As I think about the ripple effect of oil prices on our varied stakeholders, one insight comes to mind – refineries are in the sweet spot. And we can all learn from their playbook as they maneuver the market.
Profitability is traditionally housed in upstream areas of the energy market, which leaves the downstream end with little room to optimize. If anything, refineries are accustomed to slim margins and squeezing out efficiencies. But what happens to refineries when oil prices drop? Their cost of materials suddenly plummets, yet they keep on producing outputs – generating a welcome influx of profitability.
Certainly this varies by region and the refinery itself. I have seen firsthand, however, that a brownfield environment can reshape itself during market swings. Astute leaders are using the “upside” of the downward oil price trend to make infrastructure improvements and technology investments.
Refineries Taking Advantage
In the case of a U.S. refinery I know well, they made a strategic decision to aggressively implement new technologies with their new-found profits. What’s interesting is not only Continue reading