Amazing someone making 2000 barrels/day can compete with someone making 100X more.
Amazing someone making 2000 barrels/day can compete with someone making 100X more.
:::
It really gets down to how much each company has to actually pay for a bbl of crude. Extraction costs of the larger companies are most likely much lower than smaller ones. And what the quality of the crude is in each case. So many variables that determine the true cost per bbl.
Kind of makes you believe this is a competitive market after all.
They typically do this one of two ways: (1) through a special product and/or process (e.g. making asphalt out of extremely heavy local crude) or (2) by taking a cut off of a local supply of crude in areas where there is a reasonable demand for refined products but where it is expensive to ship product back from lower cost refineries (e.g. Alaska).
Generally speaking, however, the larger the refinery the more the owner can achieve economies of scale and spread out corporate overhead and thus the better the margins.