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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.
