Prices

Geopolitical conflicts, refinery outages, export restrictions and supply chain disruptions have reduced the world's ability to convert crude oil into usable fuels, even as global consumer demand remains strong. The following perspectives from analysts and reporters help explain why fuel prices today aren’t moving in lockstep with crude oil prices, and why refining capacity has become one of the most important factors shaping what consumers pay at the pump.

Some have been surprised by recent refining margins, earnings in the refining sector and a seeming disconnect between finished fuel prices and prices of crude oil. There’s a reason for this: in short, while the price of crude oil is the biggest factor determining fuel prices, it’s not the only factor, and there’s particular tightness in the global refined product market which hadn’t been the case until recently. Take a look to see what several analysts, reporters and market experts have explained about this topic.

WASHINGTON, D.C. — The American Fuel & Petrochemical Manufacturers offered the following explanation of fuel price fundamentals.

Gasoline and diesel prices are front-of-mind for Americans, and people are understandably interested in whether there’s a connection between higher pump prices (which refiners do not set) and higher profits in the refining industry. That deserves a deeper dive.

The closure of the Strait of Hormuz has shocked the entire global crude oil and fuels system and pushed up prices everywhere, including in the United States. The United States is better positioned than most because we produce and refine a large share of our own energy, but prices are set in a global market, so U.S. consumers still feel the impact.

With the conflict in Iran causing massive shifts in global energy markets, it's important to remember global supply and demand forces (for both crude oil and refined products) are just one factor of many — albeit a huge one — impacting the prices drivers see at the pump. So, let's walk through all that goes into the price of gasoline.

It is a common misconception that refiners set the price of gasoline. But, in fact, refiners are price takers—not price makers.

AFPM issued the following statement on the passage of California legislation that will empower the state’s unelected bureaucracy to impose an effective windfall tax and massive regulatory burden on the state’s remaining refineries. "...Add this legislative cocktail to the list of self-inflicted policy wounds for a state already bleeding people."

In a tight refined product market it has been U.S. refiners that have stepped up. Our industry ran full-out for most of 2022 making sure American consumers, our domestic economic centers and our allies had enough gasoline, diesel and jet fuel to keep everyone moving. Our refining sector leads the world in liquid fuel production and is effectively doing more than any other to bring better balance to the global market.