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TopicsHow are Refined Products Sold? After crude oil is converted into refined products, the products must be transported and sold to end-users. Refined products are consumed throughout the United States. For convenience, the country is divided into five Petroleum Administration for Defense Districts (PADDs). The states included in each PADD are shown in the following table:
The consumption of products in each PADD for 2000 is shown in the following table:
Consumption
of Petroleum Products
(Source: Energy Information Administration, Petroleum Supply Monthly) Go to the Topic Listing In many cases refined products need to be moved from a PADD where there is excess supply to another PADD which needs more products. This supply balance is illustrated in the chart. PADD III refineries supply demand to the U.S. Midwest (PADD II) and East Coast (PADD I). PADDs IV ( Rocky Mountains) and V (West Coast) are rather isolated from the rest of the nation and must largely be self-sufficient.
[Click on image to view full-size] (Source: Mr. James Watson, Baker & O'Brien)
[Click on image to view full-size] (Source: Mr. James Watson, Baker & O'Brien) Refined products are moved to markets using pipelines, tankers and tank trucks. Pipelines are the lowest cost method. Colonial Pipeline Company ships products from refineries in the U.S. Gulf Coast (PADD III) to markets in the East and Northeast. Colonial Pipeline Co. is an interstate common carrier of petroleum products. Each day, Colonial delivers an average of 80 million gallons of gasolines, kerosenes, home heating oils, diesel fuels and other fuels to terminals in 12 states and the District of Columbia. The 5349-mile system transports fuels from Texas, Louisiana, Mississippi and Alabama to 267 marketing terminals located near the major population centers of the Southeast and Eastern Seaboard. It is owned by BP (17.96%), CITGO Petroleum (15.79%), Conoco (8.53%), Equilon (16.12%), Koch Industries (7.30%), Marathon Oil Company (2.82%), Phillips Petroleum (8.02%) and Union Oil Company of California (23.44%).
Once the products reach their destination, which is usually a supply terminal, they are distributed to gasoline stations, airports and homes by tanker trucks. Companies mix their additive packages into gasoline at these facilities. Go to the Topic Listing Perhaps the most visible refined product is gasoline. Over 180,000 gasoline stations deliver transportation fuels to motorists throughout the United States.
Distributors may also supply gasoline to dealers who are independent gasoline stations that have no distribution capabilities. Branded operations allow distributors and dealers to market gasoline under a recognized brand. Unbranded stations are retail or commercial. Retail establishments include companies such as chains such as RaceTrac and QuikTrip, "mom and pop" stations, and major retail marketers such as Wal-Mart and Coscos. Commercial operations are for fleet programs and construction operations.
Go to the Topic Listing Convenience stores or C-stores represent a growing trend in retail operations. Data compiled by the National Petroleum News indicates the nature of C-store operations.
Go to the Topic Listing The Petroleum Marketers Association of America (PMAA) is a federation of 42 state and regional trade associations representing 7,850 independent petroleum marketers nationwide. Most of these marketers are small, family businesses serving the petroleum needs of their local community. These companies sell approximately half the gasoline, 60% of the diesel fuel and 80% of the home heating oil consumed in America annually. Go to the Topic Listing
Go to the Topic Listing For more information about refined product marketing, please check out the following references:
Updated 01/10/08 |
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