just two months ago president joe biden was castigating oil refiners for making record profits at a time when americans were paying 5 per gallon at the pump today gasoline prices are down below 4 and refiners’ stocks are falling too the vaneck oil refiners etf ticker crak has fallen 14 from the high it hit shortly before biden sent the companies a letter outlining his concerns shares of major us refiners including phillips 66 psx valero energy vlo and marathon petroleum mpc have all slipped refinery margins—the difference between the cost of a barrel of oil and the value of the products that can be made from it—had soared in the second quarter because the companies weren’t making enough products like diesel and gasoline as people started traveling more but now that shortfall has eased in part because demand has fallen as economic growth has weakened in much of the world restrictions to fight covid19 have cut into fuel consumption as well refineries are processing more crude by operating near the limits of their capacity which has helped to shore up supplies too this week the international energy agency reported that refineries are likely to hit their highest production levels since january 2020 this month as refineries around the world have ramped up production output has risen so much the agency said in a monthly report that it is now outstripping demand and capacity is set to rise next year too further easing the crunch and possibly putting a lid on gasoline and diesel prices exxon mobil xom has already announced an expansion at one of its refineries that will add 250000 barrels a day of capacity early next year in recent weeks refiners have been telling investors that margins had slipped although they remain above historical norms margins are “not what we experienced in the second quarter but certainly well above what we would consider to be a traditional midcycle” said valero ceo joseph gorder on the company’s earnings call late last month valero’s stock has fallen particularly hard in recent weeks as margins have contracted it is down 22 from its june high that said the refiners had been preparing for margins to moderate building up cash cushions when they were at their peaks and refining capacity is still only expanding gradually with construction around the world being delayed by covid19 in the us despite biden’s attempts to expand capacity it’s unlikely any new refineries will be built in the coming years so while margins may have come down from their peaks it is likely that they will be strong for an extended period current margins are “still spectacular” wrote tom kloza global head of energy analysis at opis in an email to barron’s they could tick higher again when some refineries stop operating for maintenance in september “i still see real epic margins for jet fuel and diesel in the last 100 days of 2022 and beyond” kloza wrote opis is owned by dow jones publisher of barron’s