Major oil companies have opted to allocate their recent windfall profits primarily toward shareholder returns and debt reduction rather than significantly expanding refining capacity in the West, despite repeated calls from political leaders for increased investment to address supply shortfalls. ExxonMobil, Chevron, BP, Shell, and TotalEnergies collectively reported over $50 billion in net income for the third quarter, benefiting from elevated fuel prices driven by geopolitical disruptions.

The surge in profits stems largely from refining operations running near full capacity to capitalize on high prices amid reduced supply. This tightening in refining capacity coincides with about 10% of global oil refining capacity being offline due to the war in Iran, attacks on Russian refineries in Ukraine, and export restrictions imposed by China and Russia. The International Energy Agency (IEA) has warned that diesel shortages stemming from these disruptions could persist through 2027.

Governments from the United States and G7 nations to the European Union have urged oil companies to reinvest these increased earnings into boosting domestic refining capabilities to enhance energy security and stabilize fuel prices. US President Donald Trump convened a White House meeting in September with oil industry leaders to discuss measures aimed at lowering fuel costs.

Despite these appeals, the major refiners have refrained from large-scale investments or building new refineries, citing the long development times and uncertain future demand for refined fuels. Industry analysts note that with a projected gradual decline in fuel consumption due to shifts toward cleaner energy and alternative technologies, constructing new refining facilities in Europe and North America is considered economically unviable. Allen Good, an energy analyst at Morningstar, said no new greenfield refineries are likely in these regions under current conditions, and that current profit margins are viewed as unsustainable in the long term.

ExxonMobil, which reported record third-quarter refining profits, is proceeding with an expansion of its Baytown, Texas refinery but will maintain overall refining capital expenditure at about $9 billion over the next four years. BP CEO Meg O’Neill confirmed the company has no plans to expand refining capacity further, following the recent sale of its Gelsenkirchen refinery in Germany.

Similarly, smaller US refiners have focused on optimizing existing assets rather than capacity growth. Phillips 66 has prioritized investments in midstream infrastructure, which involves storage and transportation of refined products, while Valero recently acquired an idle refinery in Houston from LyondellBasell for $320.5 million.

While Western refiners hold back on capacity expansion, investment in refining has continued in other regions. Since 2019, China and the Middle East have added approximately 4.4 million barrels per day (b/d) of refining capacity, contrasting with a reduction of about 2.1 million b/d in Europe and North America, according to data from the Federal Reserve Bank of Dallas. This divergence underscores the complex global dynamics affecting fuel supply amid ongoing geopolitical tensions and evolving market conditions.