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
Nov 27, 2024 - Prices Sink Amid Slowing Demand
- Producer prices for petroleum refiners sank 28.1% in September compared to a year ago after falling 7.6% in the previous September-versus-September annual comparison, according to the latest US Bureau of Labor Statistics data. Production of crude oil rose 3.1% in July versus June and was up 2.1% year over year, according to the Energy Information Administration. Meanwhile, employment by the industry was relatively flat YoY in September, according to the BLS. US refiners are looking to reduce capacity amid slowing demand and growing concerns about a global crude oil glut, Business Insider reported in August.
- 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.
- New polling shows widespread support among swing state voters for policies that encourage domestic oil and natural gas production and limit reliance on foreign sources, the American Petroleum Institute reports. Polling conducted in August by Morning Consult also found strong support among voters in battleground states for reforms to streamline the approval process for energy infrastructure projects. Specifically, 8 in 10 voters agree that producing more oil and natural gas in the US could help lower energy and utility costs for consumers. (AZ: 83% GA: 88% MI: 84% NV: 86% NC: 85% PA: 83% WI: 80%), while a similar number support reforming the permitting system (AZ: 79% GA: 81% MI: 82% NV: 81% NC: 80% PA: 84% WI: 80%). Also, a majority of voters polled said they oppose government mandates that restrict consumer choice, including banning new gasoline, diesel, and hybrid vehicles.
- 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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