Platts clarifies proposed changes to Midwest CBOB gasoline assessments ahead of 2025 RVP waiver removal, extends feedback period.

Platts, part of S&P Global Commodity Insights, has extended to Dec. 20, 2024, the feedback period for a number of proposed changes to its Midwest CBOB gasoline assessments with effect from Feb. 3, 2025, ahead of the removal next year of an RVP waiver in a number of Midwest states.

In addition, Platts is clarifying its proposed addition of BCX CBOB to generic Chicago basket is for a separate standalone assessment reflecting the lowest fungible RVP product.

This waiver removal will lower the RVP limit for conventional gasoline in eight states – Illinois, Iowa, Minnesota, Missouri, Nebraska, Ohio, South Dakota and Wisconsin -- to 9 psi during the summer months, compared with the current 10, after blending with up to 10% ethanol.

The removal of the 1-psi waiver is expected to alter the supply of CBOB in the region, impacting both the Group 3 and Chicago markets.

Platts opened a consultation on Sept. 9 on the impact of the waiver removal, announced in a subscriber note which can be found here. The consultation invited broad feedback on whether the low RVP gasoline expected to be supplied following the waiver removal should be reflected in new assessments, or whether existing assessments should instead reflect the low RVP quality.

Group 3

Platts understands that the Group 3 market is expected to see demand for the lower RVP CBOB in the northern part of the Oneok pipeline system, while the southern part of the system remains at 9 RVP, as in summer 2024 and previous years.

Platts is proposing that its current assessments for sub-octane and Premium unleaded 91 gasoline in Group 3 continue to reflect the 9 RVP market in the summer months, and to launch new assessments for the same two grades which would reflect the new low RVP quality in the summer. The new assessments would be published on both an outright basis and as differentials to NYMEX RBOB futures and would be published year-round.

Chicago

In the Chicago area, the removal of the waiver is expected to mean that the Badger and West Shore pipelines only handle low RVP CBOB. Recent feedback suggested that BCX will service the higher 9 RVP product, but there is still uncertainty if the complex will also carry the same low RVP grade of CBOB. Meanwhile, the Wolverine pipeline is expected to ship the higher, 9 RVP product.

As a result, Platts would like to clarify that it expects its generic Chicago CBOB assessment next summer to reflect the lower RVP CBOB being shipped on West Shore and Badger. The generic assessment currently reflects the lowest value between the Badger, West Shore and Wolverine pipelines. With Wolverine expected to ship a different, higher RVP product next summer, Platts is proposing to remove Wolverine from the basket underpinning the generic Chicago assessment. At the same time, Platts is proposing to launch a separate standalone assessment for the BCX complex to reflect the lowest fungible RVP product. Once it is confirmed if the BCX complex will handle both qualities, the new low RVP BCX assessment will be included in add it to the generic Chicago CBOB assessment in place of Wolverine.

In addition to the generic Chicago assessment, Platts also publishes separate, stand-alone assessments for CBOB on the Wolverine pipeline and at the BCX complex. These assessments will still be published, with Platts expecting the current Wolverine assessment to reflect 9 RVP CBOB in the summer, as well as the BCX assessment, subject to confirmation.

These proposals are based on feedback gathered during the recent consultation. Platts now invites further feedback on these specific proposals by Dec. 20.

The proposed new assessments and existing assessments impacted by the proposed changes are as follows:

Group 3

Chicago

The proposed changes to the composition of the basket underpinning the generic Chicago basket only relate to CBOB and Premium CBOB (Unleaded 91) assessments detailed above, and not to any Platts Chicago assessments of other refined products.

Platts intends to publish an RVP calendar in January for these assessments detailing the timing of the expected RVP changes throughout 2025. The calendar will be subject to change in accordance with updates from Oneok, Buckeye, West Shore, and Wolverine.

The proposals are based on current market expectations relating to the removal of the waiver and the impact on resulting pipelines and other infrastructure. Should these circumstances change, Platts may update its proposal as necessary through the publication of additional subscriber notes.

Please send all feedback and comments by Dec. 20 to americas_products@spglobal.com and pricegroup@spglobal.com.

For written comments, please provide a clear indication if comments are not intended for publication by Platts for public viewing.

Platts will consider all comments received and will make comments not marked as confidential available upon request.