figure combines distillate fuel oil product supplied (already reported in PSM and STEO) with two new data categories:
Biodiesel Product Supplied
Renewable Diesel Product Supplied
Previous Accounting for Diesel Consumption
In the past, the EIA only published distillate fuel oil product supplied in STEO Table 4a. This data included biodiesel and renewable diesel volumes reported to the EIA as net inputs from refiners and blenders. Net inputs refer to the amounts of these fuels that are blended with petroleum distillate.
While these volumes are part of the distillate fuel oil product supplied, they do not include the full consumption of biofuels, which are reported separately as biodiesel and renewable diesel. This means that previous figures for distillate fuel oil product supplied did not capture all the biofuel consumption, resulting in an incomplete picture of total fuel consumption.
What Are Biomass-Based Diesel Fuels?
Renewable diesel and biodiesel are two types of biomass-based diesel fuels that can replace petroleum-based distillates.
Renewable Diesel:
This fuel is chemically similar to petroleum distillate but is made from fats, oils, or greases. It can be used in diesel engines in any proportion.
Biodiesel:
This fuel uses the same raw materials as renewable diesel but is typically mixed with petroleum distillate at 20% or less for vehicle use due to some chemical differences. Both fuels serve similar purposes and can reduce the use of petroleum distillate.
Why Publish a New Total Distillate Fuel Oil Series?
The decision to publish a total distillate fuel oil consumption series comes from the increasing share of biofuels in the market. Most of this growth is happening on the West Coast, particularly in California, where state policies like the Low Carbon Fuel Standard create incentives alongside federal programs like the Renewable Fuel Standard and the biodiesel tax credit.
From 2016 to 2020, the average share of biofuels in total distillate fuel oil consumption was about 4%. However, the rise in renewable diesel production has increased this share from 5% in 2021 to 7% in 2023. Renewable diesel supply has surged from nearly 70,000 barrels per day in 2021 to 240,000 barrels per day this year, thanks to increased private investment. We expect the biofuels share to rise to 9% in 2024.
The total distillate fuel oil consumption figure more accurately reflects market demand as biofuels become a larger part of the distillate supply. While data on distillate product supplied (which only includes petroleum-based distillate and the blended biofuels) suggested consumption had not returned to 2019 levels, the new series shows that total distillate consumption exceeded 2019 levels in 2022.
Various economic indicators that influence distillate consumption, such as U.S. real GDP, real imports, and manufacturing activity, all surpassed 2019 levels by 2022. This supports the idea that total distillate fuel oil consumption is a better measure of actual usage.
In the first half of 2024, data on distillate fuel oil product supplied indicated a 5% decline compared to the five-year average (2019–2023). However, total distillate consumption remained stable when looking at the same period. The difference in these figures highlights the growing share of biofuels in the market.
The EIA has updated its forecasting method for distillate consumption to better reflect biofuels. The agency now uses macroeconomic indicators to estimate total consumption by end users. To forecast distillate fuel oil product supplied, the EIA subtracts its projections for renewable diesel and biodiesel from the overall distillate fuel oil consumption forecast.
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