NEW YORK, July 30 (Reuters) - U.S. refiners like Valero Energy Corp are running plants at full tilt, squeezing the remaining dollars from stronger-than-expected surge in gasoline demand before the busy summer season is replaced by the chill of winter, executives said on Thursday.
A growing economy combined with low gasoline prices has drawn U.S. motorists back to the roads in record numbers. Recent weekly U.S. government data showed finished motor gasoline demand at its highest level since records were available in 1991.
The strong demand has prompted refiners to produce higher-than-normal volumes of gasoline. They have also enjoyed bumper margins while crude has remained cheap.
Refiners such as Valero, Marathon Petroleum Corp and CVR Refining said they expect demand to remain strong for the rest of the summer, even extending into the fall and winter months if the pump prices remain low and the economy continues to grow.
“We’re certainly running our gas-producing units at max utilization,” Valero CEO Joe Gorder said during an earnings call on Thursday. “We’re having trouble keeping up with gasoline inventory. So I think it will be here for an extended period.”
The company said that it had to curtail its gasoline exports in the second quarter to meet domestic demand.
U.S. motorists logged 275 billion vehicle miles in May, the highest in a single month since 1990, according to the latest data from the U.S. Department of Transportation. The May figures followed consecutive months of surprisingly traffic volumes.
Marathon CEO Gary Heminger said the increased traffic has pushed production volumes to 2007 levels. Heminger also noted that gasoline and diesel exports are also enticing refiners to run at high rates.
”We have continued to see very strong and very robust demand on diesel into Latin America, Europe and South America, with continued increases in the request for gasoline cargos,
I find both export products being very strong going into the third quarter ... I think that underpins the strength of refining going forward.
The cold weather will predictably stifle some driving, hurting demand, the refiners said, but the drop-off might not be as steep as previous years.
“We would see the seasonality as we get out of driving season, and we would certainly expect some fall off in gasoline demand,” Gary Simmons, Valero Senior Vice President, said. “As long as we see the lower prices, I think we expect the demand response to continue to be good.” (Reporting by Jarrett Renshaw, additional reporting by Kristin Hays in Houston; editing by Josephine Mason and David Gregorio)