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[bob ford <bobford79 AT yahoo.com>]

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........................


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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
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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