Posted on 10/29/2008 8:42:47 AM PDT by BGHater
As falling gasoline prices squeeze refining profits, there are signs that refiners are ratcheting back production to pare losses.
Gasoline output, which had been expanding as U.S. refineries came back online after hurricane-related shutdowns, dropped for the first time in weeks, according to data reported last week from the Department of Energy. Philadelphia refiner Sunoco Inc. said last week that it is shutting down a unit used in gasoline production at one of its refineries, though it declined to say why.
"It makes no sense to be running [equipment] if they're not making any money," said Daniel Katzenberg, an analyst at Oppenheimer & Co.
Following oil prices down, the cost of gasoline tumbled to a national average of $2.699 for a regular gallon Sunday, far from its high of $4.114 in July, according to the auto club AAA. That has brought relief to consumers and businesses nationwide -- but not refiners.
The business of processing crude oil into gasoline suffered earlier this year as oil prices skyrocketed to $145 a barrel in July. Refiners were unable to pass on the higher cost to consumers who balked at paying record-high prices at the pump. Refining profit margins collapsed, and many companies resorted to production cutbacks, making for some of the lowest operating rates at U.S. refineries in years.
(Excerpt) Read more at online.wsj.com ...
PING!
Actually, low feed-stock prices are an opportunity for refiners to make money, but not if the price at the pump falls faster than the price of crude.
It’ll all work out. It always does.
I guess they make money when things are nice and stable...
What nonsense. The barrel prices are still well into the profit margin. Funny, before the barrel price began to rise these prices were just fine, Oil companies were still making billions in profits.
The only ones being squeezed at the current barrel prices are the consumers.
Maybe the refiners could use a bailout. To the helicopter, Ben! Magic monopoly money for all!
1.88/gal here in Indy today
filled my tank with a $20 bill
sweet
Now that right there is funny, the feds coming to the rescue of the oil industry!!!!
Only when hell starts serving ice cream to the guests.
Good thing I filled before I crassed the border this morning. Still $5 in Canada (imperial gallon mind you)
Sweet indeed!
Roughly about $3.20 per us gallon.
I’ve slashed my fuel consumption by 33% at least.
Well, boo freakin' hoo.
There is a squeeze alright on the refiners right now. Just look at the Spot market (immediate delivery, not futures) Crude Price versus the Gasoline Price in the Gulf Coast.
Crude Oil average $65.57/barrel.
Regular Conventional Gasoline $1.48/gallon or $62.50/barrel.
That is a $3 loss for the work of refining the crude into gasoline.
Petroleum Spot Prices
http://tonto.eia.doe.gov/dnav/pet/pet_pri_spt_s1_d.htm
Thanks thackney, you always have good dope.
Obviously it is not a situation that is going to last very long. Contracts will be met but who is going to continue running crude through a refinery to lower the price?
$1.88???
We’re still paying $2.50 or so in North Alabama. The past month we finally quit having spot outages.
Very simple who will operate a refinery at a loss. Since a great many of those refineries are owned by the same oil companies that helped drive up the prince of oil allowing them to post record breaking profits, they can eat the cost. For those that are independently owned, which are few, they will just have to suffer.
It’s not right to strip the little guys and rake us over the coals for years, and then scream foul when they end up losing a mere .001 percent of their profit. I don’t know the exact number, but I can rest well knowing that their losses arefar offset by their profit.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.