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.


Refining Multinomial Probit Plant exit Multi-plant coordination 

JEL Classification

L11 L71 



We thank Matthew Chesnes, Jeffrey Fischer, Daniel Hosken, Nicholas Kreisle, and Nathan Wilson, for helpful comments and Elisabeth Murphy and Thomas Sharon for research assistance. The views expressed are those of the authors and do not necessarily represent those of the U.S. Federal Trade Commission or any individual Commissioner.


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Copyright information

© This is a U.S. Government work and not under copyright protection in the US; foreign copyright protection may apply  2018

Authors and Affiliations

  1. 1.US FTCWashingtonUSA

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