Accurate, Focused Research on Law, Technology and Knowledge Discovery Since 2002

GAO Report – Petroleum Refining

PETROLEUM REFINING: Industry’s Outlook Depends on Market Changes and Key Environmental Regulations, GAO-14-249: Published: Mar 14, 2014. Publicly Released: Apr 14, 2014: “Stakeholders GAO contacted and information reviewed by GAO identified the following three major changes that have recently affected the domestic petroleum refining industry:

  • Increased production. U.S. and Canadian crude oil production have increased, leading to lower costs of crude oil for some refiners. After generally declining for decades, monthly U.S. crude oil production increased over 55 percent compared with average production in 2008.
  • Declining consumption. Domestic consumption of petroleum products declined by 11 percent from 2005 through 2012, resulting in a smaller domestic market for refiners.
  • Key regulations. Two key regulations—the Environmental Protection Agency’s (EPA) and Department of Transportation’s (DOT) coordinated fuel economy and greenhouse gas (GHG) vehicle emission standards, as well as EPA’s Renewable Fuel Standard (RFS)—have contributed to declining petroleum-based fuel consumption. For some refiners, compliance with the RFS increased costs in the first half of 2013, though costs have since declined to some degree from their peak. According to some stakeholders GAO contacted, this was primarily due to RFS requirements exceeding the capability of the transportation fuel infrastructure to distribute and the fleet of vehicles to use renewable fuels. Moreover, EPA has missed the statutory deadline to issue regulations establishing annual RFS blending standards since 2009. EPA has not systematically identified the underlying causes of these delays or changed its approach in order to avoid them. A late RFS contributes to industry uncertainty, which can increase costs because industry cannot plan and budget effectively, according to some stakeholders.”

Leave a reply