Morningstar® Commodities Research

In-Depth Reports

Pacific Northwest Refineries: Cheap Crude and a Captive Market

Outlook Excerpt:

The five refineries in the U.S. Pacific Northwest performed better in 2016 than rivals on the East or Gulf coasts for two main reasons. First, the changing pattern of North American crude supply has worked to their advantage. Faced with the threat of dwindling mainstay crude supplies from Alaska, refiners in Washington state replaced 22% of their slate with North Dakota Bakken crude shipped in by rail. They have also enjoyed advantaged access to discounted crude supplies from western Canada. Second, Northwest refiners face less competition for refined product customers than rivals on the East and Gulf coasts, meaning they have a captive market that often translates to higher margins. This

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Crude Supply to Washington State Refineries

PJM Zonal Term Outlook

Outlook Excerpt:

The rally in Central Appalachia coal prices from $34/ton in June 2016 to more than $56/ton in November 2016 has significant implications for power prices in PJM at both the RTO and zonal levels. Coal still sets the marginal price during 42% of on-peak hours in PJM and, as we discuss below, we do not see that changing much at the RTO level (absent congestion) through 2020 even as another 16 gigawatts of gasfired combined cycles come on line

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PJM TRO Generation Stack

East Coast Refining After the Shale Boom

Outlook Excerpt:

The shale boom breathed new life into East Coast refineries that were under threat of closure by their owners between 2009 and 2012. Now some of those same refineries are under threat again, suffering poor margins as well as expensive compliance with environmental regulations.

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Petroleum Administration for Defense District









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