United Refining Competition
Now Viewing United Refining's competition in: Petroleum Refining (primary)
Recent Developments
Gas Prices Indicate Low Profit Margins - As a result of lower gas consumption, refinery margins are expected to remain low in 2009 but may rebound slightly in 2010. Retail gasoline prices are expected to average $1.96 per gallon in 2009 and $2.18 per gallon in 2010, after hitting a four-year low in December 2008 of $1.69 per gallon. Refiner margins are not quite as low as at the end of 2008, but margins are still depressed, according to the Energy Information Administration.
Sunoco Supports Gas Tax Hike - Increases in the federal gas tax and a new carbon tax have the support of US refinery Sunoco, despite reduced demand for refiners' gasoline and diesel products. While the taxes may not seem in the best interest of refiners now, the taxes may be beneficial in the long-term, according to Sunoco's chief executive. Refiners may need to invest in the future of the energy industry to win support and funding from the Obama Administration, which favors incentives and research aimed at creating clean, efficient, and renewable energy.
Refineries Restructure to Cut Costs - Refineries around the globe are restructuring, cutting costs, eliminating jobs, and in some cases shutting down due to depressed demand and low profit margins. Some companies are turning refineries into storage facilities, which may be less expensive than closing, and possibly more profitable than refining. Closing a refinery may actually be more expensive than keeping it running due to costly environmental cleanup requirements, according to Cambridge Energy Research Associates.
Competitive Landscape
Demand, largely driven by US consumption of gas and diesel fuel, has been relatively flat in recent years. 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 industry is highly automated: average annual revenue per worker is over $3 million.
Petroleum Refining Industry Forecast
from Hoover's/D&B subsidiary First Research
The output of US petroleum refining is forecast to decline at an annual compounded rate of 3 percent between 2008 and 2013. Data Sourced: December 2008
Petroleum Refining Production Growth Volatile
First Research forecasts are based on INFORUM forecasts that are licensed from the Interindustry Economic Research Fund, Inc. (IERF) in College Park, MD. INFORUM's "interindustry-macro" approach to modeling the economy captures the links between industries and the aggregate economy.
First Research Industry Growth Rating
The First Research Industry Growth Rating reflects the expected industry growth relative to other industries, based on INFORUM's forecasted average annual growth for the combined years of 2009 and 2010.
- Demand: Driven by high energy prices
- Large economies of scale in production
- Risk: Slow economy cuts energy use
Industries Where United Refining Competes
- Energy & Utilities
- Oil & Gas Refining, Marketing & Distribution
- Petroleum Refining (primary)
- Oil & Gas Refining, Marketing & Distribution
- Retail
- Gasoline Retailers