To: Docket ID No. EPA–HQ–OAR–2014-0827

From: Lester Wyborny

Subject: Impact of Lower Product Demand on U.S. Petroleum Imports

Background

The Phase 2 Heavy-Duty Greenhouse Gas rulemaking is expected to reduce demand for diesel 

fuel and gasoline. The reduction in petroleum products demand will cause a reduction in crude oil and 

other feedstocks to U.S. refineries, or a reduction in imported finished petroleum products. For 

assessing the impact on energy security, it is important to project what fraction of the reduced 

petroleum inputs caused by the reduced product demand would be from imported petroleum versus 

domestic petroleum.

Methodology

To estimate the relative impact on imported versus domestic petroleum use, we used 2014 

refinery modeling output from the 2014 Annual Energy Outlook (AEO) conducted by the Energy 

Information Administration (EIA). We used Low Economic Growth case of the 2014 AEO and compared 

that case to the Reference Case of the 2014 AEO. The Low Economic Growth case estimates lower 

finished product (diesel fuel and gasoline) demand compared to the Reference case. We also 

considered using the Low VMT (i.e., vehicle miles traveled) Case, which modeled lower vehicle use than 

modeled for the Reference Case. The Low VMT Case primarily analyzed lower gasoline demand while 

the Low Economic Growth Case modeled both a reduction of diesel fuel and gasoline demand. Because 

of the greater reduction in diesel fuel demand of the Low Economic Growth Case, we preferred to use 

this Case because it is more consistent with the impact of the phase 2 heavy-duty greenhouse gas 

rulemaking which is expected to primarily reduce diesel fuel demand. 

To assess what impact that the AEO estimates lower fuel demand will likely have on U.S. 

imports, we downloaded supply and demand information from the Low Economic Growth and 

Reference Case refinery modeling output files. The volumetric projection information we downloaded 

includes the volume of light product demand, the volume of imported and domestic crude oil refined, 

the volume of imported light products and the volume of exported products. Since we are proposing 

the phase 2 heavy-duty GHG standards to begin phasing in 2021, we evaluated U.S. imports versus 

domestic supply and demand starting in 2021 through 2040, which is the end year for the AEO 2014 

projections. When assessing the U.S. import versus domestic supply balance, it was necessary to adjust 

for the higher energy density of crude oil relative to the lower energy density of refined products. 

Rather than estimating the relative energy difference between crude oil and the refined products, we 

used a factor which forced an energy balance over the years evaluated between the reduction in light 

product demand and supply of crude oil and imported light products. The adjustment factor used 

estimates that crude oil is about 16% more energy dense than the light products. The calculations used 

to estimate the portion of reduced fuel consumption from this rulemaking which is imported versus 

domestic is contained in the spreadsheet named “Impact on Fuel Demand and ImportsJan14.xlsx“ which 

is in the Docket.
Results

The results of the supply and demand analysis is that relative to the reduction of U.S. refined 

products, reduced U.S. imported crude oil comprised about 88% of the reduced U.S. product demand, 

net U.S. imported refined products comprised about 3% of the reduced product demand, and domestic 

crude oil comprised about 9% of the reduced product demand. Thus, reduced U.S imports comprised 

about 91% of the reduced product demand. For our energy security analysis, we rounded the U.S. 

imported petroleum share of reduced product demand to 90%. 

For conducting energy security estimates for the RFS2 rulemaking, the phase 1 and 2 light-duty

greenhouse gas rulemakings and phase 1 heavy-duty greenhouse gas rulemaking, we used a similar 

methodology to that used here using previous versions of the AEO. The previous assessments 

concluded that a large (greater than 90%) portion of the reduction in domestic petroleum use would be 

from imported petroleum.

i ii iii iv

 

i

Regulation of Fuels and Fuel Additives: Changes to Renewable Fuel Standard Program; Final Rule; March 26, 2010

40 FR 14669.

ii Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards; Final 

Rule; May 7, 2010; 40 FR 25323.

iii 2017 and Later Model Year Light-Duty Greenhouse Gas Emissions and Corporate Average Fuel Economy 

Standards: Final Rule; October 15, 2012; 40 FR 62623.

iv Greenhouse Gas Emission Standards and Fuel Efficiency Standards for Medium- and Heavy-Duty Engines and 

Vehicles; Final Rule; September 15, 2011; 40 and 49 FR 57105.