Unplanned refinery outages and lower capacity are heating up U.S. gasoline prices

From unplanned refinery outages to the nuances of seasonal fuel production, numerous elements are affecting your wallet at the pump.

• The U.S. petroleum market is currently grappling with a series of disruptions that are pushing up the prices of both gasoline and diesel.

• The widening gap between petroleum product prices and crude oil prices is significantly impacting both gasoline and diesel retail prices.

• The production of summer-grade gasoline and diesel is more expensive, adding an extra layer of cost.

• The increasing price difference between high-octane gasoline and high-cetane diesel blendstock signals the rising costs of specialized fuel production.

• COVID-19 has led to structural shifts in refining capacities, exacerbating the effects of unplanned outages on gasoline and diesel production.

Gas Station

Crack spreads, which are a significant component of retail fuel prices, are expanding due to unplanned refinery outages and reduced gasoline and diesel production capacities. The summer season further complicates matters by requiring the production of more expensive summer-grade gasoline and diesel. These summer-grade fuels necessitate different components and processing, adding to the overall cost.

The production costs for specialized fuels like high-octane gasoline and high-cetane diesel are also on the rise. This is evident in the widening price differences for these specialized blend stocks at major trading hubs. Additionally, the COVID-19 pandemic has led to long-lasting changes in refining and secondary conversion unit capacities, making the production of both summer-grade gasoline and diesel even more challenging and costly.

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The information provided in this market insight is for general informational purposes and should not be considered as financial advice. It is not intended to offer any financial recommendations or endorsements. Any decisions made based on the content are the sole responsibility of the reader.