Since Japanese refineries have planned to cut crude oil processing in the fourth quarter of this year, recent lower refinery runs are not surprising. However, although Japanese refiners have set lower processing plans since the beginning of this year, their actual output was higher than previous year levels between June and September. Recent figures seem to show a slowing of the demand recovery.
One of major reasons why Japanese refineries are not aggressive to process crude oil is the sluggish domestic gasoline demand. Gasoline accounts for nearly 30% of the total demand of petroleum products in Japan. Refiners become to be not able to ignore an accelerating diffusion of fuel-efficient vehicles like hybrid cars.
Hybrid vehicles accounted for only 0.5% of the total registered cars in Japan as of March 2007, but its market share rose to 4.2% as of March 2013. On the other hand, about 15% of monthly manufactured passenger-cars are hybrid vehicles currently.
The total numbers of manufacturing cars and registration in Japan are decreasing, while the supply of hybrid vehicles is steady. Therefore, gasoline demand in the country is under the downward trend basically. Even if monthly gasoline demand rises on year, it is likely to be a rebound from slump in the previous year.
A slowdown of fuel oil consumption also discourages Japanese refineries. Fuel oil accounts for about 15% of the total petroleum products demand in the nation. Monthly demand of the product has recorded more than 20% of year-on-year decreases since March this year.
The nationwide power saving has suppressed the electricity demand in Japan after the severe earthquake in March 2011. Although entire nuclear power plants in the nation are shut, any significant shortage of electricity supply has not been reported. An urgent fuel oil demand for power generation due to the nuclear plants shutdown is going to end in line with expanding gas turbine and coal-burning power generation facilities.
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