Los Angeles, CA (PRWEB) August 11, 2012
The Petroleum Refining industry has accelerated its processing of crude oil over the five years to 2012. Revenue is expected to grow an average of 2.8% annually during the period. Increases in the price of crude 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,” says IBISWorld industry analyst Josh McBee. “Robust demand from emerging economies has supported crude oil exports, as Asian and Latin American countries require more energy to build up infrastructure.” Crude oil price growth is expected to continue to spill over from 2011 into 2012, boosting revenue an anticipated 2.2% to an estimated $725.1 billion.
Despite steady growth, the past five years have introduced some speed bumps. A dip in crude oil prices during the recession presented difficulties for the Petroleum Refining industry, as firms were forced to shed assets to stay afloat. Players sold assets such as underused refineries to pad bottom lines because less oil was flowing through their pipes and the prices were unprofitable. The industry has since turned around. “With oil prices rising and fewer refineries in underserved areas dragging on bottom lines, players have quickly returned to profitability,” adds McBee. “Furthermore, in response to rising prices, firms have plans to expand refinery capacity to handle more crude oil, with expectations that prices will rise further.” This trend, however, is beginning to unravel as high oil prices are forcing some players to sell refineries that have difficulty staying profitable. The industry has moderate market share concentration and many major players, including ExxonMobil, ConocoPhillips and Valero Energy Corporation.
Revenue is projected to expand moderately during the next five years, as fuel prices rise and consumption increases. Stronger global growth will push oil prices higher as demand grows from emerging markets (such as China) and developed economies. Capacity upgrades will lead the way as industry players invest in expansion and will be able to handle more crude oil. However, regulations stipulating the inclusion of renewable fuels will pose more of a challenge during the next five years. Industry players that can integrate these fuels according to government mandates will be competitive. Refinery sales will also weigh on the industry, as fewer refineries will likely be operating over the next five years. Because of these trends, IBISWorld forecasts revenue to increase through 2017. 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.
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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