Forum Discussion

Trackrig's avatar
Trackrig
Explorer II
Jul 23, 2015

Refiners - a factor in the price of fuel.

We've all watched the price of fuel drop slowly when there's a glut of crude oil and then watch the price of fuel jump overnight when the price of crude goes up. This is old news.

Something I've been watching for a while is why the price hasn't (particularly of diesel) been going down more with the excess of crude production vs usage? My thoughts have been that the refiners have been charging more and more. Let's say that if crude drops 5%, the refiners have lowered the refined product only 4%. Or, if the price up crude goes up 5%, they've been charging a 6% increase in refined product. The storage capacity of crude tanks is almost full in this country.

We're producing almost a million more barrels of crude per day than we're using - the price should be dropping further, but the refiners keep upping what they take out of the middle. Crude has dropped from $63 per barrel in mid to late May to $48.45 today. That's a 23% drop in the price of crude. Has anyone seen the price of fuel drop anything close to 23% also???

They think (and apparently so) that everyone is so happy with the lowered fuel price that they won't notice if the refiners take a larger chunk out of the middle.

Here are two quotes from a Seeking Alpha story a few minutes ago:

* Even as the E&P and oilfield services sectors have slumped again, stocks of refiners such as Valero Energy (NYSE:VLO), Tesoro (NYSE:TSO), Marathon Petroleum (NYSE:MPC) and Western Refining (NYSE:WNR) have jumped 25% or more YTD.

Their stock price is way up because they've been generating a lot more profits.

* West coast refiners are big winners right now: Earlier this month, according to Credit Suisse, regional refining margins hit almost $60/bbl, - higher than the oil price itself.

That's a lot of profits, and growing.

Bill
  • Keep in mind that most gasoline in an area is produced by one regional refinery, regardless of the brand name on the station. Among the major retailers, they just put their own additive package in the truck so that if you're at a Shell station you're getting the regional gas with Shell additives. If you purchase a "non-branded" gasoline getting adequate additives is suspect, thus some auto manufactures are starting to put recommended brands in their owner's manuals.
  • Here in Ca. it don't matter there is ALWAYS an excuse for why the fuel is high :(
    Change to summer blend, change to winter blend, Refinery fire , Refinery shut down for maintenance, cold winter back east so more heating oil instead of gas fuel being produced. Blah Blah Blah !!!
    Oil is trading at $52 a barrel so why is gas selling for $3.50 a gal ?
    A couple months ago on the news "the market is glutted with fuel and they have run out of places to store it" WTH ???
    But our prices are still high, now its there is plenty of crude oil , but supposedly they can't keep up with demand.
    Gas prices jumped over $.70 a gallon in 3 weeks around here in some places over $1.00 more!
    Next night on news reports now that more fuel efficient cars and electric we are not using as much fuel!! Once again W.T.H !!!

    Strange how fuel prices can jump $.10 or more a day , but when it comes down its only $.01-.02 per day !!
  • 3oaks wrote:
    Here in Pennsylvania, as the price of gas at the pumps drop, our governor adds more tax per gallon. The consumer can't win. :M


    More fuel efficient cars + all electric cars = less or no taxes collected so taxes raised.
  • Here in Pennsylvania, as the price of gas at the pumps drop, our governor adds more tax per gallon. The consumer can't win. :M
  • Trackrig wrote:
    We've all watched the price of fuel drop slowly when there's a glut of crude oil and then watch the price of fuel jump overnight when the price of crude goes up. This is old news.

    Something I've been watching for a while is why the price hasn't (particularly of diesel) been going down more with the excess of crude production vs usage? My thoughts have been that the refiners have been charging more and more. Let's say that if crude drops 5%, the refiners have lowered the refined product only 4%. Or, if the price up crude goes up 5%, they've been charging a 6% increase in refined product. The storage capacity of crude tanks is almost full in this country.

    We're producing almost a million more barrels of crude per day than we're using - the price should be dropping further, but the refiners keep upping what they take out of the middle. Crude has dropped from $63 per barrel in mid to late May to $48.45 today. That's a 23% drop in the price of crude. Has anyone seen the price of fuel drop anything close to 23% also???

    They think (and apparently so) that everyone is so happy with the lowered fuel price that they won't notice if the refiners take a larger chunk out of the middle.

    Here are two quotes from a Seeking Alpha story a few minutes ago:

    * Even as the E&P and oilfield services sectors have slumped again, stocks of refiners such as Valero Energy (NYSE:VLO), Tesoro (NYSE:TSO), Marathon Petroleum (NYSE:MPC) and Western Refining (NYSE:WNR) have jumped 25% or more YTD.

    Their stock price is way up because they've been generating a lot more profits.

    * West coast refiners are big winners right now: Earlier this month, according to Credit Suisse, regional refining margins hit almost $60/bbl, - higher than the oil price itself.

    That's a lot of profits, and growing.

    Bill


    Here in Southeast Texas, price of diesel IS DROPPING. It is about the same per gallon as regular gas in most places. I for one am thankful for the relief. It has been years since diesel has been as cheap as regular.

    The price of diesel took a huge jump right after our industrious know-it-all government demanded ULSD from refiners a few years ago.

    As a retired refinery worker, I can tell you it costs lots more for refiners to make ULSD.
  • wa8yxm's avatar
    wa8yxm
    Explorer III
    The bumper jack theory of Fuel pricing,, Raise it, lower it a little Raise it a bunch, lower it a little (Remember the old bumper jacks, worked just like that)

    page 2.

    Ever notice how when the price gets low enough there is a refinery fire or some other disaster that reduces oil production capability so the price has to go back up? I have.. Is this by design? You decide.
  • And winter is coming. In the North East a lot of us use heating oil.
    Even when the price of crude drops, the price of heating oil goes up in the winter.
    Imagine that.

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