Gas and oil prices and exchange traded funds (ETFs) have been the subject of nearly non-stop discussion for almost a year. We spoke with API, a trade association that educates and informs the public about the petroleum industry.
Like many, we’ve reported a few times on the reasons gas and oil prices aren’t in lockstep. Part of the reason gas prices continued to rise despite the price of oil declining has been blamed on reduced refinery output, but Chief Economist John Felmy says that this isn’t exactly the case.
Refinery output is down, but for a couple of reasons:
1. Refineries are going through maintenance right now, a twice-yearly event that takes place for the purpose of upgrades, safety and preparations for the coming season (particularly the switchover to summer gas).
2. Refineries have become more efficient in their production, so the full capacity isn’t needed. “Refiners are squeezing more out of the barrel by the changes they’re making – that increases the total volume of gas being produced,” Felmy points out.
In fact, Felmy says, if you compare the average production of gas now to a year ago, it’s higher, and even reached an all-time high in January.