I just filled my truck with gas. I paid almost $ 2.60 per gallon, which seems expensive to me.

It’s hard to believe this summer’s prices were the highest since 2014. We’ve had nearly four years of low gas prices … or what feels low.

However, based on the price of oil, we are paying more for gasoline now, in relative terms, than in 2008.

A lot more. That makes me think there is an investment opportunity.

Let me teach you …

Something strange is happening with the gasoline

The price of oil represents only 45% of the price of gasoline. The rest are taxes (21%), refining costs (18%) and distribution (16%).

However, something strange is happening with the price of gasoline. We can see it from a simple comparison: for how many gallons of gasoline we can buy with a barrel of oil.

In theory, that ratio shouldn’t change much. However, something is not right with the price of gasoline. As oil prices fell from 2008 to the present, the price of gasoline has risen relative to the price of oil.

Gasoline has become more expensive relative to the price of oil.

Oil refineries are a good option today

Before 2017, the price of oil represented 62% of gasoline costs. But in 2009, it took 50 gallons of gasoline to pay for a single barrel of oil. Considering there are only 42 gallons in a barrel of oil, something was wrong.

When oil prices skyrocket, refineries have a hard time producing gasoline at a profit. That’s because as gas prices rise, consumers conserve.

In 2009, the US had the fewest miles driven since 2003. That forces refineries to keep the cost of gasoline low, even while paying high prices for oil.

However, as oil prices fell in 2016, refineries regained ground by pulling consumers out. They charged more for gasoline … lowering the ratio and increasing profits.

Giant oil refiner Valero Energy Corp. saw its revenue drop from $ 113 billion in 2008 to $ 63 billion in 2009. From 2013 to 2015, as prices fell, Valero’s profits grew from $ 5.7 billion to $ 8.2 billion. That was a 44% increase in profits, even as oil prices collapsed from $ 100 to $ 30 a barrel.

Today we see something similar happening. As oil prices contract from a recent high of $ 66 to $ 60 and below, we can expect gasoline prices to decline more slowly. That means the refineries will probably do well this year.

And the industry should continue to do well. And the recent pullback makes the refining complex look attractive today.

If you want to put money to work on oil without direct exposure to the price of oil, that is a good option today.