Money
Why Gasoline Prices Keep Rising Even When Crude Oil Doesn't
Pump prices have jumped again as fighting in the Middle East disrupts oil routes, but the real squeeze started years before the latest conflict: the world simply has fewer refineries turning crude into fuel.
3 million bpdGlobal refining capacity lost since 2020 (IEA estimate)
The facts
- 1Gasoline prices have surged worldwide as the Iran conflict disrupts Middle East shipping routes, Mint reports, but the underlying bottleneck predates this war.
- 2The gap between crude oil cost and finished fuel price is called the 'crack spread,' a measure of refining profit margin that has widened sharply this year.
- 3Global refining capacity fell by more than 3 million barrels a day after pandemic-era plant closures between 2020 and 2023, per International Energy Agency estimates.
- 4Fewer refineries mean pump prices can rise even when crude oil costs stay flat, hurting drivers and import-dependent economies like India far more than oil producers.
- 5Building a new refinery takes several years and billions in investment, so analysts warn this capacity bottleneck could keep fuel expensive long after the Iran conflict cools.
Why it matters
Consumers pay more at the pump regardless of crude prices, while refiners earn wider margins; countries that import fuel, including India, absorb costs producers don't fully feel.
Sources
- Mint (livemint.com)
- International Energy Agency
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