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 167 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
Industry Forecast
Petroleum Refineries Industry Growth
Source: Vertical IQ and Inforum

Recent Developments

Jan 27, 2024 - Prices Plunged Amid Declining Sales in 2023
  • Producer prices for petroleum refineries fell nearly 20% in 2023 amid declining sales for petroleum and coal products, after rising roughly 22% in 2022. Employment by petroleum refineries was up about 1.4% from the start of the year through November after trending downward in recent years. Sales for the US petroleum refineries industry are forecast to grow at a negative 0.61% compounded annual rate from 2023 to 2027, slower than the growth of the overall economy, according to the Interindustry Economic Research Fund.
  • More than 190 countries at the United Nations Climate Change conference – known as COP28 – in December signed on to a deal calling for “transitioning away from fossil fuels in energy systems, in a just, orderly and equitable manner,” The Wall Street Journal reports. The agreement states the shift to clean energy for the global economy should accelerate this decade with the aim of net-zero greenhouse gas emissions by 2050, according to WSJ. It's the first time a UN climate agreement has called for governments to cut back on all fossil fuels and demonstrates a new determination by governments worldwide to cut fossil fuel consumption. Its supporters say it should accelerate the flow of private investment into clean energies and away from fossil-fuel production. The deal doesn’t set a strict timeline for transitioning and endorses carbon capture and storage technology, giving the oil-and-gas industry some leeway to comply.
  • Crude oil refining is one of eight industrial sectors lagging on emissions cuts, according to new reports from the US Department of Energy. To date, the eight industries have done little to move toward the Biden administration’s goals of halving US emissions by 2030 and reaching net zero by 2050, according to DOE analysts. In 2022, the US produced 20% of global refined oil and was the world’s top producer of refined oil products (gasoline, diesel, jet fuel, biofuels) on a volume basis. Production emissions from refining accounted for about 2% of US carbon dioxide equivalent emissions in 2021. Decarbonizing the transportation sector could lead to a meaningful reduction in demand for refined oil products. But without widespread implementation of decarbonization levers, refining will likely continue to be a major contributor to US emissions. Refining emissions could grow by about 5–10% by 2050 in a business-as-usual scenario, per the report.
  • The US government has committed to providing up to $700 million in funding to monitor and reduce methane emissions from the oil and gas sector, setting aside half of the amount for grants to states, the Environmental Protection Agency and Department of Energy announced in July. The funding will be accompanied by technical assistance to reduce greenhouse gas emissions, according to the EPA. States will get as much as $350 million through the DOE's National Energy Technology Laboratory to help companies voluntarily identify and permanently reduce methane emissions from low-producing wells. The funding comes from the Inflation Reduction Act as part of a set of Biden administration rules that tackle power plant and vehicle emissions as well as other potent greenhouse gases. The overall impact is expected to reduce the equivalent of 15 billion metric tons of greenhouse gas emissions between 2022 and 2055, EPA Administrator Michael Regan said.
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