Booming Oil Production Gives Refiners a Boost

An oil tanker leaves the French Total group refinery of Grandpuits after filling up the tank, outside Paris, on October 25, 2010, three days after anti-riot policemen broke up pickets besieging the site. For two months France has been in the grip of a wave of protests against the government's bid to raise the retirement age from 60 to 62 and to set the latest threshold for full pension payments at 67. 
National Journal
Add to Briefcase
Clare Foran
March 4, 2014, 2:24 a.m.

A hand­ful of new re­finer­ies are either in the plan­ning stages or un­der con­struc­tion in the U.S., a ma­jor mile­stone for a sec­tor that has not seen sig­ni­fic­ant ex­pan­sion in dec­ades, The New York Times re­ports.

In the past dec­ade, a surge in do­mest­ic oil pro­duc­tion ushered in by the one-two punch of hy­draul­ic frac­tur­ing and ho­ri­zont­al drilling has driv­en down oil prices and made re­fin­ing a luc­rat­ive busi­ness ven­ture.

That, in turn, has caused com­pan­ies to in­vest in ex­pand­ing or open­ing up new re­finer­ies.

“The flash of ex­pan­sion over the next two years of re­fin­ing ca­pa­city is the biggest that I’ve seen in 30 years,” Greg A. Haas, dir­ect­or of re­search at Hart En­ergy, a re­search and con­sult­ing com­pany, told The New York Times.

But a dark cloud looms over­head.

The cal­cu­lus could change if poli­cy­makers lift re­stric­tions on crude-oil ex­ports. A rush of ex­ports to for­eign coun­tries, many re­finers be­lieve, could sap do­mest­ic oil sup­plies and cause prices to spike. That could leave re­finers out in the cold, mak­ing it dif­fi­cult to com­pete with for­eign re­finery op­er­a­tions in coun­tries where labor is cheap­er.

For now, un­cer­tainty over the fate of ex­ports is tem­per­ing the re­finery renais­sance.

If the de facto ban on ex­ports were lif­ted, it “would take away what has ef­fect­ively re­versed a trend of re­finery clos­ures in the United States that had been pretty steady from about 1975 to 2009,” said Mi­chael C. Jen­nings, chief ex­ec­ut­ive of Holly­Fron­ti­er.


Welcome to National Journal!

You are currently accessing National Journal from IP access. Please login to access this feature. If you have any questions, please contact your Dedicated Advisor.