Tough times for US refiners

Falling gasoline demand and price volatility have significantly reduced profits in the US refining sector

The cyclical nature of the US refining industry became painfully apparent in third-quarter 2008 as refineries saw their fortunes reverse. After four years of strong growth, profit margins shrank and, at times, disappeared altogether as gasoline demand fell. More disturbing is the prospect that this drop in demand is not an anomaly, but a trend. The industry's response has been mixed. Some refiners have cut or altered production runs, while others have cancelled or postponed growth projects. Others are pushing ahead with expansion plans or upgrading existing facilities to produce higher-margin products, or process lower-quality, less-expensive crudes. Although no new refinery has been built i