Operating costs

Operating costs typically refer to only the non-hydrocarbon costs associated with running the refinery. Refinery costs are typically measured per barrel of crude oil processed.

These are typically grouped into fixed and variable categories depending on whether they vary with throughput or not.

  • Fixed costs are any costs that do not vary with the level of throughput at any point in time. Examples are labor and equipment. Fixed costs are typically measured relative to crude processing capacity (e.g., USD/bbl crude distillation capacity). Fixed costs are also frequently subdivided into costs associated with maintaining the refinery (maintenance costs), costs of running the refinery (operating costs), and costs of managing the refinery (supervisory, overhead, support)
  • Variable costs are any costs that vary with the level of refinery throughput. Examples include energy, catalyst, and chemicals. Variable costs are typically measured relative to crude throughput (e.g., USD/bbl crude run or USD/bbl of utilized crude capacity). Generally, all costs are assumed to vary with refinery size and with refinery complexity

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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