Petroleum Refineries NAICS 324110

May 27, 2025 - Hurricane Risk

• An expected above-average Atlantic hurricane season raises the risk of weather-related production outages in the US oil industry, the US Energy Information Administration said in May. With much of the nation’s refining capacity concentrated along the Gulf Coast in Texas and Louisiana, petroleum refineries are especially vulnerable to disruptions by tropical storms and hurricanes. That concentration means more than 1 million barrels per day of US refining capacity – roughly 5% of daily domestic petroleum consumption – is likely to be shut in anticipation of a major storm, per the EIA. Hurricane experts at Colorado State University are predicting a 70% storm chance and 44% hurricane chance this year for Texas, and 74% storm chance and 46% hurricane chance for Louisiana. Five hurricanes made landfall in the US last year, knocking out millions of barrels of oil and gas output and disrupting fuel supply in Florida, the agency said.
• The US Energy Information Administration is forecasting the inflation-adjusted average regular gasoline price this summer to be the lowest since 2020. The summer 2025 average price of about $3.10 per gallon is based on the average of the 2Q25 and 3Q25 US regular gasoline price, when increased travel during the warmer months of the year puts upward pressure on gas prices. Looking ahead to 2026, EIA is forecasting a US average summer retail price of regular gas near $3.20 per gallon. Compared with recent years, lower forecasted US gasoline prices in 2025 and 2026 are mainly a result of lower crude oil prices. The agency expects crude oil prices to continue to fall in 2026, creating a downward effect on gasoline prices and refinery margins.

• Margins for petroleum refiners are shrinking – due in part to reduced demand – indicating reduced profitability from refining crude oil and the sale of petroleum products, according to the US Energy Information Administration. Producer prices for petroleum refineries, which measures prices refiners receive for their output, fell 20.5% in April compared to a year ago after dropping 1.3% in the previous April-versus-April annual comparison, according to the latest US Bureau of Labor Statistics data. Employment by the refineries shrank 2.4% year over year in March, according to the BLS.
• 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.