The Morning Sun’s headline blamed refinery profits. Its own reporting explains the actual driving factors and the detail critics keep skipping.

This month, The Morning Sun published a column titled “Pain at the Pump, Profits at the Refinery.” The headline implies refiners are cashing in at drivers’ expense, but the column’s own reporting says otherwise. Berkeley economist Severin Borenstein, who is quoted in the piece, says, “I don’t see any evidence that refiners are doing anything anti-competitive,” and adds, “They are selling a scarce commodity, which results in large profits. That’s how markets are supposed to work.”

That headline is a small example of a much bigger argument. Oil and gas companies are posting large profits while drivers pay more at the pump, and the response from Washington has been to demand relief. In June, Sens. Elizabeth Warren and Sheldon Whitehouse wrote to seven oil companies about “windfall profits,” citing a national average of $4.16 a gallon, up from $2.98 before the Iran war. President Trump has demanded gasoline fall to $2.25 to $2.50 and ordered the Justice Department to look into price gouging, according to OilPrice’s reporting. Advocacy groups, including Food & Water Watch, are pushing a windfall tax and an export ban. Much of that response rests on an assumption: that oil companies pick the price and could simply pick a lower one.

Nobody is setting the price

Crude is priced on a global market, so no single producer sets the price. A company selling a barrel of oil gets whatever the market is paying that day, the way every commodity seller does in a free market. It is the supply and demand lesson from Economics 101, and the next section shows how it plays out.

Critics ask why companies aren’t simply drilling more to bring prices down. Grist reports the answer is investors: after the busts of 2014 and 2020, shareholders reward discipline and payouts over growth, so record profits haven’t set off a drilling spree. Drilling is picking up, with U.S. oil rigs at 440 in late June, their highest level since June 2025, but slowly. Two more factors hold it back.

• Price expectations: a well drilled today has to make sense at the price executives expect in 2028, not the number on this week’s screen, as we noted earlier this month.
• Policy risk: one exploration and production executive wrote in the Dallas Fed’s third-quarter energy survey that “Regulatory uncertainty poses a material risk to business investment,” and that when “administrations’ priorities shift sharply every two to four years, companies face a dilemma: Invest in initiatives the current administration favors or avoid them due to reversal risk under the next administration.”

Each of those is a choice about how much to drill, made under pressure from shareholders, markets, and politics. None of them sets the price a barrel sells for.

A shortage, not a price tag

The closure of the Strait of Hormuz sent crude to a four-year high. Energy Live News called the result the largest oil supply disruption ever, with global inventories falling by 250 million barrels in March and April. The disruption squeezed refining too: global refining fell about 10%, according to the American Fuel & Petrochemical Manufacturers (AFPM).

Refiners earn the “crack spread,” which is the gap between what they pay for crude and what their products sell for. If crude costs $80 a barrel and products sell for $100, the spread is $20. If products climb to $120 while crude holds still, it doubles to $40. S&P Global Market Intelligence predicted that U.S. independent refiners’ profits would rebound in 2026 because global supply disruptions are widening margins and strengthening crack spreads. That is the dynamic behind the numbers critics cite.

What would actually lower prices

Borenstein says little can be done immediately, and AFPM’s Chet Thompson argues that steady long-term policy is what attracts refinery investment. California shows what happens without it. When Valero announced it would close its Benicia refinery, CEO Lane Riggs cited a challenging regulatory and enforcement environment and said the state’s rules are “the most stringent and difficult of anywhere else in North America.” Valero ended fuel production there on April 30, 2026, and Phillips 66 began winding down its Los Angeles refinery. Reuters reported the two sites together account for roughly 20% of California’s gasoline supply, and it tied the state’s high gasoline prices to its reliance on imported fuel. A state that imports more of its fuel has less cushion when a supply shock hits.

Bottom Line

Frustration with $4 gasoline is fair. Aiming it at oil company profits misreads the cause, which is a supply shock. A windfall tax would not add a single barrel of supply, but capacity, steady policy, and an end to the supply disruption would.