Three refineries at a one year high, the spread makes the profit

The short version

• Phillips 66, Marathon Petroleum and Valero Energy reached new 52 week highs on 1 September.
• Marathon Petroleum traded at 381.15 dollars, a level the share had last seen in June 2011.
• The energy sector is up around 43 percent in 2026 and therefore leads all eleven sectors in the S&P 500.

Three highs on one day

Three American refinery operators reached new 52 week highs on 1 September. Phillips 66, Marathon Petroleum and Valero Energy benefited from the situation on the energy market. Marathon Petroleum traded at 381.15 dollars, a level the share had last seen in June 2011.

That all three mark record levels at the same time is not chance but a pointer to a common cause. Three companies can rise on the same day for three different reasons. It is more likely that they are all reacting to the same thing.

With refinery operators this common element does not lie in the running of the individual plants but in the price constellation they work in. How well a single site is run decides nuances. Whether processing crude oil into fuel is worthwhile is decided by the market for everyone at once.

At Marathon Petroleum the order of magnitude can be read off a date. A price of 381.15 dollars means the share had last seen this level in June 2011. The move therefore goes beyond what a single good quarter would explain.

Why the spread is what counts for a refinery

That is exactly the difference to producers. For a producer a high oil price is immediately good, because its costs per barrel are largely fixed. For a refinery it is at first only a higher purchase price.

A rising oil price is therefore neither good nor bad for a processor. What matters is only whether petrol, diesel and kerosene become more expensive faster than the crude oil they are made from. If product prices lag behind, the refinery earns less despite expensive oil. If they rise more strongly, it earns more.

That explains why reports about the oil price say little about this part of the industry. The figure that matters is a difference and not a price.

What is making the spread large at the moment

That the spread is unusually large at the moment has several possible reasons. Fuels are scarce while crude oil is comparatively available. On top of that come disrupted transport routes that cut individual regions off from supply.

Both work in the same direction. Scarce fuels lift the selling price, available crude oil keeps the purchase price down. Disrupted transport routes reinforce the effect, because a surplus in one place no longer offsets a shortage in another.

What is visible of this in Germany

In Germany this can be seen at the pump. Fuels were around 23 percent more expensive in July than a year earlier, while electricity and gas for households even became cheaper.

This comparison is the actual evidence. If energy had become more expensive in general, electricity and gas would have to follow. They do not. The price pressure sits with fuels, so exactly where the refineries sell.

For households that is the unpleasant side of the same calculation. The difference that appears as earnings at the processors is paid at the other end by somebody at the pump. That electricity and gas became cheaper over the same period only makes the contrast clearer.

The energy sector as a whole is up around 43 percent in 2026 and therefore leads all eleven sectors in the S&P 500. The three one year highs of 1 September are therefore not an outlier but the most visible point of a development that has been running all year.

Assessment

The refining margin is one of the most underrated figures in the energy field. It explains why processors sometimes earn well when oil is expensive and sometimes badly.

What strikes me about the current situation is the simultaneity. When three processors mark one year highs on the same day, it is not about how they are run but about a market constellation that all three benefit from.

Such constellations rarely last long. As soon as transport routes normalise or capacity returns, the spread shrinks, and with it the profit.

Frequently asked questions

What is a refining margin

The difference between the purchase price for crude oil and the selling price for petrol, diesel, kerosene and other products. A refinery earns from this spread and not from the oil price itself. It can be large or small when the oil price is high, depending on how strongly product prices follow.

Why does a high oil price work differently at producers than at refineries

For a producer a high oil price is immediately good, because its costs per barrel are largely fixed. For a refinery it is at first only a higher purchase price. Whether that turns into a higher profit depends on whether product prices follow. That is why a report about the oil price alone says nothing about how a processor is doing.

How long does a spread this large hold

Such constellations rarely last long. As soon as transport routes normalise or capacity returns, the spread shrinks, and with it the profit. The move at Phillips 66, Marathon Petroleum and Valero Energy therefore describes a market situation and not a lasting improvement of the business. At the moment two circumstances carry it, scarce fuels alongside comparatively available crude oil and disrupted transport routes.

This text is not investment advice. It reports verifiable figures and puts them in context.

This analysis is for information only and is not investment advice.