Refinery Diesel Balance & Export Curb Simulator
Test the macroeconomic and refining balance trade-offs of proposed U.S. distillate export bans. Model tank topping, involuntary run cuts, East Coast supply logistics, and crack spread divergence.
U.S. refineries run at high rates. High international prices incentivize maximum distillate export, sustaining elevated crack spreads while keeping Gulf Coast storage clear of tank top limits.
Daily Distillate Supply/Demand Balance Sheet
| Flow Component | Daily Rate (mb/d) | Share of Production | Notes / Bottlenecks |
|---|
Why Banning Diesel Exports Can Backfire
While an export ban is aimed at lowering the record $6.53/gal pump price by trapping supply domestically, oil refiners face strict physical and logistical limits:
- The "Tank Top" Problem: Gulf Coast (PADD 3) produces far more diesel than local markets consume. If ships cannot load, storage tanks fill to capacity within weeks.
- Involuntary Refinery Run Cuts: Once tanks are full, refineries cannot simply stop producing diesel while continuing to make gasoline and jet fuel. They must cut overall crude intake.
- Co-Product Shocks: Cutting crude runs to manage excess diesel creates an unintended artificial shortage of gasoline and petrochemical feedstocks.
- Colonial Pipeline Inelasticity: Pipelines connecting the Gulf Coast to the high-demand Northeast are already operating near 100% capacity; excess Gulf diesel cannot easily reach Boston or New York without Jones Act waivers.
Macroeconomic Mechanics & Equations
This simulator evaluates real-world refinery linear programming (LP) heuristics:
- Distillate Output:
Crude Run × Distillate Yield %(typically 30–33% for complex coking refineries). - Days to Tank Top:
Available Ullage / Net Gulf Surplus Accumulation Rate. - Crack Spread ($/bbl):
(Diesel Wholesale Price × 42) - Crude Input Cost. - East Coast Bifurcation: When overseas imports into New York Harbor (PADD 1) collapse due to retaliation and European bidding wars, Northeast retail prices can spike even as Gulf wholesale prices plummet.
Frequently Answered Policy Questions
Can U.S. refineries just switch to making only gasoline?
No. Modern complex refineries can adjust their catalyst and hydrocracker severities to shift yield by only 2 to 4 percentage points between gasoline and middle distillates. Crude oil chemistry dictates that distilling a barrel of crude always produces fixed ratios of light ends, gasoline, distillates, and heavy fuel oil.
How does the Jones Act impact East Coast diesel supply?
The Merchant Marine Act of 1920 (Jones Act) requires goods shipped between U.S. ports to be carried on U.S.-flagged, U.S.-built, and U.S.-crewed ships. Because there is a scarcity of Jones Act-compliant product tankers, shipping fuel from Houston to New York is frequently more expensive than importing European or Latin American cargoes.
What happened historically during previous fuel export debates?
Energy Information Administration (EIA) and Department of Energy studies have consistently concluded that barring refined product exports tends to raise domestic retail prices over medium time horizons because global refining margins surge, international fuel imports into the U.S. halt, and domestic refiners are forced to idle capacity.