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Refinery Margin Compression
Our client operates three oil refineries and has seen margins decline over the past year. How would you diagnose the issue?
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📋 Solution:
Refinery Margin Compression
Clarifying Questions:
• Is the margin decline linked to specific products?
• Are all refineries affected similarly?
Solution:
I would break this into two major areas: pricing dynamics and cost structure.
- Revenue and pricing
• Assess crack spreads and regional fuel pricing trends.
• Evaluate product mix and downstream contracts.
- Cost structure
• Analyze crude input costs and sourcing.
• Evaluate operational efficiency and downtime.
• Review maintenance and compliance expenses.
