Petroleum Refineries
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 132 petroleum refineries in the US transform crude petroleum into usable products. Gasoline accounts for nearly half of industry sales. Other products include light fuel oils, heavy fuel oils, jet fuel, and kerosene. Firms typically operate multiple refineries in areas strategically located near sources of supply, distribution centers, or key customers.
Push for Renewable Fuels
Concern over the environment and dependence on fossil fuels has led to a government and public push for renewable and alternative fuels.
Capital-Intensive Operations
The petroleum refinery business is extremely capital-intensive and requires significant investment in plants, property, and equipment.
Industry size & Structure
The average petroleum refinery employs about 450 workers and generates about $3.8 billion annually.
- The petroleum refinery industry consists of about 132 establishments that employ about 59,500 workers and generate about $500 billion annually.
- The industry is highly concentrated; the top 20 companies account for about 92% of industry revenue.
- Large integrated oil companies, which include Exxon Mobil, Chevron, and Valero, engage in exploration, production, supply, transportation, marketing, and retailing. Firms with petroleum refinery operations include MPLX LP, HF Sinclair Corp. (formerly HollyFrontier), PBF Energy, and Alon USA Energy (Delek).
- A total of 132 operable petroleum refineries exist in the United States, according to the US Energy Information Administration (EIA).
- Texas leads the nation in refining capacity followed by Louisiana and California.
Industry Forecast
Petroleum Refineries Industry Growth
Recent Developments
Jan 27, 2025 - Declining Pricing Power
- Producer prices for petroleum refineries, which measures prices refiners receive for their output, fell 8.2% in December compared to a year ago after dropping 13.7% in the previous December-versus-December annual comparison, according to the latest US Bureau of Labor Statistics data. Meanwhile, employment by the industry shrank 1.3% year over year in November, according to the BLS. US refiners are looking to reduce capacity amid slowing demand and growing concerns about a global crude oil glut.
- President Trump’s threat to impose a 25% tariff on crude oil from Canada would be particularly painful for US refiners as approximately 55% of all US crude imports flow from Canada, OilPrice.com reports. US refiners, especially those in the Midwest, take nearly all of Canada’s crude oil exports, and all but one of its export pipelines go to the US. Refineries in Michigan, Wisconsin, Indiana, and Ohio process almost 70% of the Canadian crude imports, according to Canada’s Cenovus Energy, which owns refineries in Ohio and Wisconsin. “A 25% tariff on Canadian crude could increase gas prices at the pump by up to 30 cents or more per gallon,” Cenovus said. On his first day in office, Trump said he aims to place 25% tariffs on imports from Canada and Mexico on February 1. Tariffs on Canadian crude, if levied, could lower downstream profitability for US refineries.
- A California law signed by the governor in October imposes new mandates on refineries in the state, The Wall Street Journal reports. The statute, ABX2-1 – ostensibly designed to prevent supply shortages that can result in price spikes at the gas pump – gives regulators at the California Energy Commission (“CEC”) greater control over oil refineries operating in the state. Specifically, it empowers the CEC to set minimum inventory standards for oil refineries, as well as restrict the conditions under which refineries can undergo maintenance that would reduce their output temporarily. High operating costs have already caused seven California refineries to cease production over the last decade, according to WSJ. Critics say the new law imposes intolerably high operating costs on refineries. Moreover, the statute imposes significant costs for noncompliance — between $100,000 and $1,000,000 per day for each day in violation.
- The US Supreme Court in June blocked the Environmental Protection Agency’s “Good Neighbor Rule,” which required “upwind” states to reduce air pollution affecting “downwind” states, according to the America Petroleum Institute, which applauded the court’s action. The 5-to-4 decision granted requests by Ohio, Indiana, and West Virginia, as well as US Steel, pipeline operator Kinder Morgan, and industry groups, ruling that the emissions-reductions standards set by the plan were likely to cause “irreparable harm” to almost half the states unless the court halted the rule pending further review by the US Court of Appeals for the District of Columbia. The high court’s ruling was a major loss for environmental groups and downwind states but represented a win for the fossil fuel and steel industries. The decision was the latest ruling by the conservative-majority court restricting the powers of the EPA.
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