Petroleum Refining Industry Trends

Market Concentration

After a wave of mergers, just five large companies control almost half of US refinery capacity. Larger companies prefer to operate bigger, more-efficient refineries and may close smaller ones, leaving local markets vulnerable if a big refinery has to shut for maintenance or repairs. Big companies also manage inventories of gas and heating oil more tightly, leaving less of a cushion in the system.

Fewer, Bigger Refineries

The number of refineries in the US peaked in 1980 at 315, and has since been declining. As the industry faced requirements for cleaner fuels and improved environmental performance, the number of refineries has decreased to about 150. The operating capacity of the average refinery has increased to more than 100,000 barrels per day (bpd).

High Capacity Use

The capacity use rate of US refineries has grown, increasing the risk of supply interruptions. With no excess capacity, a relatively minor incident may quickly cause supply disruptions. Refinery capacity use for the industry is often over 95 percent in summer months.

Refineries Process Heavier Crude with More Sulfur

As current levels of production deplete existing high-quality fields, the crude oil available to refineries is becoming heavier and more sulfurous. The largest crude oil reserves in the western hemisphere are in Venezuela and Mexico and are of relatively low quality. Apart from Nigeria, Norway, Libya, and Iraq, no countries have sizable reserves of high-quality crude.