The U.S. refining industry has undergone a number of changes in recent years and more turbulence looks likely as global economic and trade patterns shift and energy transition moves forward. For some refineries, this has led to closures due to weak profits, rising regulatory costs and declining demand for products, particularly gasoline. But other refineries have prospered — and even invested in expansions — while the U.S. industry as a whole has evolved into the most competitive system in the world. Overall, the prospects have been very regionally (and even facility) specific. As detailed in the most recent Future of Fuels report from our Refined Fuels Analytics (RFA) practice, this regional differentiation will continue and shift over the coming years. In today’s RBN blog, we’ll discuss what we expect for the U.S. refining industry — where closures will likely take place, where the industry might actually add capacity, and the reasons for those actions.
U.S. refiners are facing a number of challenges, including slowing demand and higher regulatory and compliance costs, all of which pressure less-competitive plants the most. We saw more than 1.3 MMb/d of capacity closures from 2019 through 2024, most related to the severe drop in demand during the COVID shutdowns, with closures taking place in every PADD. (Interestingly, despite these shutdowns, operable capacity fell by only 600 Mb/d over the same period, as expansions at other plants partially offset these closures.) A new wave of shutdowns is taking place this year and next, such as LyondellBasell’s Houston facility (closed in Q1 2025), Phillips 66’s Wilmington plant in Southern California (due to cease operations in Q4 2025) and Valero’s Benicia refinery in Northern California (planned for closure by April 2026).
So, what’s next? Our RFA practice has done a detailed supply and demand balance by regions and developed a schedule identifying where capacity reductions will likely be required over the next two decades. We’re going to break down what that analysis means for each of the PADDs (see Figure 1 below), but we expect that PADDs 5 (West Coast), 2 (Midwest/Great Plains) and 1 (East Coast) will be hit the hardest (in that order), with PADD 2 refineries facing their greatest challenges post-2035. Altogether, PADDs 5, 2, and 1 will require refinery capacity reductions of about 900 Mb/d, 700 Mb/d and 300+ Mb/d, respectively, from 2026 through 2045 (with the PADD 2 closures not starting in earnest until the second half of the period) for regional supply/demand to remain balanced. At the same time PADD 3 (Gulf Coast) could actually see positive capacity “creep” overall, as small expansions at the more competitive facilities more than offset closures at smaller refineries.
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About the song
“Us and Them” has music written by Richard Wright and lyrics by Roger Waters. It appears as the second song on side two of Pink Floyd’s eighth studio album, Dark Side of the Moon. The song was recorded in January 1973 at Abbey Road Studios in London. It was originally written for the motion picture Zabriskie Point, but the director, Michelangelo Antonioni, rejected it as being too sad, and it reminded him of being in church. The lyrics describe the horrors of war, oppression and the loss of civil liberties. Released as the second single from the album in February 1974, it just missed reaching the Billboard Hot 100 Singles chart, peaking at #101. Personnel on the record were: David Gilmour (lead vocals, guitars), Richard Wright (keyboards, backing vocals), Roger Waters (bass), Nick Mason (drums), Dick Parry (tenor saxophone), and Doris Troy, Barry St. John, Liza Strike (backing vocals).
Dark Side of the Moon was recorded from May 1972 to February 1973 at Abbey Road Studios in London and produced by Pink Floyd. The album was released in March 1973 and went to #1 on the Billboard 200 Albums chart and remained in the charts for a record-breaking 741 weeks. It has been certified 15X Platinum by the Recording Industry Association of America. Two singles were released from the LP.
Pink Floyd is a British rock band formed in London in 1965 by Syd Barrett (lead vocals, guitar), Roger Waters (bass, backing vocals), Richard Wright (keyboards, backing vocals) and Nick Mason (drums, percussion). They were one of the first British psychedelic bands and evolved into a supergroup of progressive rock. Guitarist David Gilmour joined the band in 1967, and Syd Barrett departed the group in 1968. They have released 15 studio albums, seven live albums, 12 compilation albums, three EPs, and 27 singles. They have sold more than 250 million records worldwide. They have won four Grammy Awards, two Ivor Novello Awards and a Polar Music Prize, and are members of the Rock and Roll Hall of Fame and the UK Music Hall of Fame. The band has never officially broken up, but both Roger Waters and David Gilmour have stated that they have no interest in reuniting the band. Waters, Gilmour and Mason all have successful solo careers. Syd Barrett died in London in July 2006 at 60, and Richard Wright died in London in September 2008 at 65.
