Oil is around $120 per barrel right now. Over the last 10+ years it has been at this level or higher, especially factoring in inflation. Why is gas so much higher this time? Is it refining capacity or the rhetoric surrounding fossil fuels?

Others can chime in on refining capacity.

We NEED heavier crude in larger quantities than we're getting. It has to do with the blending requirements that refineries are configured/built for. Shale oil is light.

This affects, among other things the amount of diesel we can manufacture. I don't know if/how much diesel we're exporting. I've heard they're really cranking on maximizing the amount of diesel they can produce and that in turn is affecting gasoline volumes.

The US lost 5% of its refining capacity since 2019. That's about 1MBD. Global refining capacity is down 3.5MBd. 1 refinery in a Philadelphia blew up and never repaired and in 2020 when refiners were losing money, it was just cheaper to stop operations because it's presumed to be a dying business. Also to get those ESG scores up. We now have demand at 2019 levels while at the same time we have less refining capacity.

In addition, China has banned exports. Indian and Mexico enacted export controls and Russian imports are banned. That's means our limited refining capacity now has to supply more of the world.

Refining margins are about $40/barrel. They are printing money right now. Crappy refineries like Lyondells Pasadena Refinery made money in 1Q.

The amount of gasoline we are pushing to Northern Mexico through S Texas is unbelievable. It has slowed right now because our prices are higher than theirs. A few months ago,the amount of barges and trains going to Harlingen was amazing. It will ramp up again.

padreislandagfan said:

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The amount of gasoline we are pushing to Northern Mexico through S Texas is unbelievable. It has slowed right now because our prices are higher than theirs. A few months ago,the amount of barges and trains going to Harlingen was amazing. It will ramp up again.

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That volume going to Mexico is a drop in the bucket, no more than the capacity of one large Gulf Coast refinery, total. They have always bought it from the US; the only difference is, now, a handful of private companies import it directly to Mexico.

It seems insane, until you realize as big as those vessels are, they're a drop in the bucket for what flows through bankruptcy single pipeline, or comes off a single super tanker offshore.

I grew up around refineries and the O&G industry, I thought I understood volume. My first trip out and seeing a true super tanker.... holy hell.

Don't forget ad pack companies. It's not just crude prices. The fuel ad packs are significantly higher too.

Very simple answer: Demand is outstripping supply by a lot.

Refineries can get huge margins on their products because demand for fossil fuels has pretty much stayed the same since 2019 while refining output has gone down

rgag12 said:

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Very simple answer: Demand is outstripping supply by a lot.

Refineries can get huge margins on their products because demand for fossil fuels has pretty much stayed the same since 2019 while refining output has gone down

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If more refineries were made, would that help lower the price of gas?

just filled up $5.69 a gallon for Medium 89 Test here in Bethesda Maryland.

Diesel at $6.39

but at least the Shell station now has another FJB - LETS GO BRANDON sticker

Inflation isn't the price of things going up, IT'S THE VALUE OF THE CURRENCY FALLING / FAILING.

MuchosPollos said:

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Inflation isn't the price of things going up, IT'S THE VALUE OF THE CURRENCY FALLING / FAILING.

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Thanks, much chicken. Very insightful. The capital letters really drive the point home too.

Aggie95 said:

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Oil is around $120 per barrel right now. Over the last 10+ years it has been at this level or higher, especially factoring in inflation. Why is gas so much higher this time? Is it refining capacity or the rhetoric surrounding fossil fuels?

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Going off of memory here but, the last time was oil was $100 was 2012/2013 time frame, and gasoline was easily $4/gal right here by the office in DFW during that. Now its $120/bbl and fuel is $4.80. So 20% increase would equate almost perfectly there right?...

This illustrates it well. demand for energy has never decreased year over year. It just keeps increasing.

you can artificially add supply in one of the areas below, but it won't matter in the long run.

FJB.

Signel said:

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This illustrates it well. demand for energy has never decreased year over year. It just keeps increasing.

you can artificially add supply in one of the areas below, but it won't matter in the long run.

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It also demonstrates fantasy energy delusion of liberals, especially white Liberals. Solar and wind are fantasy, niche. Always will be. The electricity to power their EVs is genned by hydrocarbons

Garbage human beings. If they have their way, much suffering is headed our way.

The vast majority of the increase is due to the price of oil/gas itself. As other said, the traded price for the gasoline itself is at crazy high levels. The NYMEX for RBOB (gasoline) closed at $4.1552 (NYMEX). All of the local markets are then derived from that price. Some higher/lower depending on the market (i.e. gulf coast will be lower, California higher). Ethanol/RINs/Cap and Trade, etc will factor in and will typically drive the price down.

Then you have things like pipeline fees + terminal fees which are all going up, but by fractions of a penny (points). Taxes and what not are unchanged.

So when you really break it down, the vast reason is the cost of the gasoline/oil are the driver of the high price.

Only way to bring it down is more oil production globally that's pointed at the US and maybe with OPEC increasing production that will help. It would really help if the US was allowing drilling, but Biden is against that because his administration wants these high prices.