Why does the oil industry Downstream (refineries) profit so thin?

Discussion in 'Economics' started by Happy Hopping, Nov 7, 2011.

  1. Since the end of that Great Recession, co. such as VLO never recover, and yet, we are paying much higher gasoline than before.

    Why is the crack spread still so thin? Since we are paying for much higher gasoline, who profit from all the $$$$? If co. like VLO is not making much, and the local gasoline station is only making like 5% +, then where did all the $$ go? Who profit from this?
  2. The upstream business makes the profit
  3. I agree. But I talk to a lot of people in the oil sector, no1 can explain why the crack spread becomes so thin in the past few yr. What changes?
  4. The inputs cost what they cost. There is clear demand destruction as prices rise above a threshold. Only place to make up the difference is by squeezing the middle.
  5. Demand in the US now is same as in 2002 some say 2004

    So supply stays same but demand is falling as a result you have refineries losing money.

    This is my understanding