High crude oil prices aren't the only reason you're paying $3.15 for a gallon of regular.
For America's giant gasoline refiners -- some of whom are expected to report multibillion-dollar profits this week -- this is a golden age. By California state estimates, refinery profit margins have more than doubled in 2006, though that figure doesn't take into account some key expenses. Meanwhile, oil prices have risen by 14 percent.
Earlier this week, Valero Energy Corp., the country's largest refiner, reported the highest first-quarter profits in its history, $849 million, up 60 percent from the same period last year. The company's top executive credited the jump, in part, to record profit margins that he cheerfully predicted would last through the summer.
Exxon Mobil, the world's largest publicly traded oil company, will report its results today. San Ramon's Chevron Corp. will follow suit Friday. Wall Street analysts expect big profits from both, with refineries bringing in far more of the cash than they once did.
Oil industry critics hunting for proof of price gouging point to refineries' expanding profit margins as evidence. Oil companies, they say, can control the price they charge for refined gasoline far more than they can influence the price of crude. Whereas crude oil prices are set by a global market, the market for refined fuel tends to be more local, with more limited supplies. That narrows the competition refiners face and gives them more leeway in what they can charge.
In addition, critics say the companies deliberately closed many U.S. refineries years ago as a way to drive up their margins. The country now has 144 refineries, down from 324 in 1981.
"The refining business used to be pretty lousy, but they took very aggressive actions to correct that," said Tyson Slocum, director of the energy program at the Public Citizen watchdog group. "They're choosing not to build new refineries because it's not in their economic interest."
Some also wonder if the companies are testing drivers' willingness to pay higher prices. Refinery profit margins aren't the biggest component of retail gasoline prices -- crude oil is the largest, and taxes take a sizable chunk -- but they have a direct impact on prices at the pump.
"If gas companies know that they'll sell as much of their product at $3 as they do at $2.50 per gallon, what do you think they're going to do?" said Sean Comey, spokesman for the AAA of Northern California auto club.
Refiners maintain they'd be happy to build more refineries if they could find towns and cities willing to host them. And they bristle at the suggestion that they're raising prices more than necessary as some kind of market test.
"A company that does that is risking market share, because not everyone's going to along with it," said Joe Sparano, president of the Western States Petroleum Association, which represents several refiners. "And God help them if they do it when oil prices are going down."
Exact profit margins for the industry are difficult to track, because the companies involved don't reveal financial details that could help their competition.
The California Energy Commission publishes a loose weekly estimate, measuring the difference between what the state's 21 refineries pay for crude oil and what they charge for their products. Since the start of the year, that figure has jumped 130 percent, from 30 cents for each gallon of finished gasoline to 69 cents last week. During the same time, the price refiners pay for crude oil has increased 14 percent.
Sparano noted, however, that the energy commission's numbers don't take into account many of the refiners' costs, such as buying chemical additives to blend into their gasoline and paying other companies to store it.
"In the case where it's 30 cents, no one -- including the CEC and me -- can tell you how much of that is cost and how much is profit," said Sparano. As head of a trade organization, he is prevented by antitrust laws from seeing precise profit details of the companies he represents.
The federal government keeps similar statistics, calculated in much the same way as the state's. They show a hefty 34.8 percent increase in refining margins nationwide in 2005 compared with 2004 -- which had been considered a strong year.
Those statistics, however, show that the margins barely kept pace with growth in the price of unrefined oil. The amount refiners spent on crude grew 36.6 percent during 2005, according to the federal Energy Information Administration. Similar figures for the start of 2006 won't be available until oil companies finish reporting the first quarter results.
Even so, refinery profit margins are about to get more scrutiny.
They will be one of the subjects of California's latest investigation into rising gasoline prices, announced by Gov. Arnold Schwarzenegger Tuesday.
Past investigations in the state have been unable to prove market manipulation or price gouging. A 2004 study by the federal Government Accountability Office, however, concluded that oil company mergers and acquisitions from the mid-1990s through 2000 had pushed up California's gasoline prices about 7 cents, in part by consolidating control over refineries in the hands of fewer companies.