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Survival in the U.S. petroleum refining industry

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  • Shuyi Jiang

Abstract

Of the 324 petroleum refineries operating in the U.S. in 1982, only 149 were still in the hands of their original owners in 2007. Using duration analysis, this paper explores why refineries change ownership or shut down. Plants are more likely to ‘survive’ with their original owners if they are older or larger, but less likely if the owner is a major integrated firm, or the refinery is a more technologically complex one. This latter result differs from existing research on the issue. This paper also presents a split population model to relax the general assumption of the duration model that all refiners will eventually close down; the empirical results show that the split population model converges on a standard hazard model; the log-logistic version fits best. Finally, a multinomial logit model is estimated to analyze the factors that influence the refinery plant's choices of staying open, closing, or changing ownership. Plant size, age and technology usage have positive impacts on the likelihood that a refinery will stay open, or change ownership (rather than close down).

Suggested Citation

  • Shuyi Jiang, 2012. "Survival in the U.S. petroleum refining industry," Journal of Applied Statistics, Taylor & Francis Journals, vol. 39(7), pages 1505-1530, January.
  • Handle: RePEc:taf:japsta:v:39:y:2012:i:7:p:1505-1530
    DOI: 10.1080/02664763.2012.658359
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    Cited by:

    1. David W. Meyer & Christopher T. Taylor, 2018. "The Determinants of Plant Exit: the Evolution of the U.S. Refining Industry," Journal of Industry, Competition and Trade, Springer, vol. 18(4), pages 429-448, December.
    2. Meyer, Andrew & Pac, Grzegorz, 2017. "Analyzing the characteristics of plants choosing to opt-out of the Large Combustion Plant Directive," Utilities Policy, Elsevier, vol. 45(C), pages 61-68.

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