Valero closes Delaware oil refinery due to slack demand
Latest refinery closure removes more than 200,000 barrels/day
Dave Hannon -- Purchasing, 11/20/2009 3:15:16 PM
What do you think?
The largest oil refiner in the U.S., Valero Energy, today said it would shut down a refinery in Delaware City, Del. as fuel demand has slumped and margins have slimmed in the oil refining sector.
The closure will take more than 210,000 barrels of refining capacity out of the U.S. market. Valero said the Delaware plant, one of four refineries acquired in the purchase of Premcor in 2005, was losing more than $1 million a day. It also closed a refinery in Aruba earlier this year. Combined the two shutdowns have cut about 14% of the refiner's total capacity.
Valero's move is only the latest in a string of shutdowns by refiners in the U.S. In October, for example, Sunoco said it was indefinitely idling its Eagle Point refinery in Westville, New Jersey in an "effort to reduce losses in its refining business at a time when a recessionary economy, weak demand for refined products, and increased global refining capacity have created margin pressure on the entire refining industry."
"If there's ever been a time to mothball a refinery, it's probably now...I wouldn't be surprised to see additional closures," said Peter Beutel, president of Cameron Hanover in a recent Reuters report.
Despite the rash of closures, the Energy Department reports that refineries are operating at below 80% capacity in recent weeks and was under 85% for much of the year.
It's a dramatic swing from calls only two years ago when market watchers blamed high gasoline prices on a lack of refining capacity.
No Surge in Gasoline Prices Forecasted
04/30/2009New Oil Refinery Planned
10/17/2007Tight supplies push diesel up
12/04/2005
Now Playing: 
