Rising domestic prices and steady growth in consumption will drive up industry revenue.
New York, NY (PRWEB) June 02, 2014
The Gasoline and Petroleum Bulk Stations industry has expanded over the past five years. Positive economic growth fuelled demand across all downstream sectors. Industrial production steadily recovered following the recession, while construction activity strongly expanded. Additionally, consumers took more trips and purchased more goods as their confidence in the economy grew. “As a result, downstream demand for transportation fuel, generator fuel and petroleum feedstock increased during the past five years, leading to revenue growth for industry operators,” according to IBISWorld Industry Analyst David Yang. Consequently, IBISWorld expects industry revenue to increase at an average annual rate of 7.9% to $145.9 billion during five years to 2014.
Although this industry expanded overall during the past five years, revenue exhibited high volatility. “During the recession, for example, global demand for crude oil and petroleum products plummeted, and prices quickly followed suit,” says Yang. As a result, despite only a moderate decline in domestic petroleum consumption, revenue contracted 15.3% in 2009. In 2010 and 2011, revenue strongly recovered on the heels of rising petroleum product prices, with double-digit growth in each of these two years. Since then, however, growth has somewhat slowed due to pipeline shortages in North America. Pipeline shortages prevent the export of crude oil and petroleum products, resulting in an excess supply of petroleum products in Canada. As a result, petroleum prices have declined, causing revenue to fall 1.1% in 2014.
Industry growth during the next five years is contingent on the successful completion of export pipelines. Currently, the Keystone XL remains in limbo and awaits approval from the United State federal government. Once completed, Canadian crude oil and petroleum products will be able to easily reach Gulf Coast refineries and export terminals. Nevertheless, as overall exports rise, domestic prices will converge with higher international prices. Domestic petroleum consumption is also expected to steadily increase in the coming years. Profit margins are also expected to improve over the five-year period, compared to dismal profitability in the aftermath of the recession. However, if pipeline construction experiences continued delays, industry operators will likely remain less profitable over the next five years.
For more information, visit IBISWorld’s Gasoline and Petroleum Bulk Stations in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry operates bulk-storage facilities for petroleum products and also wholesales those products in bulk to smaller petroleum distributors, electricity generators and gasoline stations.
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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