Economics

The profitability of refineries varies widely, across different individual refineries, as well as over time for a single refinery as market conditions change.

Measures of refinery profitability

The economic performance of a refinery can be measured in a number of different ways. Typical measures of refinery profitability are:

  • Refinery margins - A measure of the value created per unit of crude oil processed or per barrel of crude distillation capacity
  • Refinery returns - The value created by the refinery per unit of capital invested or employed in the refinery
  • Refinery asset values - The lump sum value of a refinery, typically for a buyer or seller

Drivers of profitability

There are a number of internal and external factors that have a large effect on refinery profitability.  They can be grouped into the following major categories:

The Refinery Reference Desk includes content derived from our industry experts as well as from public data sources such as company websites. Nothing herein is intended to serve as investment advice. This material is based on information that we believe to be reliable and adequately comprehensive, but we do not represent that such information is in all respects accurate or complete. McKinsey Energy Insights does not accept any liability for any losses resulting from use of the content.



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