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Tesoro sees Calif economy, gasoline demand up

  • Märkte: Crude oil, Oil products
  • 10.12.14

Improving California gasoline demand has perked up prospects for refiners and fuel retailers in a state notoriously difficult for the industry, according to Tesoro, California's largest refiner by market share.

US independent Tesoro, which operates more than 28pc of the state's refining capacity, noted the uptick in a presentation to analysts yesterday.

Tesoro executive vice president of operations Keith Casey said a US Census Bureau-estimate of 1pc population growth and rising vehicle miles should help tighten the state fuels market.

"Within the west coast, the Golden State is regaining its luster," Casey said. "As that demand continues to pick up internally in California, it has the ability to soak up any export need in the market."

There are other signs on growing fuel demand in California. Vehicle miles traveled in the state through the first 11 months of the year reached 170.5bn miles, an all-time high for the period, according to the California Department of Transportation. Drivers are outpacing the current high of 182.7bn miles set in 2007, when retail gasoline prices averaged 74¢/USG less.

California lagged other states in recovering from the recession that began in 2008. Unemployment remains above 7pc, still high but falling through 2014 closer to the national 5.8pc unemployment rate, according to the US Bureau of Labor Statistics.

The state still challenges US refiners. Comparatively steep regulatory hurdles continue to stall refiner efforts to produce fuels from cheaper, more profitable crudes. Phillips 66, another US independent refining in the state, declined to comment on gasoline demand but noted state fees tied to emissions regulations will increase the cost of transportation fuels beginning in January. Those costs could be as much as 20¢/USG in 2020, according to state studies.

Tesoro has bet heavily on California, a state that has a regulatory policy of drastically reducing gasoline and diesel consumption by 2033. The US independent refiner edged out Chevron and ExxonMobil for refining market share last year with the purchase of BP's California operations. Tesoro operates nearly two thirds of its refining capacity in California.

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