Closing Refineries Brings Higher Profits
The now-closed Valero refinery in Delaware City. (image: awm.delaware.gov)
According to an article published Friday by Bloomberg, oil refiners are processing 24 percent less fuel than this time last year. In order to stay profitable, they are looking to increase margins by shutting down East Coast refineries. So far, it has been successful; the difference between the price of crude and gasoline has widened recently.
After Valero shutting of its Delaware City facility and Sunoco’s indefinite closing of a New Jersey plant, refining capacity along the East Coast now stands at 1.32 million barrels per day.
The slashing of capacity could tilt heavily in favor of refiners; a delay in oil shipments or a sudden rise in demand could make a dent into inventory and cause prices – and profits – to rise. This scenario would obviously not be favorable to heating oil consumers.
Refiners’ Troubles Have No End in Sight | HeatingOil.com says: says:
[...] survive for very long. Refiners may begin to see the same things the analysts at Barclays see, and slash capacity to swell profits, at the expense of consumers buying heating oil and [...]
France’s Refinery Strike Causes Higher Heating Oil Prices | HeatingOil.com says: says:
[...] closing a refinery does not bode well for consumers, either. The reason it has proved to be a profitable move for oil companies is that less refining capacity means lower supplies of oil products and higher [...]
Oil Analyst Schork: Oil Investors Ignore Permanent Change in US Gasoline Demand | HeatingOil.com says: says:
[...] gasoline and other distillates. Low gasoline demand hurt them throughout 2009, the result being refinery closures to improve margins and stop massive financial [...]
Kuwait Drops Oil Price as Asian Refiners Cut Production | HeatingOil.com says: says:
[...] Japanese and South Korean refiners have cut back on their processing in response to low oil demand, much the same way US refiners have tried to preserve some profit by closing some refineries and operating below capaci…. [...]
NYC Will Act To Curb Use Of No. 4 And NO. 6 Heating Fuels | HeatingOil.com says: says:
[...] demand increase coincides with refiners’ deliberate reduction in capacity—i.e. supply—as they shutter refineries, any heating oil price increase could be [...]
Heating Oil Price Preview: December 21, 2009 | HeatingOil.com says: says:
[...] includes heating oil and diesel, and caused a spike in the price of heating oil. However, with refineries operating below 80 percent of their capacity, it’s not clear that the drawdown of distillates was due to increased [...]