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 171 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 have 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 350 workers and generates about $4 billion annually.
- The petroleum refinery industry consists of about 171 establishments that employ about 60,400 workers and generate over $547 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 (Andeavor), HollyFrontier, and Alon Energy (Delek).
- A total of 135 operable petroleum refineries exist in the United States, according to the US Energy Information Administration (EIA).
Industry Forecast
Petroleum Refineries Industry Growth
Recent Developments
Mar 27, 2023 - US Crude Slips Below $70 per Barrel
- Crude oil prices sank to 15-month lows in mid-March amid turmoil in the US banking sector and broader economic concerns, The Wall Street Journal reports. As investors took shelter in bonds following the failure of Silicon Valley Bank and Signature Bank, shares of the major oil companies, refiners, oil-field services firms, rig owners and other industry players tumbled making the energy sector the S&P 500’s worst performer, according to WSJ. The price of West Texas Intermediate (WTI) crude slipped to $66.74 a barrel on March 17 and hovered around the $70 per barrel mark for much of the remainder of March. Financial turmoil in the US is dimming the outlook for oil just as energy-hungry China is showing signs of revving up from strict pandemic lockdowns, WSJ reports.
- The March startup of Exxon-Mobil’s Beaumont refinery expansion project boosted the US fuel supply, Hydrocarbon Processing reports. The expansion at the Beaumont facility adds 250,000 barrels per day (bpd) of capacity to one of the largest refining and petrochemical complexes along the US Gulf Coast, with the added volume increasing total processing capacity to more than 630,000 bpd, making the Exxon-Mobil refinery in Beaumont one of the largest in the nation. The project was the largest refinery expansion in the US in more than a decade. The refinery, which is connected to pipelines from Exxon-Mobil’s operations in the Permian Basin, manufactures finished transportation products, including diesel, gasoline and jet fuel.
- United Airlines and other companies in February launched a $100 million venture capital fund to invest in sustainable aviation fuel, The New York Times reports. The United announcement followed one by Boeing that said it was doubling its use of sustainable fuel this year. Sustainable aviation fuel is a low-carbon alternative to traditional jet fuel refined from crude oil. It’s made from used cooking oil and agricultural waste and produces up to 80% fewer planet-warming emissions than conventional jet fuel, according to some estimates, NYTs reports. It is currently blended with fossil jet fuel, but the hope is that one day planes could eventually be powered exclusively with the alternative fuel. The United fund is seeded with initial investments from JP Morgan Chase, Honeywell, Air Canada and Boeing.
- US crude oil production will increase to new records in 2023 and 2024, according to the US Energy Information Administration’s (EIA) January 2023 Short-Term Energy Outlook. The EIA forecasts that US crude oil production will average 12.4 million barrels per day (b/d) in 2023 and 12.8 million b/d in 2024, surpassing the previous record of 12.3 million b/d set in 2019. Last year, domestic crude oil production averaged an estimated 11.9 million b/d. Increased production in the Permian region and, to a lesser extent, in the Offshore Gulf of Mexico drives the agency’s forecast growth in production. The agency bases its forecast on its expectations of crude oil prices and infrastructure capacity additions. The EIA forecasts that crude oil production in the Permian region will increase by 470,000 b/d in 2023 and 350,000 b/d in 2024.
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