Last week the Capital Spectator had a good post about oil, in particular prices and the Valero/Premcor merger. Note that since his post oil futures have fallen to around $50/barrel from $54-55 earlier in the week; that’s a large drop. Most of the price decrease probably arises from geopolitical discussions and has nothing to do with refiner mergers, but I mention it because he’s touching on the two subjects in this post.
Meanwhile, ChevronTexaco’s recently-announced quarterly earnings indicate that refining is not a slam-dunk profitable business:
The No. 2 U.S. oil company’s refining and marketing profit fell 36 percent, hit by work stoppages at its three major U.S. refineries and weak marketing margins overseas. …
ChevronTexaco’s results come a day after industry stalwart Exxon Mobil Corp., the world’s largest publicly traded oil company, also posted profit that fell short of Wall Street estimates.
The shortfall in Exxon’s results were also largely tied to its refining and marketing operations, which suffered from weak marketing margins.