PBF Energy 2012 Annual Report Download - page 31

Continued economic turmoil in the global financial system has had and may continue to have an adverse
impact on the refining industry.
Our business and profitability are affected by the overall level of demand for our products, which in turn is
affected by factors such as overall levels of economic activity and business and consumer confidence and spending.
Declines in global economic activity and consumer and business confidence and spending during the recent global
downturn have significantly reduced the level of demand for our products. Reduced demand for our products has
had and may continue to have an adverse impact on our business, financial condition, results of operations and cash
flows. In addition, continued downturns in the economy impact the demand for refined fuels and, in turn, result in
excess refining capacity. Refining margins are impacted by changes in domestic and global refining capacity, as
increases in refining capacity can adversely impact refining margins, earnings and cash flows.
Our business is indirectly exposed to risks faced by our suppliers, customers and other business partners.
The impact on these constituencies of the risks posed by the continued economic turmoil in the global financial
system have included or could include interruptions or delays in the performance by counterparties to our
contracts, reductions and delays in customer purchases, delays in or the inability of customers to obtain financing
to purchase our products and the inability of customers to pay for our products. Any of these events may have an
adverse impact on our business, financial condition, results of operations and cash flows.
The geographic concentration of our East Coast refineries creates a significant exposure to the risks of the
local economy and other local adverse conditions.
Our East Coast refineries are both located in the mid-Atlantic region on the East Coast and therefore are
vulnerable to economic downturns in that region. These refineries are located within a relatively limited
geographic area and we primarily market our refined products in that area. As a result, we are more susceptible to
regional conditions than the operations of more geographically diversified competitors and any unforeseen events
or circumstances that affect the area could also materially adversely affect our revenues and profitability. These
factors include, among other things, changes in the economy, damages to infrastructure, weather conditions,
demographics and population.
We must make substantial capital expenditures on our operating facilities to maintain their reliability and
efficiency. If we are unable to complete capital projects at their expected costs and/or in a timely manner, or if
the market conditions assumed in our project economics deteriorate, our financial condition, results of
operations or cash flows could be materially and adversely affected.
Delays or cost increases related to capital spending programs involving engineering, procurement and
construction of new facilities (or improvements and repairs to our existing facilities and equipment) could adversely
affect our ability to achieve targeted internal rates of return and operating results. Such delays or cost increases may
arise as a result of unpredictable factors in the marketplace, many of which are beyond our control, including:
• denial or delay in issuing regulatory approvals and/or permits;
• unplanned increases in the cost of construction materials or labor;
• disruptions in transportation of modular components and/or construction materials;
• severe adverse weather conditions, natural disasters or other events (such as equipment malfunctions,
explosions, fires or spills) affecting our facilities, or those of vendors and suppliers;
• shortages of sufficiently skilled labor, or labor disagreements resulting in unplanned work stoppages;
• market-related increases in a project’s debt or equity financing costs; and/or
• non-performance or force majeure by, or disputes with, vendors, suppliers, contractors or sub-
contractors involved with a project.
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