Low U.S. distillate consumption reflects slow economic activity and biofuel substitution – U.S. Energy Information Administration (EIA)

In-brief analysis

April 25, 2024

U.S. Distillate Consumption Lower Than Usual

U.S. distillate consumption so far this year is lower than usual due to warm winter weather, reduced manufacturing activity, and continued substitution of biofuels in place of petroleum distillate on the U.S. West Coast (PADD 5).

Tracking U.S. Distillate Consumption

As reported in our Weekly Petroleum Status Report (WPSR), four-week average U.S. distillate consumption, which we track using product supplied, has been lower than the previous five-year (2019–23) range for most of 2024 (January 1 through April 19).

Distillate fuel oil includes both the diesel fuel used in vehicles and home heating oil. Changes in product supplied from week to week can be volatile and often reflect natural intermittencies in our survey collection, such as when an import cargo clears U.S. Customs, as opposed to changes in oil supply or demand. However, U.S. distillate fuel consumption has been seasonally low so far this year, suggesting longer-term trends are at play.

Impact of Warm Winter on Heating Oil Consumption

U.S. consumers used less heating oil than usual in the first quarter of 2024 (1Q24), part of the warmest winter on record. Heating oil typically accounts for between 10% and 15% of U.S. distillate fuel consumption in the first quarter of every year, depending on the weather; it accounts for only about 4% the rest of the year. The winter of 2023–24 was 5% warmer than the winter of 2022–23. We estimate 6% less heating oil was consumed in the United States because of the warmer weather.

Economic Indicators Reflecting Subdued Activity

Economic indicators that correlate with U.S. distillate fuel consumption suggest subdued economic activity. Industrial production, which measures output from manufacturing, mining, and utilities, declined on an annual basis for the second consecutive month in February 2024 and showed no growth in March. The American Trucking Association’s truck tonnage index, which measures domestic freight such as manufactured and retail goods carried by trucks, declined 1% in March 2024 compared with the same month in 2023, the 13th consecutive month of year-over-year declines.

Substitution of Biofuels on the West Coast

On the West Coast, continued substitution of biofuels (particularly renewable diesel) for petroleum distillate is reducing consumption of petroleum-based distillate fuel in that region. Renewable diesel and biodiesel are biofuels that can be used in place of petroleum distillate fuel oil. Renewable diesel has a growing share of the region’s diesel fuel market because clean-fuel programs that began in 2011 provide incentives for its consumption.

Renewable Diesel Consumption on the Rise

We recently started publishing the product supplied of U.S. renewable diesel and biodiesel separately, and we have published data for combined renewable diesel and biodiesel dating back to 2021. In January 2024, consumption of combined renewable diesel and biodiesel on the West Coast averaged 141,000 barrels per day (b/d), near its all-time high of 152,000 b/d set in December 2023. In contrast, West Coast consumption of petroleum distillate fuel averaged 330,000 b/d in January, the least for any month since May 1996. Renewable diesel consumption represents only about 4% of combined U.S. petroleum and biofuel distillate consumption, but we forecast consumption will continue growing this year and next. We expect this growth will continue to displace petroleum distillate fuel.

Principal contributor: Jeff Barron

SDGs, Targets, and Indicators in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 7: Affordable and Clean Energy
• SDG 9: Industry, Innovation, and Infrastructure
• SDG 13: Climate Action

2. What specific targets under those SDGs can be identified based on the article’s content?

• SDG 7.2: Increase substantially the share of renewable energy in the global energy mix.
• SDG 9.4: Upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies and industrial processes.
• SDG 13.2: Integrate climate change measures into national policies, strategies, and planning.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• Indicator for SDG 7.2: Consumption of combined renewable diesel and biodiesel on the West Coast as a percentage of total distillate fuel consumption.
• Indicator for SDG 9.4: Reduction in petroleum distillate fuel consumption due to the substitution of biofuels.
• Indicator for SDG 13.2: Reduction in greenhouse gas emissions from the use of renewable diesel and biodiesel compared to petroleum distillate fuel.

Table: SDGs, Targets, and Indicators

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Source: eia.gov

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