New York, NY (PRWEB) April 08, 2014
The Petroleum Refining industry has been volatile in the five years to 2014. Crude oil prices are the primary driver of industry revenue, because the price of petroleum products matches trends in crude oil prices. In 2009, revenue deteriorated as falling crude oil prices pushed petroleum product prices down. Revenue quickly recovered over 2010 and 2011 when crude oil prices surged, but slowed down again in 2012 as crude oil prices came down from their historic highs. In 2014, the world price of crude oil is expected to fall 3.0%, leading to an estimated revenue decline of 4.9% for the industry. Nevertheless, industry revenue is expected to grow at an annualized rate of 4.0% to $81.8 billion in the five years to 2014 as the Petroleum Refining industry recovers from the recession.
“After a dramatic drop during the recession, demand for petroleum products has steadily recovered as economic growth picked up,” says IBISWorld Industry Analyst David Yang. Much of this growth has come as a result of high demand for new cars, boosting demand for gasoline. Demand for diesel fuel, commonly used by freight trucks, has also grown strongly as the revival in economic activity led to greater demand for trucking and shipping services. Strengthening exports further facilitated the recovery, though exports are expected to fall over 2014 due to stabilizing crude oil prices.
“Over the past five years, profitability has been mostly determined by the location of the refinery,” says Yang. Refineries in western Canada have had access to cheaper crude oil, as a lack of pipelines has resulted in a glut of crude oil in the region, as well as in the western United States. Overall, average industry profit is anticipated to account for 7.5% of revenue in 2014. On the other hand, refineries in the east have had to purchase crude oil at considerably higher international prices, lowering profit margins. Consequently, Shell Canada shut down its Montreal East refinery in 2010, while Imperial Oil converted its Dartmouth, NS, refinery into an oil terminal in 2013.
In the five years to 2019, as the economic recovery accelerates in the United States, the main trading partner for industry firms, export growth will pick up. However, overall refining capacity is forecast to only marginally increase due to restrictive environmental laws, limiting overall industry growth. Additionally, crude oil prices are anticipated to increase slowly due to rising crude oil production in North America.
For more information, visit IBISWorld’s Petroleum Refining in Canada industry report page.
Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld.
Friend IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189.
IBISWorld industry Report Key Topics
The Petroleum Refining industry refines crude petroleum through cracking and distillation to produce gasoline, diesel fuels and other fuel oils.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US and Canadian industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.