10-10-07 by dugan
Chevron, BP and Valero Energy have warned that their third-quarter profits will be under those of the last quarter because their refining profits have deflated from stupendously piggish highs. Unfortunately, they and other oil companies are doing all they can to correct the situation. A web financial-analyst report filled with mind-numbing charted data sums it up:
"Lending further support for a rebound in refining stocks is the fundamental pictures of supply and demand. Gasoline production is declining precipitously and is below last year’s levels as refinery utilization rates have fallen from a high of 92% in August to 87.5% currently.
"The falloff in demand with the end of the summer driving season is stabilizing while at the same time additional supply coming from imports is falling. With falling production, falling refinery utilization rates, falling imports, and stabilizing demand, it’s no wonder that U.S. gasoline stockpiles are well below the average for this time of the year."
That "rebound," then, would be induced by a deliberate reduction in refining and gasoline supplies, even as U.S. pump prices linger at nearly 50 cents above last year’s price at this time.
Oil prices are at historic highs, with analysts stumped for any real-world explanation beyond irrational unregulated market trading. On top of this, oil companies will do all they can to regain the near $30-a-barrel refining margin that drove new profit records across the board in the second quarter.
Homeowners in cold climates may suffer even more than motorists. The federal Energy Information Administration yesterday predicted that the cost of heating oil (also a refined product) will jump 22% this winter. In New York, that’s on top of heating oil prices that are already at record highs.
The other heating fuels, natural gas and propane, are predicted to rise 10% and 16% respectively.
Has anyone given a thought to what that will do to homeowners whose adjustable mortgages already have them on the edge of insolvency? In California, maybe not much. But in Chicago, Buffalo and Boston, an extra $100 or $150 a month adds major stress to a mortgage rising by hundreds more.