The Shift in Refinery Capacity Around the World Refinery capacity in the west has declined. We have lost 5% of the capacity in the US, creating product shortages we now see in diesel with corresponding higher prices, although run rates have been high as refineries are pushed to the max.
Globally, this is about to change, as there are a lot of new refineries being built in other areas, and coming online by 2025 to provide for the big increase in global oil demand in the next few years.
Countries that have an industry that is not hampered by anti fossil fuel energy policy are being proactive, and building ADDITIONAL crude refining capacity of over 7.5 M bpd of product. They will supply the areas are where additional net global oil demand will be, hint: not in the OECD.
How will this affect Suncor and the North American markets? I believe we in Canada and the US have missed this opportunity, and will become even more dependent on importing finished product instead of making it ourselves to fill the gap. Due to continued structural under supply, refining capacity in the US and Canada will become even more valuable, if not only for a strategic basis.
Mark Rossano has a great weekly report, touching on many detailed aspects of global oil trade and economics.