Gas Prices Don’t Reflect Record Levels of U.S. Refinery Output

The price of gasoline in the United States will remain fairly static for the immediate future, even though refineries are working at record levels because of the surge in oil production.

Jul 28, 2014 at 9:56AM

This article was written by Oilprice.com -- the leading provider of energy news in the world. Also check out this recent article:

The price of gasoline in the United States will remain fairly static for the immediate future, even though refineries are working at record levels because of the surge in oil production.

The U.S. Energy Information Administration (EIA) said July 24 in its weekly petroleum report that refineries took in 16.8 million barrels of crude per day for the previous two weeks, more than the last record set in 2005.

The refining output broke the old record in the week of July 13 with input levels at 16.6 million barrels a day, particularly at refineries in the Midwest and the Gulf coast, the EIA said. This was the highest level it recorded since 1989.

The record high for midwestern refineries was 3.8 million barrels per day for the week ending July 11 the report said. Gulf Coast refineries took in 8.5 million barrels per day in the week ending June 27 and 8.7 million barrels per day for each of the two subsequent weeks.

Much of this, of course, is thanks to the increased extraction of crude in the United States and Canada, particularly because of oil companies' growing reliance on horizontal drilling and hydraulic fracturing, or fracking, to reach oil deposits that are otherwise inaccessible, Andy Lipow, a Houston-based oil industry consultant and president of Lipow Oil Associates LLC, told the International Business Times.

This surge in supply also has lowered costs for refinery operators, simply because domestic crude is less expensive than imported oil. At the same time, Lipow said, Gulf Coast refineries have expanded over the past few years and can increase their volume, keeping prices even lower. And their electricity costs are declining because it's generated by low-cost natural gas.

Lipow said all this combines to make U.S. refineries increasingly competitive with foreign rivals, including those in Africa, Europe and South America.

Yet despite this volume, the growth of overall global demand for oil products is matching the growth in oil stocks, so don't expect retail prices for oil products to drop. Plus, refiners are jumping on the opportunity to increase profits, according to Donald Morton, a senior vice president at the investment bank Herbert J. Sims & Co.

"We're pumping a lot of juice – these refineries are running hard," Morton told The Wall Street Journal. "They've still got good profit margins. They're trying to take advantage of it as much as they can."

At the same time, don't expect U.S. pump prices to go up soon, either. Demand for gasoline in the United States ordinarily rises during the summer travel months, but increased capacity at many refineries is meeting that demand, with plenty left over for use later in the year, when demand lessens.
"We've got adequate inventories ... already in the storage pool," Morton said.

Risk-free for 30 days: The Motley Fool's flagship service
Tom and David Gardner founded The Motley Fool over 20 years ago with the goal of helping the world invest...better. Their flagship service, Stock Advisor, has helped thousands of investors take control of their financial lives and beat the market. Click here to sign up today.

 

Written by Andy Tully at Oilprice.com.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers