Oil Refiners See Profits Sink as Consumption Falls

[flashl]

While drivers are facing sticker shock at the pump these days, here is a bigger shock: high prices are putting a strain on oil refiners.

After last year’s stellar profits, American refiners are going through a traumatic period. In a time of record gasoline prices, some of them actually lost money in the first quarter, and for virtually all refiners, profits are down sharply.

Experts say the refiners are caught in a double bind. The price of their raw material, oil, is rising because of strong global demand. At the same time, consumption of gasoline in the United States is falling as a result of slower economic growth and consumer efforts to conserve.

...

In the United States, there is no longer much doubt that consumers are responding to higher fuel costs by driving less. Oil consumption fell by 3.3 percent in March, compared with March of last year.

But even as gasoline demand softens, the price keeps rising, driven by higher oil prices. The cost of oil represents about 75 percent of the price of gasoline at the pump, according to the Energy Department; state and federal taxes account for 12 percent, and refining and distribution make up the rest.

NY Times

So much for the 'if Americans conserve' argument.

[NJmaverick]

1. GOOD! But why are prices still high if demand is down???

this reeks of market manipulation. Damn that George Bush! Letting assholes ruin our economy with their sleezy dealings and manipulations.

[Speck Tater]

2. Because global demand is still higher than global supply.

Here's the graph:

http://www.energybulletin.net/44192.html

[lib2DaBone]

3. $5 Gas

WASHINGTON—Officials from the Institute for Somehow Managing to Hold It All Together warned that, despite their best efforts, everything appears to be falling completely apart and "getting way out of hand," according to a strongly worded report characterized by panic, frustration, and numerous typographical errors that was released to the American public Monday. http://politicalhumor.about.com/gi/dynamic/offsite.htm?site=http://www.theonion.com