US Refining Capacity Declines Amid Uncertain Fuel Demand Outlook
US refiners' operating capacity declined in 2024, dropping by 43,000 barrels a day to 18.3 million, as fuelmakers reassess amid uncertain gasoline and diesel markets. Major closures, including LyondellBasell’s Houston refinery and Valero's Benicia plant, contribute to this decline. The sector has seen fluctuations post-pandemic, with ongoing challenges for smaller refineries against larger Gulf Coast plants.
(Bloomberg) -- US refiners’ operating capacity edged lower in 2024 as an uncertain outlook for gasoline and diesel prompted fuelmakers to pull back after a period of expansion.
America’s refining fleet — the world’s largest — contracted by 43,000 barrels a day in 2024, shrinking to 18.3 million barrels a day of operating capacity, according to an Energy Information Administration report that gives a snapshot of the industry as of Jan. 1 each year.
US refining capacity has swung between expansion and contraction over the past five years. The pandemic-driven drop in demand in 2020 ushered in a wave of US refinery closures that pulled nationwide capacity below 18 million barrels a day for the first time since 2014. Since then, ExxonMobil Corp., Valero Energy Corp, Marathon Petroleum and Citgo undertook major expansion projects that boosted capacity closer to pre-pandemic levels. Now, fuelmaking is once again in decline.
Since January, LyondellBasell Industries NV’s 264,000 barrel-a-day Houston refinery permanently ceased operations, and Phillips 66 will close its 139,000 barrel-a-day Los Angeles plant at the end of this year. Valero is set to close its 145,000 barrel-a-day Benicia refinery in California’s Bay Area in early 2026, continuing a decades-long trend of smaller, logistically and financially challenged US refineries pulling the plug.
Those two California refinery closures may push America’s fuel making capacity back to pandemic lows of around 17.8 million barrels a day.
While smaller refineries have closed, mega plants on the Gulf Coast have boosted capacity, making less complex facilities uncompetitive. Motiva’s refinery in Port Arthur, Texas, grew to an operating capacity of 641,000 barrels a day in 2024, vaulting it over Marathon’s nearby 631,000-barrel Galveston Bay plant to become the largest in the nation, according to the EIA annual report.
Saudi Aramco-owned Motiva continues to push capacity higher at its Texas plant, the only refinery it owns in the US, and processed as much as 651,000 barrels of oil a day in December.
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