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API: Oil costs remain key gasoline price influence

Oil & Gas Journal

Turnarounds normally take place as refiners deplete inventories of winter fuel blends and before they begin to produce fuels with summer formulations, Felmy explained.

"The reason we've seen increased gasoline prices has been higher crude costs. Refiners' returns aren't good right now. On [Mar. 28], the price of crude was $2.51/gal. Add in about 47¢ for taxes, then consider the costs of refining and distribution, and the profits don't look great," Felmy said.

Unlike 2007, when there were several unplanned US refinery outages, maintenance is following normal seasonal patterns early in 2008, Felmy said. "I think higher prices are starting to have an impact on demand, but the change is at the margin. We learned in the early 1980s that permanent changes occur when consumers change the kind of cars they drive and the number of trips they take. There's no question that fuel's share of total household expenditures has gone up from 4.6% in November 2006 to around 5% now, with gasoline representing about 20-25% of the increase," he said.