Falling oil prices aren't lowering gas costs

It’s a great time to be an oil refiner — but a less great time to be filling up at the pump.

- By Jack WITTELS, VEENA ALI-KHAN, NICHotas Lua AND NATHAN RISSER

REFINERY disruptions are limiting how much oil can be turned into gasoline.

(CAROLYN COLE Los Angeles Times)

In Europe, the U.S. and Asia, giant plants are making money by doing what they've always done: converting crude oil into vital fuels and selling them at a profit.

What's different today is the scale of the threat to global supplies: Relentless attacks on Russia’s energy infrastructure, outages at key plants in Asia and Africa and permanent closures across Europe and the U.S. have removed millions of barrels of diesel and gasoline from the world market.

On top of these real-world consequences are traders’ fears of what’s yet to come: imminent U.S. sanctions on Russian oil giants Lukoil and Rosneft and fresh European Union curbs on fuels made from Russian crude threaten already squeezed supply chains.

The result is ongoing pressure on costs at the pump despite a fall in global oil prices — something that’s unlikely to sit well with a U.S. administration that sees “affordable energy” as essential.

“Global refinery margins are astronomical,” said Eugene Lindell, head of refined products at the consulting firm FGE NexantECA. “The signal you're giving the global refining system, no matter where the refinery is located, is to just run flat out.”

In the U.S., Europe and Asia, margins are the highest they've been at this time of year since at least 2018, according to fair value data compiled by Bloomberg. The profits are so good that refiners’ stock prices are also surging: Processors including Valero Energy Corp. and Turkiye Petrol Rafineri-leri have seen stellar rises, while Orlen gained more than 100% year-to-date.