AM-02-32 THE STRATEGIC IMPLICATIONS OF INCREASINGLY VOLATILE MARKETS

Description:

Refining industry profitability over the course of 2000 and 2001 was well above historical averages for the last 10 years. Much of this increased profitability was in the form of volatility with significant spikes in refining margins over relatively short periods of time followed by periods of more typical refining margins. McKinsey & Company undertook an analysis of industry performance starting with the United States and ultimately including elements of European and Asian supply and demand. This analysis uncovered several important drivers for this volatility and overall increase in average margins that may, in fact, be structural in nature.