4-17-08 by dugan
Yep, the price of oil keeps rising. But the price of gasoline is now rising even faster, up nearly two cents a gallon in one day to $3.418 nationally. Here’s how it’s done, courtesy of a few paragraphs tucked into a larger Bloomberg story:
The Energy Department yesterday reported an unexpected
decline in U.S. crude-oil inventories and refinery operating
rates last week. The report also showed a bigger-than-expected
drop in gasoline supplies.
U.S. refineries operated at 81.4 percent of capacity, the
lowest since October 2005 when output was cut by hurricanes
Katrina and Rita. Lower margins, or the profitability of
refining, reduced the incentive for refiners to process crude oil
into gasoline and other fuels.
Last year, when refinery output fell and prices spiked, producers blamed storms, refinery accidents, "unplanned maintenance." This year, they’re admitting to naked profit-seeking. Oil companies already making windfall year-over-year profit records crude oil are now seeking to restore obscene refinery profits as well. U.S. motorists are cutting back steadily on driving. But refiners are cutting back even more on making fuel, to make sure their pump prices don’t respond to the drop in consumption.