Determining incremental refining yields can reduce runs, increase profits

05/29/2000
Most refiners would have higher profits if they reduced crude runs. This is particularly true when refinery profit margins are small or negative.Although incremental crude barrels do not have to cover refinery-base expenses, sometimes the yields on incremental barrels are so poor that they do not even cover the cost of the crude oil itself.The "shadow value" incremental economics from the refinery linear programming (LP) model is not an accurate measure of the real value of the next barrel of crude oil processed. It mistakenly assumes that the incremental yields for any unit are the same as that for average yields.Refinery economists often use average yields as incremental yields because ...
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