Petroleum Refining Industry Overview

Excerpt from Petroleum Refining Report

Companies in this industry refine crude oil to produce fuel and other products. Major companies include Chevron, Exxon Mobil, and Valero (headquartered in the US); BP (UK); and Royal Dutch Shell (the Netherlands).

Competitive Landscape

Demand is driven by US consumption of gas and diesel fuel. The profitability of refineries depends on efficient operations and the best mixture of products. Although there are significant economies of scale in refinery operations, a small refinery can compete effectively with large ones if it's located in a favorable market area, or if it produces specialty products that are in high demand. The US industry is highly concentrated: the eight largest companies account for about 75 percent of revenue.

Products, Operations & Technology

Major products are gas (50 percent of revenue), diesel fuel (25 percent), and jet fuel (8 percent). Diesel fuel and heating oil are jointly called "distillates." A refinery uses crude oil as raw material. The output of a particular refinery depends on the grade of crude oil it uses and the downstream processing operations it has installed.