Posted: 01 Jul 2013
Refiners are keeping windfall profits from flood of tar sands oil for themselves, undermining a key national interest argument in favor of the Keystone XL.
By Elizabeth Douglass
For nearly two years, refineries in the Midwest have been buying crude oil at steep discounts thanks to a glut of U.S. and Canadian oil. But drivers in the Midwest haven’t seen a corresponding decrease in gasoline prices. In fact, they sometimes pay more at the pump than people in other parts of the country, even as windfall profits flow to BP, Koch Industries Inc. and other large Midwestern refiners.
"It’s good to be a refiner," said Tom Kloza, chief oil analyst at the Oil Price Information Service, a company that tracks energy markets. "For 20 years, the rule of thumb was that if you made $5 a barrel east of the Rockies, that was a good profit for a refinery. Recently, we saw a period in the Midwest where refiners were making $40, or $50, or even $60 a barrel on gasoline."
The disparity of fortunes between Midwest refiners and consumers isn’t a surprise to industry analysts.
In today’s complex fuel market, retail gasoline prices are no longer just a reflection of the cost of oil. A host of other factors—such as refinery fires, power outages and damage from extreme weather events—now have an increasing impact, in part because there are fewer refineries fulfilling the nation’s thirst for fuel.
FROM: Inside Climate