Exploring temporal demand patterns of refined petroleum products: Implications of the COVID-19 pandemic as a black swan event

Abstract

Understanding the short- to long-term demand patterns of refined petroleum products is vital in making joint-production and investment plans. These patterns are typically propelled by global economic conditions and user behaviors. However, these patterns are profoundly impacted by rare, unpredictable, and impactful black swan events such as global political conflicts, wars, terrorism, and pandemics. The COVID-19 pandemic, a recent black swan event, drastically affected the extractive industries. The sudden change in oil demand behavior, attributable to this event, demonstrated the need for robust and economically sustainable energy production pathways. This work proposes a novel methodology that facilitates such planning by capturing the effect of the COVID-19 pandemic on the demand patterns of refined petroleum products and their temporal shifts over short, medium, and long terms. The results from a case study involving 56 U.S. refineries served by suppliers from the Middle East, West Africa, and the Americas suggested significant long-term shifts in the behavioral relationships of demand of various refined petroleum products. Important shifts in short and medium terms were also observed. These results are valuable to oil suppliers and refineries in laying out robust refinery production and supply chain plans.