How Refineries Turn Petroleum into Gas and What This Means for Prices at the Pump

Posted on Posted in Financial

While many millions of Americans regularly buy gasoline, diesel, and other refined fossil fuels, relatively few understand what it takes to pull crude petroleum into the ground and turn it into such products. In its raw form, petroleum is a thick, almost sludge-like material that burns in notably dirty fashion. With much of the energy locked up in the liquid being wasted when crude petroleum is simply burned, refining it into purer and more specialized forms of fuel almost always makes sense.

In fact, refineries generally turn a single batch of petroleum into a number of different final products at once. At the center of most refineries operating today is a system that enables what is known as fractional distillation, with progressively purer and lighter forms of fuel being produced as crude petroleum proceeds through a column or similar feature. At the beginning or bottom of such a piece of equipment, processed petroleum will emerge in a form that most closely resembles the original one. At the far end, highly refined and much more volatile and cleaner burning fuels like gasoline can be tapped, with these typically commanding the highest prices of all.

As my review here might make clear, this process is a central feature of the work that begins when petroleum is extracted from the ground or under the ocean’s floor and ends with the combustion of a refined fuel in the engine of a passenger car or truck. While many drivers would just as soon not think overly much about the details, the fact is that the important role refineries play in this cycle accounts for a fair amount of a situation that commonly confuses those who are filling up their own tanks at a local pump.

This issue, of course, is the way that prices for gasoline, diesel, and other refined fuels sometimes seem to fall out of step with the petroleum pricing developments on the world commodity markets. Quite a few drivers correctly believe that the cost of crude petroleum itself accounts for the largest portion of the price paid for gas at the pump. What many fail to realize, though, is that the complexity of the process that turns raw petroleum into refined gas sometimes means that the effects of price fluctuations will not be felt right away.