In terms of barrels produced, 2009’s second half was still outperformed by second-half 2005, when refineries in the U.S. Gulf Coast were ravaged by Hurricanes Katrina and Rita, and by second-half 2008, when refiners were stopped cold first by Hurricane Ike and then by the U.S. economic downturn.

For 2009 as a whole, domestic base oil output was just 55.4 million barrels — a 12 percent fall-off from 2008. The year’s total included 46.3 million barrels of paraffinic base oils and 9.1 million barrels of pale oils. Last year also marked the first time since 1993 that full-year base oil production did not surpass the 60-million-barrel mark.

The EIA data indicate that refiners throttled back their base oil units in the face of poor demand, and were still doing so late into the year. Operating rates in 2009 averaged about 76 percent for U.S. base oil refineries, according to estimates from Lubes’n’Greases magazine.

“That doesn’t surprise me, that operating rates were so low for the year as a whole,” commented Jamie Brunk of Solomon Associates in Dallas, which does benchmark studies to analyze refinery performance. “In 2008, when the economic crisis hit in October and November, plant operating rates went way, way down. There were lots of reports of base oil customers working off inventory instead of buying base oil, because they were waiting for prices to come back down. So refiners had to cut back some, since no one was buying.”

A year later, particularly by the fourth quarter of 2009, he added, the recovery began to firm up, “and demand rose, plus we saw people needing to refill their base oil inventory and restock their warehouses.

“All refiners make decisions for economic reasons, independently of each other, and based on the same general indicators of what the business climate seems to be,” Brunk pointed out. Until demand solidified, most would not hurry to inject slackness into the market by running at higher rates.

On the other hand, “there’s a point at which you really can’t run any slower,” pointed out a paraffinic base oil seller in the Houston area, who asked not to be identified. “For some, it might be 75 percent of stream-day capacity. If you drop below that, you might as well shut off the unit and go home.”

“Why make it if you can’t sell it?” agreed consultant Amy Claxton of My Energy in Hummelstown, Pa. “Clearly refiners have no choice but to cut back when their tanks are overflowing and they can’t move barrels. Instead they slow down. Some may just limp along for months, hoping things will get better, while others will shut down a unit completely if they have to drop to below 80 percent of capacity.”

Brunk thinks some of that may have happened as well. “We probably saw some plants that went down for what they called ‘maintenance’ reasons, but in fact were economic slowdowns or shutdowns,” he said. “Most people tend not to publicize it, but some took advantage of the slow time to shut down and do maintenance, since they weren’t making money anyway.”

Base oil marketer Gerry Jackson, at Renkert Oil in The Woodlands, Texas, observed that a base oil unit average operating rate of 76 percent “would be pretty much in line with crude runs, which are averaging about 78 to 77 percent across the country.”

Some base oil producers probably did better than that, and some undoubtedly did far worse, he added. Naphthenic base oils, for example, are tied closely to auto manufacturing, where they’re used to make metalworking fluids; to the rubber industry for making tires; and to the housing market, for use as transformer oils. “And we all know what happened to those markets– housing, auto and tires,” Jackson said.

Over full-year 2009, average operating rates for naphthenic base oil units didn’t quite reach 70 percent, Lubes’n’Greases research suggests. Production of pale oils fell to 9.1 million barrels in 2009, from 9.7 million in 2008 and 10.4 million barrels in 2007.

Exacerbating the dilemma on the naphthenics side was a big gulp of new capacity (8,000 barrels per day) that came on stream in second-half 2009 at Ergon’s Vicksburg, Miss., refinery. At a time when the market was already sluggish, this new mass of hydrotreated pale oils and bright stock created a visible bulge in supply, like a python swallowing a puppy.