13 March 2012 22:50 [Source: ICIS news]
SAN DIEGO, California (ICIS)--Maintaining positive returns on capital investment is a major challenge for the refining industry as a result of high fixed costs and other factors, the chief executive of US refiner Tesoro said on Tuesday.
“That’s no easy task with a business with high fixed costs, enormous capital intensity and the need to run at very high utilisation rates,” said Gregory Goff, the chief executive of Tesoro.
Goff spoke during the annual meeting of the American Fuel and Petrochemical Manufacturers (AFPM) in San Diego. The meeting ends on Tuesday.
He said the refining sector had about a 4.8% return on capital investment.
However, it will be hard for refiners to maintain or exceed those returns as long as the government puts unfair mandates on the industry, Goff said.
“Rational involvement on the part of the government in our industry is something we should expect, embrace and welcome,” he said. “It’s the irrational variety …that contributes to an environment that makes fuels manufacturing challenging.”
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