In the past two brutal years, refinery profits sank. Secondly, with the signals on mandates for increased bio-fuels, the message was clear to the refining industry - gasoline demand in the long run will stay flat or shrink. In response to the short term over-capacity and the bearish projections for the future, capacity was taken out of the system to balance the dropped demand and low margins.and 4-5 refineries were permanently shutdown
What happens now when demand spikes ? I am sure the shutdown refineries will be put up as Exhibit A of 'measures to ensure high prices'.