By ANGEL GONZALEZ
Independent refiners are destined to be in the driver's seat
of the US refining industry as integrated oil companies
increasingly shed refining assets, according to analysts at
In a report released Wednesday, the consultancy said by the
end of 2013, over 70% of domestic refining capacity may be controlled
by independent refiners, a radical shift from 1990, when most
of the refining capacity in the US was in
the hands of integrated oil companies.
That likely means a reduction in the cyclical profit margin
swings normally seen by refiners, as independent companies are
less likely to be able to weather downturns and therefore
strive for more efficient and stable operations, Deloitte
consultant Roger Ihne said.
"Refiners operate on a very small margin," Ihne said.
If it shrinks, "the amount of impact is greater" for an
independent refiner than for an integrated oil company buoyed
by profitable oil-and-gas production, he added.
For consumers, however, the smoothing of these profitability
cycles is likely to have a relatively small impact, Ihne said,
as profit margins account for a minuscule portion of the price
at the pump.
Independent refiners, however, likely are going to be more
focused on the retail aspect, which has been neglected by the
"They're going to provide additional value to the consumer,"
The restructuring of the US refining industry comes as there are
expectations for a long-term decline in domestic demand for
fuel, driven mainly by gains in efficiency.
That is triggering refinery sales and shutdowns, both
among majors and independents.
Last year, integrated oil company Marathon Oil split into an
exploration company, and an independent refiner, Marathon
Energy company ConocoPhillips is in the process of
completing a similar move.
Meanwhile, UK-based oil major BP has put two of its US
refineries up for sale.
Dow Jones Newswires
Images courtesy of BP p.l.c.