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Fuel demand affects refineries

Posted at 10:29 AM, Apr 19, 2020
and last updated 2020-04-19 12:29:34-04

The oil industry continues to struggle during the novel coronavirus pandemic and a statewide stay-at-home order.

Prices and demand for gasoline and diesel have gone down and according to one analyst, refinery production has decreased 50 percent.

Some smaller refineries had to run idle.

Marathon Petroleum near San Francisco announced on Friday that it would stop production.

U.S. crude oil has dropped under $19 per barrel, according to Bob van der valk, a consultant and an editor for the Bakken Oil Journal.

Refinery van der valk.jpg

Van der valk said the demand may force more to stop refining.

"The refinery doesn't really make any money unless it can run at about 85 percent of its capacity," van der valk said. "And some of these refineries run are only running at 50 percent of capacity. This the biggest unknown we've ever had here before. The industry has not had to deal with a pandemic crisis like this where everything was shut down almost overnight. I think we're in unknown territory when it comes to demand for the next year, possibly longer."

An Exxon-Mobil spokesman said its refinery in Billings is producing at normal capacity.

We have not heard back from Phillips 66 in Billings or CHS in Laurel.