Rising domestic prices and steady growth in consumption will drive up industry revenue
Los Angeles, CA (PRWEB) June 11, 2013
The Gasoline and Petroleum Bulk Stations industry has expanded over the past five years. On average, positive economic growth fuelled demand across all downstream sectors. “Industrial production recovered steadily following the recession, while construction activity expanded strongly,” IBISWorld industry analyst David Yang says. 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 over the past five years, which led to revenue growth for industry operators. In the five years to 2013, IBISWorld expects revenue to increase at an average annual rate of 3.1% to $134.7 billion.
However, although this industry expanded on average during the past five years, revenue exhibited high volatility. During the recession, global demand for crude oil and petroleum products plummeted, and prices quickly followed suite. As a result, despite only a moderate decline in domestic petroleum consumption, revenue contracted in 2009. In 2010 and 2011, revenue strongly recovered on the heels of rising petroleum product prices, with double-digit growth in each of the two years. Since then, however, industry growth has slowed down 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,” Yang says. As a result, petroleum prices have declined, leading industry revenue to fall an estimated 3.9% in 2013.
The Gasoline and Petroleum Bulk Stations industry has a moderate level of market share concentration, with the four largest firms accounting for less than 50.0% of industry revenue. Currently, the four largest industry firms are Imperial Oil Limited, Suncor Engery Inc., Shell Canada Ltd. and Gibson Energy. The major players are large integrated companies with extensive crude oil production, refining and distribution capacity. These firms sell their own refined products through terminals and bulk stations, providing them with a stable supply of products. On the other hand, there is also a large number of small independent terminal and bulk station operators. These firms typically serve as distributors for domestic oil refineries or imported petroleum products.
Industry growth over the next five years is contingent on the successful completion of export pipelines. Currently, the Keystone XL pipeline is projected to be in operation by late 2015. Once completed, Canadian crude oil and petroleum products will be able to easily reach Gulf Coast refineries and export terminals. As exports rise, domestic prices will converge to higher international prices. Rising prices and steady consumption growth are forecast to drive up industry revenue in the five years to 2018. Profit margins are also projected to improve over the period, compared to dismal profitability following the recession. However, if pipeline construction experiences any delays, industry firms will likely continue to face poor profitability 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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