Planes Over Cars: The $5 Gasoline Trap

U.S. crude oil and petroleum product inventories totaled 1.57 billion barrels as of May 29—the lowest level in about 22 years , according to the Energy Information Administration. But the real squeeze isn't just about how much oil America has. It's about what refiners are doing with it.

A global supply crunch has U.S. refineries producing jet fuel at a record pace while skewing output away from gasoline, setting up a potential transport fuels production clash during the peak summer travel period , Bloomberg reported in May. Refiners have been "maximizing jet fuel production at the expense of gasoline and diesel yields," said Natalia Losada, senior oil products analyst at consultancy Energy Aspects . The math is brutal: gasoline margins are sitting around $50 a barrel—the highest since the peak of the 2022 energy crunch . Yet jet fuel cracks have exploded even higher, and refiners follow the money.

Can Refineries Just Make More Gasoline?

Not easily. U.S. refineries produced a record-high share of jet fuel in 2024, reflecting increased demand relative to other transportation fuels, with motor gasoline, distillate fuel oil, and jet fuel making up more than 85% of U.S. refinery output , the EIA noted. Refineries cannot shift between products so easily—alterations in the product slate are subject to technical limitations, including minimum lead times, and transformation costs , according to an IATA analysis.

In summer, when demand peaks, refineries typically get less gasoline out of a barrel of crude because they blend in fewer cold-weather additives—meaning a gallon of gasoline requires more crude, and refiners must "steal" materials that typically go into jet fuel and diesel , said Susan Bell, senior vice president of downstream research at Rystad Energy. "It turns into a bidding war," said Eugene Lindell, head of refined products at consultancy FGE NexantECA, with gasoline and jet fuel competing for refinery capacity . Oil processors including Valero and Marathon have brought on extra jet fuel capacity, in some cases at facilities that typically don't make the product.

California offers a preview of what happens when the bidding war tips decisively toward aviation. In April, California refiners boosted CARB-diesel by 16,000 barrels per day and jet fuel by 20,000 b/d, while cutting CARB-gasoline output by 32,000 b/d, with gasoline averaging around 590,000 b/d—about 20% lower year on year , OilPrice.com reported. Jet fuel prices in Los Angeles more than doubled year on year, rising from roughly $2.1–2.2 per gallon in 2025 to around $4.7–4.8 in April 2026 . Gasoline prices have already approached all-time highs of almost $6 per gallon in the state.

The structural problem runs deeper than price incentives. The number of refineries in California has fallen from 23 in 2000 to just 11 in 2026, with the latest closures in November 2025 and April 2026 removing the 140,000 b/d Phillips 66 Wilmington/Carson complex and Valero's 145,000 b/d Benicia refinery—together accounting for 17.5% of the state's refining output .

Why Is Jet Fuel Suddenly King?

Seven major refinery closures and conversions since 2019 have permanently removed more than 1.2 million barrels per day of crude processing capacity, while jet fuel demand has recovered to pre-pandemic levels and is projected to reach an all-time high of 1.76 million barrels per day in 2026, with TSA average daily throughput reaching 2.39 million passengers in 2024—up 6% from 2019 domestically and 24% internationally , according to industry data compiled by DWU Consulting. The EIA's February 2025 Short-Term Energy Outlook forecasts U.S. jet fuel days of supply to fall to approximately 21 days in 2026—the lowest level since 1963, with combined inventories of gasoline, distillate, and jet fuel forecast to reach 375 million barrels by end of 2026, the lowest since 2000 .

The Iran war turbocharged the shift. Refiners in the U.S. Gulf Coast are some of the most price sensitive in the world, tailoring their petroleum product output to make as much money as possible, and with the war upending energy markets and stockpiles, they have ramped up jet fuel in recent months to capture a price spike while gasoline output as a percentage of production is well below seasonal norms , Bloomberg noted.

U.S. gasoline stockpiles are at their lowest seasonal level since 2014, while imports are at their lowest seasonal levels this century , according to TT News. Meanwhile, U.S. crude inventories fell by 7.974 million barrels in the week ended May 29, the most since February and exceeding expectations for a 4 million barrel draw , Trading Economics reported. Gasoline inventories rose by 3.364 million barrels, but distillate stocks increased by 1.502 million barrels —hardly enough to ease concerns heading into peak driving season.

What Changed This Week

US crude oil and petroleum product inventories have fallen to their lowest level in more than two decades, as shipping restrictions in the Strait of Hormuz continue for a fourth month amid the war between the United States and Iran, with the decline attributed to the Trump administration's release of Strategic Petroleum Reserve stocks to curb soaring oil prices, combined with a surge in US crude exports , the Seoul Economic Daily reported. Trafigura's results for October 2025 to March 2026 show net profit of $4.1 billion—exceeding its full-year 2025 profit of $2.7 billion—driven by broad contributions across oil, metals, gas and power , according to Mining.com. The commodity trader called the current moment an "inflection point" for oil markets. China's crude imports, meanwhile, experienced a dramatic slump in May 2026, reaching their lowest level in nearly a decade at 6.36 million barrels per day, down from 8.10 million bpd in April and nearly half the 11.39 million bpd recorded in February , ChemAnalyst reported—a collapse that has inadvertently cushioned global prices but won't last indefinitely.

What to Watch

The EIA releases its next Weekly Petroleum Status Report on June 10. Watch for gasoline inventory draws as Memorial Day demand filters through the data. "Global crude inventories could fall to extremely low levels within the next two to three weeks," Neil Chapman, senior vice president at ExxonMobil, warned at a conference in late May . Bob McNally, president of energy consulting firm Rapidan Energy Group, noted that "if the Strait of Hormuz is not reopened to tanker traffic, oil prices could spike to $200 per barrel this summer" . For now, WTI crude traded at $71.50/bbl per barrel on Wednesday, up +0.63%, while Brent settled at $75.20/bbl, gaining +0.51%, according to market data. Those prices remain well below panic levels—but the refinery product mix suggests the real pain may show up at the pump, not the futures screen.