Marginal configuration

Marginal configuration is the refinery configuration that is operating at the margin in a market, balancing refined product supply and setting market conditions by its break-even economics.

Marginal configuration is one of the key price-setting mechanisms for refined products markets. Under tight market (high utilization) conditions, the marginal configuration shifts to a less complex configuration, forcing margins to improve to bring that configuration to economic break-even levels. Under lower utilization conditions, the marginal configuration shifts to more complex configuration, reducing the margin condition needed to be at economic break-even.

The type of configurations likely to be marginal (price setting) vary across markets based on differences in refinery capacity and demand volatility.

McKinsey uses cookies to improve site functionality, provide you with a better browsing experience, and to enable our partners to advertise to you. Detailed information on the use of cookies on this Site, and how you can decline them, is provided in our cookie policy. By using this Site or clicking on "OK", you consent to the use of cookies.