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Are US Gasoline Refiners Holding Back as Gas Prices Rise?

CNBC contributor John Kilduff of Again Capital shared his thoughts on the refining industry, after looking at EIA energy inventory data Thursday. This is what he wrote:

There was a curious statistic in today's weekly energy report from the EIA. U.S. refinery runs fell below 80 percent to 79.6 percent. This is an extraordinarily low level of operation, especially given the high crack spreads refiners are earning. (Crack spread is the profit margin refiners make on turning a barrel of crude oil into refined products, such as heating oil or gasoline)

The industry seems to be holding back on productive capacity. Even allowing for seasonal retooling to emphasize gasoline production, this is abnormal and approaching levels usually seen in the aftermath of a hurricane hit or scare.

As pump prices surge toward $4 per gallon, it is hard to understand why more capacity is not being utilized to get more product to market. I would think this will soon invite government scrutiny.

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