U.S. Gasoline Holds Above $4 as 5 Million Bpd Refining Losses Threaten Record Labor Day Prices
Updated
Updated · CNBC · Aug 6
U.S. Gasoline Holds Above $4 as 5 Million Bpd Refining Losses Threaten Record Labor Day Prices
3 articles · Updated · CNBC · Aug 6
Summary
$4.06-a-gallon gasoline could stay unusually expensive into the fall, with GasBuddy warning prices may even top the $3.83 Labor Day record if the Strait of Hormuz remains unstable.
About 5 million barrels per day of refining capacity has been knocked out by wars in the Middle East and Ukraine, tightening fuel supply even as U.S. crude has fallen about 10% this week to roughly $76.
That shortage has broken the usual link between oil and pump prices: crude is up about 14% since Feb. 27, while retail gasoline is still 36% higher, according to AAA and company executives.
Refiners are capturing the squeeze as crack spreads jumped above $70 in late July and some plants delayed maintenance; Valero, Marathon Petroleum and Phillips 66 all posted year-over-year profit surges above 300%.
Executives say outages could last because damaged refineries need time and spare parts to restart, while reduced Chinese exports and disrupted Hormuz traffic keep global product markets tighter than crude markets.