The sustained cold weather that overtook much of the United States during January and February increased demand for space heating fuels, disrupted crude oil and natural gas production as well as refinery, rail, and pipeline operations, and challenged the ability of energy infrastructure to deliver fuel.
Cold temperatures caused space heating demand for distillate, propane, and natural gas to increase significantly. Limited gas supplies and pipeline capacity available to serve parts of the Northeast, particularly New England, were used to meet space heating needs for which no alternative fuel options were available. As natural gas supply to power plants was curtailed and as prices for natural gas spiked higher (Figure 1), electricity generators increased their use of residual fuel and distillate fuel to replace natural gas for power generation. U.S. residual fuel consumption, which averaged 220,000 barrels per day (bbl/d) during December and early January, more than doubled to 471,000 bbl/d for the week ending January 17. U.S. distillate consumption also rose sharply, to 4.5 million bbl/d for the week ending January 24, an increase of 22% from the same week last year and a 50% increase from the week ending January 3. Since January 24, as temperatures moderated, consumption declined and averaged 3.7 million bbl/d over the three-week period ending February 14, slightly below the same period in 2013.
Since the start of the year, distillate inventories in the Northeast (PADDs 1A and 1B) have fallen 6.4 million barrels, leaving stocks at 18.8 million barrels on February 14, 7.6 million barrels below inventory levels for the same week in 2013. However, imports of distillate fuel into the Northeast have been noticeably higher in recent weeks. Trade press reports had estimated that 6.6 million barrels of distillate from Russia, India, and Europe would reach New York Harbor by the end of February.
In the Midwest, where propane inventories were already low at the start of the heating season following a large, wet corn harvest, the frigid weather depleted inventories and caused extreme tightness in propane supplies. EIA has written in depth about the propane markets, and links to previous EIA publications can be found on EIA's website at Energy Market Alerts: Winter 2013-14 Propane Updates. With the easing of winter cold this past week and emergency measures to move additional propane supply into the Midwest, spiking propane prices at Conway, Kansas, the Midwest storage and distribution hub for propane, have declined. Conway prices returned to a more typical relationship to propane prices at Mont Belvieu, Texas, the major propane storage and distribution hub in the U.S. Gulf Coast (Figure 2).