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Shedding Refineries? Not So Fast!


In a week that has seen gasoline and diesel prices rise dramatically across much of North America (an unusual outcome for the fall season), some environmental reports are suggesting that the future of refineries may be in peril.

As hard as it may be to fathom now, pledges (which have yet to morph into concrete action) by some governments to cut back on their carbon dioxide emissions (or CO2) in order to meet commitments at the U.N.-backed 2015 Paris Accord on Climate Change, are taking direct aim at fossil fuels. According to some reports, the rise in electric vehicle sales, higher efficiency in internal combustion engines for all modes of transportation, and the outright banning of ICE engines in some countries in the next 10- to 25-year period, will put a significant strain on global refinery profits and thus lead to the closure of as many as a quarter of the existing plants in the next twenty years.

For those with a crystal ball and understanding the growing demand for refined and crude products, the writing of the refinery epitaph may be slightly exaggerated and more the stuff of wishful thinking. Here’s why: global demand for fuel is increasing and, while it is true that developed nations may someday see demand for petroleum products wane, the more recent trends in the U.S and China show no signs of a slowdown in consumption, with this fall being a good example. But setting aside this reality, developing nations won’t be throttling back in petroleum use for reasons of economics and opportunity. The hoped-for surplus of fuel products surrendered by wealthy and demographically-older nations will be more than absorbed by developing countries who will either build new refineries or continue to rely on imports from the U.S., Europe, the Middle East or Russia.

While demand may slacken among 20% of the world’s population, it is likely to grow swiftly among the other 80%.

The more fundamental consideration of such reports portending the downfall of hydrocarbon industries is the growing mix of energy options available to future generations. As energy use has doubled globally in the last half-century — in step with the world’s population — the next generation will benefit from a suite of clean energy options which have, as a goal, the improvement of the human condition through sustainable and responsible use. In this context, refineries will remain as a vital and important energy option for generations to come.

Senior Petroleum Analyst, Canada

Dan is a skilled and noted bilingual (French and English) consumer advocate specializing in energy and current affairs. Known as Canada's “Gas Guru,” he founded to better help motorists anticipate the price of gasoline in advance across Canada. He has over three decades of experience in the petroleum industry, as a parliamentarian and an analyst.