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Oil refiners' golden age of profits
Key Excerpts from Article on Website of San Francisco Chronicle (San Francisco's leading newspaper)
Posted: November 11th, 2006
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/04/27/...
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...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. Oil industry critics hunting for proof of price gouging point to refineries' expanding profit margins as evidence. 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." Exact profit margins for the industry are difficult to track, because the companies involved don't reveal financial details. 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.
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