Time for a PADD 5 Fuels Study Tune-Up

I was walking with my neighbor John the other morning. He reminded me that he is a Stillwater Newsletter subscriber, but often he doesn’t get what all the articles are about. I told him many articles are about regulatory issues, but we do try to write for regular people as well. Our conversation then turned to gasoline supply. He wanted to know why the companies have to import gasoline into California by tanker from long distances. “Why don’t they pipeline it from Texas?” he asked.

The simple answer to that question is: There are no products or crude oil pipelines from Texas to California. California has always been an exporter of gasoline by pipeline to Arizona and Nevada, so there was no justification for a line. Texas and New Mexico supply about two-thirds of Arizona’s demand by pipeline out of El Paso, but none of that comes to the coast.

But John’s confusion begs the broader question: How are fuels like gasoline, jet fuel, and diesel distributed in the West?
Congress asked that question in 2014. In response, the U.S. Energy Information Administration (EIA) published the West Coast Transportation Fuels Market Report. This 2015 study, led by Stillwater Associates, provided a comprehensive analysis of the refining and fuel-supply dynamics in the Petroleum Administration for Defense District (PADD) 5 region, serving as a critical resource for industry leaders and policymakers.

PADD 5 Mainland Refineries and Product Flows (2015)Source: West Coast Transportation Fuels Markets Study. EIA. September 2015. Note: Many of the refineries listed have changed hands or converted to renewable fuel production.

The analysis and maps in this report have been invaluable tools for policymakers and market participants. Over the past decade, however, the energy landscape has shifted significantly, necessitating an updated assessment.

Why Update the PADD 5 Report?

Since the original publication, major regulatory, economic, and technological changes have transformed the regional fuel markets. Key developments include:

• California’s Carbon Reduction Goals: The state’s aggressive Low Carbon Fuel Standard (LCFS), Cap & Trade program, and increasing adoption of renewable diesel (RD) have altered the refining sector. Subsequent adoption of carbon reduction regulations in Oregon and Washington have accelerated the shift from petroleum diesel to RD on the U.S. West Coast.
• Declining Gasoline Demand: Enhanced Corporate Average Fuel Economy (CAFE) standards and rapid electric vehicle (EV) adoption have led to decreased gasoline consumption.
• Refinery Closures & Capacity Shifts: The result has been a decline in regional refining capacity, with California refineries historically supplying a significant portion of Nevada’s and Arizona’s fuel demand. Concerned about fuel security, the governors of these states have formally expressed their concerns to California’s leadership.
• Market Uncertainty: With two California refineries converting to RD production and two more scheduled for shutdown by Spring 2026, no comprehensive analysis currently exists to address how PADD 5 will meet future gasoline, jet fuel, and diesel demand.

Given the rapid evolution of the West Coast fuel market, a refreshed PADD 5 study is crucial for ensuring that regulatory strategies, infrastructure investments, and market responses are grounded in current realities. Engaging in this updated analysis will empower stakeholders to navigate uncertainty and secure a sustainable energy future for the region.

Stillwater’s Expertise

Stillwater Associates is uniquely positioned to conduct this updated study, leveraging its deep expertise in energy policy and market analysis. We have a strong track record of advising federal agencies such as the U.S. Department of Energy, EIA, Environmental Protection Agency, and Department of Justice. Our deep experience working with commercial clients in refining, midstream, and trade associations makes us well-equipped to provide actionable insights. Additionally, Stillwater has extensive experience working with state governments, including California, Oregon, Washington, Hawaii, Arizona, and Kentucky, offering a nuanced understanding of regional policy impacts.

Next Steps

An updated PADD 5 report will offer critical insights into fuel supply security, regulatory impacts, and market adjustments. Stillwater is prepared to engage with key stakeholders and utilize proprietary analysis to deliver a comprehensive, policy-relevant assessment. The study will provide data-driven recommendations to ensure informed decision-making in a rapidly evolving energy landscape.

If you believe in the importance of up-to-date, data-driven analysis for shaping energy policy and ensuring fuel supply security, you can support a refreshed PADD 5 study in three ways:

1. Contact us:Reach out to Stillwater Associates President, Megan Boutwell, ([email protected]) to express your support for an updated PADD 5 study. Share why a comprehensive, independent analysis is vital for the region’s future.
2. Reach out to the EIA:Let EIA staff know that stakeholders, policymakers, and industry participants want a refreshed, thorough assessment of the West Coast fuels market performed by experts with proven regional experience.
3. Spread the word:Encourage colleagues, industry partners, and community leaders to join the call for an updated PADD 5 study. The more voices, the greater the impact.