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Diverging trends in regional crude acquisition costs

THIS WEEK IN PETROLEUM REPORT RELEASE – January 25, 2012

This Week In Petroleum

Diverging trends in regional crude acquisition costs

The rise in midcontinent North American crude production since 2010 has not benefited all U.S. refiners and consumers equally.  In some cases, lower crude acquisition costs have been reflected in prices paid by consumers; in others, refiners have been able to capture higher profit margins.  Perhaps not surprisingly, several refiners in the latter situation have been expanding and upgrading capacity. At the opposite end of the reshuffle, refiners have responded by idling capacity, a retrenchment that could ultimately leave local consumers with higher product prices.  But this broad-based restructuring of the U.S. refining industry will not be without consequences for the very crude price trends that helped bring it on.  Ironically, the remaining refiners in today’s higher-cost crude markets could find themselves in an enhanced competitive position further down the road.

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