Refining Capacity Shortages Are Driving Higher Fuel Prices Despite Lower Crude Oil Costs
Gasoline and diesel prices have risen sharply in recent months, with diesel reaching $6.37 per gallon compared to just $3.70 a year ago. However, crude oil prices like West Texas Intermediate (WTI) have fallen below $90 a barrel from over $119 earlier this year. The disconnect is due not to the availability of crude but rather constraints in refining capacity globally. Refineries are struggling with reduced operable distillation capacity and closures, particularly in the U.S., where two major refinery shutdowns removed 400,000 barrels per day from processing capability. Global disruptions such as attacks on Russian refineries, Persian Gulf shipping issues, and Chinese refiners halting exports have further tightened fuel supplies. Refining margins for companies like Marathon Petroleum (MPC) and Valero Energy (VLO) are surging due to the bottleneck in production. These firms saw significant increases in EBITDA from their refining operations during Q2 2026, highlighting how refiners — not oil producers — are capturing much of the value as fuel prices rise.
Topics: fuel shortages global supply chain oil prices refinery capacity