ALEXANDRIA, Va.—As restrictions begin to lift around the country, Americans are getting back out on the roads—and fueling up as a result. This is good news not only for convenience store industry but also for fuel refiners, as they seek to come back from nearly half their normal level of demand in early April.
Refiners like Valero Energy Corp and Phillips 66 will likely ramp up production after laying low for the past few weeks. But prices should remain low for a while longer, The Wall Street Journal reports.
Regular gasoline averaged about $1.80 a gallon in the U.S. on Thursday, down from $2.89 a year earlier, according to GasBuddy.
Marathon Petroleum Corp. reported a $9.2 billion loss in the first quarter of 2020, and Phillips 66 reported a $2.5 billion quarterly loss, both of which are the largest quarterly losses on record for each company. Refiners ran facilities at nearly two-thirds their average capacity in mid-April and minimized output of jet fuel and gasoline in favor of diesel to help power trucks that transport food and necessities.
In a normal world, fuel makers do well when oil prices are low because people drive more. But because Americans have been sheltered in place recently, the demand has been at an all-time low—and it will likely continue into the second quarter.
“There’s probably a few months before we can really give a better sense for exactly how this is going to play out, but we’re definitely off the lows and seeing some nice improvement,” Timothy Griffith, president of Marathon Petroleum’s Speedway gas station chain, told the Journal.