You are here
NEW YORK -- Refiners are putting assets on the block and delaying expansion, resulting in less refining capacity, according to a report in The Wall Street Journal.
Valero Energy Corp., for instance, is cutting gasoline output by 30 percent. Tesoro Corp. reduced its 2009 capital-spending budget about 40 percent and will hold off on large projects, expecting business will remain depressed, the newspaper said. Sunoco Inc. plans to shut its Tulsa, Okla., refinery if it can't find a buyer for it by the end of next year.
The resulting cutbacks aren't likely to have a major impact outside the industry as long as the global economy remains weak, the newspaper reported. But when fuel consumption rises, lower refining capacity could create bottlenecks and push prices higher for oil and refined products.
Refiners, which lack the exploration and production operations of integrated oil companies, have been pinched all year as slowing demand made it harder to offset rising oil costs with increases at the pump, according to the report. Making gasoline has been an unprofitable operation for some refiners for most of the last three months as the spot prices for crude-oil feedstock have become more expensive than refined gasoline, the refiners' main product.