What’s In Your Crude Oil Barrel?

Share:

EmailFacebookLinkedInTwitter
instagram social media icon
Information updated from the original post date of 9/28/2018.

Consumers are often familiar with the gas and diesel used in their own passenger vehicles, but where does that fuel come from? Most people are unaware that the gas in their car comes from the same barrel of crude oil that makes the asphalt we walk on or jet fuel.

That is why it is important for large consumers of fuel—like shippers and carriers—to pay attention to changes in any single refined products market. Slight changes to one fuel type can result in price changes in others that ultimately increase their operating costs.

 

A Breakdown of Refined Products from a Crude Oil Barrel

A standard 42-gallon barrel of crude oil yields approximately 45 gallons of salable refined products. The finished goods brought to market vary significantly in price, use cases, and demand.

GASOLINE

Gasoline is considered the most important and most prevalent refined product throughout the US refining landscape, accounting for 20 gallons of a 45-gallon barrel of refined fuels.

Gasoline is primarily used as fuel for standard passenger vehicles. It is often sent to fuel blending terminals where blending agents are added to stay compliant with ethanol requirements to be infused with “brand-related additives,” such as those within Shell V-Power®NiTRO+ Premium Gasoline.

Regular, Midgrade, and Premium – also referred to as unleaded, super, or super-premium – are the different grades of gasoline sold by retailers. Differing grades have a wide array of uses, and this differentiation is the main reason refineries are not typically responsible for producing consumer-ready products.

ULTRA-LOW SULFUR DIESEL (ULSD)/HEATING OIL

Since the application of advanced emission control technologies by the Environmental Protection Agency in 2006, refineries are required to convert to ULSD production. Nearly all diesel products available in the United States are of the ultra-low sulfur variety.

Ultra-low-sulfur diesel makes up the second-largest portion of a refined product barrel, equating to roughly 11 gallons of the finished product. Various states regulate the percent of biodiesel required by both highway and off-road users, which ULSD is also eligible for blending use.

Heating oil, which is chemically identical to ultra-low sulfur diesel, is used as a fuel oil for furnaces or boilers in commercial and residential buildings. This is particularly the case in the Northeast region of the United States. Due to the comparable composition of ULSD and heating oil, the two products are often priced interchangeably. Regional price dynamics often create significant commodity price variance by geography relative to baseline heating oil. The key differentiator in selling price is taxation, as road diesel is subject to fuel taxes further down the product supply chain. Together, ULSD and heating oil make up 12 gallons of a refined barrel.

KEROSENE/JET FUEL

Kerosene is a light petroleum distillate commonly used as fuel in heaters, lamps, cooking stoves, and water heaters. Multiple grades of kerosene exist, though specifications vary depending on means of utilization.

Kerosene-type jet fuel is created via similar refining techniques, though distinct specifications through aircraft configuration differentiate generic kerosene from jet fuel. Kerosene-type jet fuel has both commercial and military use for jet and aircraft engines. Kerosene and kerosene-type jet fuel account for roughly 4 gallons of a standard barrel of refined products in the US combined.

HYDROCARBON GAS LIQUIDS

A typical barrel of refined products in the US consists of approximately 2 gallons of hydrocarbon gas liquids (HGL). Hydrocarbon gas liquids are chemically grouped into alkanes or alkenes depending on carbon content, temperature, and pressure that each HGL converts to a liquid or gas.

Under atmospheric pressure, HGL occurs as gas, while higher pressures result in HGL liquids. Alkanes include ethane, propane, butane, and natural gas. Ethylene, propylene, and butylene fulfill the alkene category. In short, hydrocarbon gas liquids are used as feedstock to make various chemicals, plastic products, and synthetic rubber. HGLs are also used as fuels for heating, cooking, transportation, additives for gasoline, and blending agents for crude oil.

RESIDUAL FUEL

Residual fuel is a more general classification for fuel oils that ultimately remain after distillates and lighter HGL has refined away during the refining process. Residual fuels are segmented into two key categories, Number 5 and Number 6.

Number 5 residuals are used in powerplants and steam-powered vessels, while number 6 residuals are used for electric power generation, space heating, and by ocean vessels as bunker fuel. Production of residual fuels makes up one of the smallest portions of a barrel of refined products in the United States, accounting for just 1 gallon of refined output.

OTHER PRODUCTS

Petroleum coke, still gas, asphalt, naphtha, lubricants, waxes, and other miscellaneous refined products fall into this category. Though the number of products in this category are marginal, the quality and breadth of these goods are instrumental across various industries with numerous uses. Six gallons of refined products make up this section of a barrel, though it is important to note the products in this category are regularly dependent on the production of other products within this classification.

The pie chart at left shows the full breakdown of a typical barrel of refined products produced by US refiners.

Price dynamics of petroleum products can change based on geography, market fundamentals, industry tendencies, and behind-the-scenes refining complexities.

Interested in more crude oil fundamentals? Read about what shifts the output balance of refined products here. You can also move back through the value chain and read Crude Oil 101 and Oil In Motion – Crude Oil Transportation.

Sign up for the Breakthrough Advisor Brief and additional market insights.