The Determinants of Plant Exit: the Evolution of the U.S. Refining Industry

This paper analyzes the exit and expansion of U.S. petroleum refineries using plant-level data from 1947 to 2013. We find that small refineries and refineries owned by a multi-plant firm are more likely to close. If a multi-plant firm closes a refinery, it closes a smaller one. Unlike previous research, we find no clear relationship between a firm’s share of national refining capacity and the probability of refinery exit. We also find that refineries close when the industry as a whole has low capacity utilization. In total, firms close small, likely inefficient, refineries when refinery utilization is low.