The vast majority oil refiners and chemical makers are ill-prepared for the looming end of the industry’s “golden age” amid the shale boom and shifting demand trends, according to Deloitte.
With electric vehicles and stricter environmental regulations poised to encroach on refiners’ traditional markets, just 5% of the 1 350 companies analysed by Deloitte have made substantial changes to their risk assessments in the past half decade.
“The golden age of downstream is coming to an end and most of the incumbent industry is not prepared for the upcoming new normal,” according to a Deloitte report authored by Duane Dickson, oil, gas and chemicals sector leader, released on Tuesday.
The warning comes as some of the industry’s heavyweights including Exxon Mobil already are boosting their capacity to churn out the chemical building blocks for plastics and other products.
“It’s right now where the fuel business looks a little bit uncertain that the chemical investments are coming into focus as interesting,” Dickson said in an interview. “I think the fuel market long term will continue to stay solid, but there’ll probably be some volatility in it over time.”
© 2019 Bloomberg L.P.