WSJ - Refiners Rake In Cash After Gas Prices Surge

July 21, 2022 – Wall Street Journal

Refiners Rake In Cash After Gas Prices Surge

By Benoît Morenne and Collin Eaton

On the U.S. Gulf Coast, estimated refining margins climbed to about $42 per barrel in the second quarter, nearly four-times higher than the average from 2017 to 2019. Excluding special items, that could lift profits for U.S. fuel makers three to four times higher than the same periods in those prepandemic years, according to RBN Refined Fuel Analytics.

Refining margins have only ever reached those heights during short-term, regional supply constraints, such as when hurricanes take multiple refineries offline, analysts said. American fuel makers have also benefited from shipping fuel to Latin American countries and other regions where gasoline and diesel prices have been higher.

The soaring profits have also become a political liability. In June, President Biden urged U.S. oil refiners to expand capacity and accused the companies of profiteering.

John Auers, a refining-industry analyst at RBN, said refiners are concerned the Biden administration and U.S. lawmakers will take aim at the oil-refining industry again for reporting hefty profits at a time when high fuel prices are weighing on the economy ahead of midterm elections in November.

"It's going to be a banner quarter," Mr. Auers said. "Refiners, from a public-relations standpoint, are afraid of it."

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