As gasoline prices rise, refineries profit.
According to data, oil refineries make nearly five times as much money refining gasoline as they did a year ago.
A lack of capacity to refine petrol and diesel from crude oil has contributed to record fuel prices and increased profits for refinery owners.
Petrol prices have reached an all-time high, while oil prices remain well below record levels.
The loss of Russian supplies has strained an already overburdened industry.
Petrol prices rose the fastest in 17 years on Tuesday, and the cost of filling a typical family car has now surpassed £100 for the first time, piling costs on motorists.
On Thursday, the price of both gasoline and diesel increased.
Part of the increase can be attributed to the high price of crude oil, which is currently trading above $120 per barrel due to concerns that the war in Ukraine will cut off access to Russian supplies.
This has resulted in billions of pounds of additional profit for oil producers, prompting the UK government to levy a £5 billion windfall tax on North Sea oil producers.
Oil refiners, which convert crude oil into diesel, gasoline, and other products, are also seeing significant increases in profits.
“Right now, the refiners are printing money,” says Neil Crosby, senior analyst at data firm OilX. “More than they’ve ever seen.”
There is a shortage of refining capacity, which has resulted in a significant increase in the “refining” price.
And, while oil prices are still well below their all-time highs, gasoline and diesel continue to set new highs on a daily basis.
Figures from the data company Refinitiv show how profitable the oil refining business has become in the last year.
On June 8, 2021, refiners earned $9.26 per barrel from refining gasoline and $6.84 per barrel from refining diesel.
On Wednesday, they were making $43.11 on gasoline, a 366 percent increase, and $51.13 on diesel, a 648 percent increase.
Figures released by BP, which owns a number of refineries in Europe and the United States, show that its own measure of refining profits, the ‘Refining Marker Margin,’ has increased from $7.7 per barrel to $35.7 in the last year.
ExxonMobil, the US oil giant, owns a number of refineries, including the largest in the United Kingdom, Fawley in Hampshire. The Financial Times reported last month that it’s CEO, Darren Woods, did not believe the “very, very high margin environment” was “good for economies around the world.”
According to a source close to a major refinery owner, the refiners do not set their own margins. The market determines what supplies are available and how much buyers will pay for crude oil, gasoline, and diesel.
Prior to the invasion of Ukraine, much of Europe’s gasoline and diesel supply was produced in Russian refineries and imported by tanker. The UK received 18% of its diesel supply from Russia in 2020.
