U.S. fuel stockpiles are languishing well below average, leaving the world's largest energy consumer vulnerable to a summer gasoline inventory crunch or tight supplies of heating oil next winter, the Department of Energy said on Wednesday.
The tightening inventories of fuel come even as U.S. supplies of crude oil -- the feedstock refiners use to make gasoline, diesel and other refined products -- swell toward the middle of the average range, thanks in part to an OPEC decision to increase exports to the world market.
"The bad news is that product inventories are not faring as well as crude oil inventories, and with little spare refining capacity available, it may take increased refined product imports to improve this situation," the DOE said in a weekly report.
U.S. gasoline supplies have declined for two weeks straight at a time of the year they normally rise in preparation for peak summer driving demand, leaving them 9 million barrels below the five-year average, according to the most recent government data.
The declines in supply come despite high domestic refining activity, underscoring a shortfall in fuel production capacity in the United States that has left it increasingly dependent on fuel imports.
"Without significant volumes of gasoline available in inventories, the system will find it difficult to quickly respond to any surges in demand or reductions in supply related to infrastructure problems," the DOE said.
The U.S. energy market is bracing for the upcoming July 4 holiday, typically the heaviest period of gasoline demand as drivers take to the roads for vacation.
U.S. Energy Secretary Spencer Abraham said on Tuesday a federal advisory panel will assess U.S. oil refining capacity to see if steps can be taken to boost energy supplies.
"There is no question that one of the significant energy challenges we face is insufficient refinery capacity," Abraham said.
Retail gasoline prices have slipped from all-time highs over $2 a gallon since late May, but remain more than 40 cents higher than last year at $1.937 a gallon, according to the DOE.
Stockpiles of distillate fuels, including heating oil, are also more than 7 million barrels below the five-year average, which could mean another season of high heating bills this winter, the DOE said.
Distillate "inventories have only built by 3 million barrels since the end of April, far less than the 8 to 9 million barrels that they would typically build from the end of April to mid-June," the DOE said. "Distillate fuel stocks will need to build at a faster rate in order for there to be enough supplies on hand this upcoming winter."
Crude oil supplies, meanwhile, have built steadily in recent weeks due to surging importing levels, bringing them to their highest levels since August 2002, the DOE said.