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  • From: bob ford <bobford79 AT yahoo.com>
  • To: homestead AT lists.ibiblio.org
  • Subject: [Homestead] Gasoline refineries cutting back , closing
  • Date: Sun, 9 Nov 2008 11:19:54 -0800 (PST)

Maybe part of big oil will be the next recepient of a federal gov't bailout.
And, just a few weeks ago candidates were promising to tax them extra for
being too successful while citizens were paying high gasoline
prices........................


------------------------------------------------------------------------
Poor Gasoline Demand Will See Refiners Cut, Close
Topics:Energy | Commodities
Sectors:Industrial Goods and Services | Utilities | Oil and GasReuters | 07
Nov 2008 | 06:13 AM ET Text Size 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."


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Poor Gasoline Demand Will See Refiners Cut, Close
Latest Energy News

Refiners have enjoyed strong earnings in recent years as the rapid
development of China and India have stretched supplies of petrol products,
leading to a raft of new refining projects being planned whilst demand was
booming.

Oil industry consultants Wood Mackenzie said that they now project that
refining capacity will expand at a faster rate than demand for at least the
next 5 years.

"There are now serious concerns that capacity additions are significantly
outpacing demand growth out as far as 2014," Wood Mackenzie said.

"The impact of this will be reduced utilization rates in those regions were
demand growth is slowest, namely the U.S. and Europe."

Gasoline Glut

National oil companies (NOCs) in the Middle East, Asia and Africa are behind
much of the predicted 12 million barrels per day of new crude distillation
capacity by 2014.

NOCs tend to be influenced more by energy independence and security than
commercial returns, but this is likely to leave a glut of gasoline on the
market.

Existing, complex refiners in the U.S. and Europe have already started
converting capacity away from gasoline and naphtha towards 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."

The majority of new refining capacity coming online over the next 7 years is
geared towards middle-distillates as well as gasoline, which could deal a
double-blow to refiners according to Blanch, with heating oil and diesel
margins also coming under pressure.

With the outlook looking bleak for the refiners in the United States and
Europe some analysts have questioned the future direction of the industry in
the West.

"How quickly demand recovers and how much rationalization occurs in the
short-term are key to determining how many (if any) new refineries will be
required post 2015," said Wood Mackenzie.


http://www.cnbc.com/id/27590231






  • [Homestead] Gasoline refineries cutting back , closing, bob ford, 11/09/2008

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