U.S. Refiners’ Profits at Risk From Rising Biofuel Costs
- Lack of gasoline supply has boosted margins to seasonal highs
- Surging ethanol costs may get in the way of refiners profiting
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The profit for turning crude into gasoline is at the strongest in years, but the mighty margins that entice refiners to churn out product may end up burning them.
The gasoline crack spread, a rough measure of profit, surged above $24 a barrel on Friday to the highest seasonal level since 2015. There’s a lack of gasoline in the U.S. -- fuel inventories are at the lowest since November -- after freezing weather in Texas last month caused widespread refinery outages. Ultimately though, rising biofuel costs are threatening to sting some refiners wanting to ramp up and take advantage of juicy margins.