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Refining

During the 1980s and 1990s, the refining industry went through a period of consolidation in order to increase utilization and address slim margins. That created a relatively small number of vertically integrated companies operating multiple facilities, the latter part of the period saw the emergence of smaller independent refining companies, a trend that has continued with the “unbundling” of a number of previously integrated oil companies. All these organizations are now faced with the double edged sword of having to meet increasingly higher quality standards with poorer quality feedstocks such as heavy and/or sour crudes, oil sands or shale oil. Added to this, the shifting balance of demand for road fuels from gasoline to distillate and the growing requirements for biofuel blending will require significant investment in existing refining stock. To stay ahead of the curve, refiners will need to make well-informed decisions to ensure the timely adaptation to these changing market conditions.

Marketing

Volatility in the price of oil obviously represents a profound challenge for petroleum marketers. Despite record high fuel prices in recent years, fuel retailers, as price takers have seen their margins remain relatively flat. These price swings can drastically alter both short term and long term consumer purchasing behaviour with a direct impact on site utilization and inventory management. The increasing requirement for biofuel blends will further complicate the issue by requiring additional capital investment in storage tanks and pumps.