– John Kemp is a Reuters columnist. The views expressed are his own –
U.S. refiners have emerged as the biggest losers from the previous surge in oil and push for cleaner energy. The industry’s brief golden age has swiftly given way to a prolonged dark period of adjustment and decline.
What went wrong? Like other sectors, refiners have been hit by the cyclical downturn, which has cut trade volumes and the related demand for transport fuels such as aviation fuel and marine diesel especially hard.
But cyclical factors are compounding a structural decline in consumption that began around 2007 and has continued through the recession, as high prices and legislative responses force greater conservation and a shift towards biofuels.
Even as the economy recovers, U.S. consumption of petroleum-derived gasoline and distillate fuels is unlikely to exceed the record set in 2007. The resulting “demand peak” has left up to 10 percent of total U.S. refining capacity (around 1.8 million barrels per day) surplus to requirements.