Poor gasoline demand will see refiners cut, close

[DainBramaged]

A golden age of profits for western oil refining companies has ended and many are likely to face cutbacks and even possible closures, analysts said on Friday.

Falling demand for gasoline globally has come just as more refinery capacity comes on stream, piling on the pressure.

The global economic crisis allied with record high oil prices earlier this year have slashed gasoline demand and curbed future growth projections, forcing refining margins for motor fuel deep into negative territory.

European refiners such as Total and Petroplus have already started planning to cut back runs on unprofitable products like gasoline and its blending component naphtha. Analysts said it could be the beginning of a longer-term trend and margins could collapse over the next 2 years.

"Perspectives for demand are much more limited, which will clearly put refining margins under pressure," said Cambridge Energy Research Associates (CERA) director of downstream oil for Europe, Olivier Abadie.

"CERA forecasts a decline of up to 40 percent of refining margins in 2009-2010 from 2007-2008."

http://www.reuters.com/article/reutersEdge/idUSTRE4A62XB20081107?sp=true

[Trajan]

1. BUT WAIT ! .... CHENEY SAID LIBERALS DIDNT LET HIM BUILD THEM !

I mean ... WTF ? ....

I am all for reducing our usage, but this blatant attempt to create scarcity should be resisted ...

Maybe THE PEOPLE should buy the facilities, and operate them to make sure their is a plentiful supply ....

[DainBramaged]

3. Lots of refineries overseas, none here

[Trajan]

5. One of my first 'real' jobs ....

"Shutdown Bum" with OCAW Long Beach CA, working the Watson district refineries ....

Swabbing up spilled crude and shoveling spilled coke under the coke belt ....

From the story:

Existing, complex refiners in the U.S. and Europe have already started converting capacity away from gasoline and naphtha toward profitable middle-distillates like diesel and heating oil, boosted by renewed demand due to the long-term switch to more efficient diesel cars in Europe.

However, analysts have warned that smaller, gasoline focused refineries could be forced to shutdown.

"A lot of refiners in the U.S. who are geared to a 75 percent gasoline yield could go out of business," said Francisco Blanch, head of commodities research at Merrill Lynch investment bank. "We've already seen some pushed out of the market and there will be more."

"We will continue to see run cuts in the short-term as we are still constrained in our ability to switch production from gasoline and naphtha to middle-distillates."

These refiners are clearly in the US as well ....

[Citizen Number 9]

6. Cheney?

I don't think even Cheney has enough money to build one.

[NickB79]

2. Has CERA been correct on anything lately?

If I were a betting man, CERA's analysis would qualify as a long shot.

[DainBramaged]

4. Right now, they appear correct

Gasoline prices are the lowest in 22 months, heating oil below $2 wholesale. Sometime production will fallback and the demand will catch up.