Revenue will expand moderately, with increased regulation hampering performance
Los Angeles, CA (PRWEB) October 27, 2012
The Petroleum Refining industry has accelerated its processing of crude oils over the past five years. Crude oil price increases have powered revenue growth as refiners passed costs down the distribution line. Firming global growth and ongoing Middle East tensions have pushed up the price of oil from the lows of the recession. Additionally, robust demand from emerging economies has supported crude oil exports, as Asian and Latin American countries require more energy to build up infrastructure. Additionally, low domestic crude oil prices compared to international crude oil have bolstered the competitiveness of US petroleum exports. Consequently, in 2011, the United States became a net exporter of refined petroleum products for the first time in many decades. Fueled by strong exports, revenue is expected to grow on average 6.1% per year to $748.6 billion in the five years to 2012, according to IBISWorld industry analyst David Yang.
Despite positive overall growth, the past five years have introduced some speed bumps. A dip in crude oil prices during the recession presented difficulties for this industry, as firms were forced to shed assets to stay afloat. In addition, weakened demand made it difficult for industry operators to pass down crude oil costs to customers, which hurt industry profitability. Furthermore, exports gradually slowed as domestic crude prices converged to international prices. The Energy Information Administration also estimates that domestic petroleum consumption will marginally decline in 2012, largely due to the slow recovery and increasing fuel efficiency. As a result, IBISWorld estimates that revenue will decline 1.7% in 2012, Yang says.
This industry is anticipated to expand moderately over the next five years, as fuel prices rise alongside consumption growth. Stronger global growth increases demand for petroleum products, making it easier for industry operators to pass down costs. Capacity upgrades will lead the way as industry players invest in infrastructure to handle more crude oil. However, environmental regulations stipulating the inclusion of renewable fuels will pose a challenge to industry operators. Furthermore, petroleum consumption growth is anticipated to slow as consumers increasingly adopt fuel-efficient technology. As a result of these factors, IBISWorld forecasts that revenue will increase in the five years to 2017. The Petroleum Refining industry has a moderate concentration level, with the four largest firms accounting for well over half of industry revenue. Nonetheless, large firms dominate this industry due the high capital costs of refining facilities. For more information, visit IBISWorld’s Petroleum Refining in the US industry report page.
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IBISWorld industry Report Key Topics
Firms in this industry refine crude oil into petroleum products. Petroleum refining involves one or more of the following activities: fractionation, straight distillation of crude oil and cracking. This industry does not include firms that extract crude oil or conduct retail sales of gasoline.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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