Stephen Schork, editor, The Schork Report, told CNBC’s “Morning Call” that limited refinery capacity -- not short supplies of crude oil -- are driving gasoline prices higher.
“The market is not concerned about the future availability of crude oil,” Schork said Tuesday. “What they are concerned about is the future availability of gasoline and distillate, because our refineries have not been running at full tilt.”
The failure to refine enough gasoline means crude oil stocks have been building and U.S. supplies, including the Strategic Petroleum Reserve, now total about 1.44 billion barrels -- a nine-year high.
A severe hurricane season could damage refineries along the Gulf Coast, disrupting supply and sending gasoline prices higher. But Schork said if this storm season is mild like last year's, crude oil prices could fall to $55 per barrel late this year, because of the large supply on hand.
Kevin Kerr, editor of Resource Trader Alert, offered a similar view.
“This is a refinery issue,” Kerr said. “Refining capacity -- we’ve seen that dropping even though we’ve seen this build in [crude] oil supply. Gasoline is certainly the big driver here right now. In the fall, it will be heating oil like it is every year. There is no margin for error.”
Crude oil recently fetched $72.63 on the New York Mercantile Exchange, up 44 cents.