Oil majors resist pressure to invest in new refineries, fuel prices keep rising
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Good signal in my humble opinion that more refinery capacity will not be coming online, which should keep refined petroleum product prices higher into the future, further encouraging economically more rapid electrification globally.
https://news.ycombinator.com/item?id=49658793 (additional context)
Why are gas and diesel prices high? Is it because of lack of refineries? No, it's because crude oil got expensive because Trump attacked Iran and they closed Hormuz.
What's building an new refinery going to do? Reopen Hormuz? Reduce the price of crude? No and no. Is there going to be anything more for the new refinery to do than the old one would have to do? No.
So why would you build a new one? Lack of refineries is not the problem.
This is factually inaccurate. Is is because refineries are maxed out. You can confirm this directly with Gas Buddy's chief economist (Bluesky contact below). Keywords you'll want to search for is "refinery crack spread."
https://news.ycombinator.com/item?id=49910374 by jmyeet covers this succinctly.
https://bsky.app/profile/gasbuddyguy.bsky.social
https://www.eia.gov/finance/markets/products/prices.php
> So why would you build a new one? Lack of refineries is not the problem.
First part, indeed, to not invest to build is profitmaxxing by design. Second part, nope.
Global refinery closure outlook to 2035 - https://www.woodmac.com/news/opinion/global-refinery-closure... - March 31st, 2025 (about a year old and stale, but demonstrates the structural issues at play)
- Refining margins are expected to stay strong in the short term. A “rising tide lifts all boats” means that we expect limited rationalisation as margins improve into the 2030s. Pressure will build over the next decade once oil demand peaks, likely in the early 2030s, margins will start to fall. Europe, in particular, is seeing a noticeable drop in demand driven by a shift toward electric vehicles. European refineries also suffer higher operating costs from the costs of their carbon emissions. This combination is making it increasingly difficult for some refineries to stay economically viable.
- Standalone refineries (those with no petrochemicals integration) make up the majority of at-risk assets. Many of them lack the ability to adjust to changing market conditions or generate extra value from chemicals. Even some complex and deep-conversion refineries are at risk, especially from carbon taxes.
- Our net cash margin (NCM) forecasts show that 101 out of 420 global refineries are at risk of closure. These sites represent around 18.4 million barrels per day (b/d) of capacity, which is 21% of current global capacity .
So! Systems analyst TLDR is "these are the last refineries that will ever exist globally, and the system is at max capacity." Last call to get whatever economic gains you can from the petroleum supply chain, fundamentally. This accelerates electrification as a second order effect.
https://ember-energy.org/data/ev-sales-tracker/ (In 2026 so far, 25.9% of new cars registered worldwide have been electric (battery or plug-in hybrid), as of this comment)
(think in systems)
I remember reading the Kochland book a few years back and the clear subtext of the refinery section (unless I am misremembering) is that Charles Koch already realized in the 70s-80s that due to the changing environmental regulations new flagship refineries would not be getting built in the US, like at all.