US Oil Refining Capacity Edges Up for Second Consecutive Year

Industry Sees Expansion Despite Uncertainty Around Citgo Ownership

by Victor Adetimilehin

The United States’ oil refining capacity increased by 1.5% to 18.38 million barrels per day (bpd) in 2024, according to a recent report by the Energy Information Administration (EIA). This marks the second year in a row that the industry has seen growth, driven primarily by expansions at existing facilities.

Texas Expansion Drives Growth

A major factor contributing to the capacity increase was the completion of a significant expansion project at Exxon Mobil’s Beaumont, Texas refinery. This $2 billion project, which came online in spring 2023, boosted the facility’s processing capacity to 609,000 bpd. Marathon Petroleum Corp remained the largest refiner in the country, with a capacity of 2.95 million bpd, followed by Valero Energy Corp at 2.21 million bpd and Exxon Mobil at 1.95 million bpd.

The EIA report also highlights the ongoing consolidation within the US refining industry. While overall capacity has increased slightly in the past two years, this growth hasn’t kept pace with pre-pandemic levels. Refinery closures during COVID-19 significantly impacted capacity, and the industry has yet to fully recover. As of January 1, 2024, US refining capacity remained more than 500,000 bpd below the 2019 peak of 18.98 million bpd.

Uncertainty Looms for Citgo Ownership

The report comes amid uncertainty surrounding the ownership of Citgo Petroleum, the sixth-largest refiner in the United States. The company’s parent is facing a court-ordered auction of its shares, which could result in a change in ownership by the end of summer 2024. Court officials are currently reviewing multi-billion-dollar bids for the shares and have scheduled a hearing on the offers in July. The outcome of the auction could have significant implications for the US refining landscape, depending on the new owner’s investment plans and overall strategy.

The increase in refining capacity is a positive sign for US consumers, as it could help to stabilize fuel prices. However, the ongoing consolidation within the industry and the uncertainty surrounding Citgo’s ownership raise concerns about potential future price fluctuations. Industry analysts are watching developments closely to see how these factors will play out in the coming months.

The EIA’s report provides a snapshot of the current state of the US oil refining industry. While there are signs of growth, the industry is still grappling with the effects of the pandemic and ongoing consolidation. The upcoming auction of Citgo Petroleum adds another layer of uncertainty to the mix. In the coming months, it will be important to watch how these factors continue to shape the US refining landscape and ultimately impact consumers at the pum

Source: Reuters

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