The falling gasoline demand in America could force oil refineries to close.
American gasoline demand may keep falling even as the economy recovers due to ambitious US policy pushing alternative fuels and efficiency - a prospect that could force oil refineries to close. The outlook in the US refining sector has reversed course since the heady days of 2002-2007 when profits were soaring to all-time peaks and the government was pushing for construction of new plants to meet voracious demand.
"It's more than just a business cycle," said Joanne Shore, lead analyst for the US Energy Information Administration. "We know that this is a long-term change for gasoline demand."
US gasoline use fell last year for the first time since 1991 under the weight of the financial crisis and experts attending conferences in San Antonio this week said rising production of ethanol and the prospects for better auto efficiency standards in the years to come could mean consumption of the key motor fuel has peaked.
"We think US gasoline demand has peaked," said Alan Gelder, vice president of downstream oil for analyst Wood Mackenzie, which on Monday released a study saying smaller, East Coast refineries primarily producing gasoline would face the greatest challenges for surviving.
"We think gasoline demand will never be back to 2007 levels," Gelder said. "First it will be the recession then vehicle fuel efficiency."
Large US refineries that have added hydrocracking and coking units are best equipped for survival. These units can take crude grades that are cheaper but harder to process and produce gasoline and diesel for the most lucrative, environmentally stringent US or European markets.
It's more than just a business cycle
Even as the economy recovers due to ambitious US policy pushing alternative fuels and efficiency - a prospect that could force oil refineries to close. The outlook in the US refining sector has reversed course since the heady days of 2002-2007 when profits were soaring to all-time peaks and the government was pushing for construction of new plants to meet voracious demand.
"It's more than just a business cycle," said Joanne Shore, lead analyst for the US Energy Information Administration. "We know that this is a long-term change for gasoline demand."
US gasoline use fell last year for the first time since 1991 under the weight of the financial crisis and experts attending conferences in San Antonio this week said rising production of ethanol and the prospects for better auto efficiency standards in the years to come could mean consumption of the key motor fuel has peaked.
"We think US gasoline demand has peaked," said Alan Gelder, vice president of downstream oil for analyst Wood Mackenzie, which on Monday released a study saying smaller, East Coast refineries primarily producing gasoline would face the greatest challenges for surviving.
"We think gasoline demand will never be back to 2007 levels," Gelder said. "First it will be the recession then vehicle fuel efficiency."
Large US refineries that have added hydrocracking and coking units are best equipped for survival. These units can take crude grades that are cheaper but harder to process and produce gasoline and diesel for the most lucrative, environmentally stringent US or European markets.
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