Who is profiting from high gas prices

BP profits surge amid higher oil and gas prices. Prices of wholesale gas have soared because of low storage levels in the UK.

BP predicts tight gas markets this winter as rising prices boost profits — business live. Read more. Reuse this content. As the surge in oil prices continues amid increasing demand and a supply crunch that has driven up prices for all types of fuels, energy stocks are soaring—in some cases, notching triple-digit returns—while several U.

Several U. The surge in oil prices is part of a global energy crunch, which has increased prices for all types of fuels : Gasoline is more costly in the U. As countries continue to recover from pandemic-induced economic slumps, however, the demand for oil has risen faster than producers can ramp up supply.

Making matters worse are shortages in coal and natural gas, which are sending the price of oil up even further. The price of oil could keep climbing.

Officials representing some oil-importing countries complain that oil companies, including those controlled by foreign governments, have not spent enough money on new exploration and development, leading to tight supplies of oil.

Consumer advocates say mergers in the refining business have diminished competition and made it easier for the companies to limit supplies of gasoline and extract higher prices. Refiners say they are spending heavily to expand and that their industry should not face new taxes or other penalties. Hurricane Katrina shocked already-tight markets for crude oil and gasoline. It reduced oil production in the Gulf of Mexico and caused the shutdown of nearby refineries, crimping supplies of crude oil and gasoline.

Traders on the New York Mercantile Exchange responded by bidding up prices for both commodities. That influenced oil sellers and buyers who negotiate prices in an informal spot market conducted by phone and instant computer messaging.

Producers cut deals with refiners to sell oil at a higher cost, pegged to the rising prices on the exchange. When the selling price exceeds that, the increase is almost all profit, they said. Refiners processing the oil into gasoline faced lucrative market conditions.

They may have had to pay producers more for the oil, but they were able to sell gasoline for higher prices as a result of the short supply and the spike on the mercantile exchange.

In their view, the increases were justified because the market dictated that their final product — gasoline — had risen in value. Refiners, particularly those with most of their facilities outside the path of Katrina, cashed in. Analysts predicted a windfall for companies such as Philadelphia-based Sunoco, which continued operating normally during the hurricane.