The outlook for U.S. refining operations is grim amid the downturn for futures and wholesale gasoline and diesel prices.

Demand is plummeting for transportation fuels as a result of sweeping economic impacts stemming from the coronavirus, forcing producers to look at some hard math.

Watch this to understand some basics refinery economics amid COVID-19 then read below for updates:

There is the distinct possibility domestic gasoline demand in April could drop to either side of 5 million b/d, or approximately 4.3 million b/d under the typical daily levels seen in the last three years.

Distillate demand is less of a concern, but demand for jet fuel is a virtual abstraction.

There are two choices for refining companies looking ahead:

1. If management believes that COVID-19 will peak and wane within, say, six to eight weeks, the answer may come via a cut in utilization to 70% or less across the 132 operating refineries in the U.S.

2. If, however, a more prolonged period of demand destruction looms, executives will identify candidates for closure.

Less complex inland sweet crude refiners might be the most vulnerable, since they don’t have access to lucrative export markets. That advantage could evaporate, however, should COVID-19 outbreaks expand to Central and South America.

“The question isn’t how much turnaround activity do we see this year. The question is at the end of all this, which refining companies survive?” one longtime refining executive told OPIS.

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