Refining Overview
The refining industry is surrounded by uncertainty. Refiners’ inputs and products are both commodities, which means that the price they pay for inputs and the prices they receive for their products are generally determined by the market. Before the collapse of oil prices in July of 2014, refiners had become accustomed to low input prices and wide margins. The crude export ban allowed refiners to pay low prices for landlocked crude and sell their refined products to the global market where prices reflected the global oil and gas market. When the price of crude oil fell worldwide, the price of refined products followed a few months after.
Although the price of refined products has increased slightly over the last few months, the M&A market for downstream oil and gas is still at a standstill waiting to better understand the long term effects of the lifting of the export ban.
