Diesel profit margins remain at high levels

| Tuesday, January 10, 2006

As diesel prices continue to climb, so too, do the profit margins of the nation’s diesel refiners.

The Denver Post reported that gross profit margins for diesel refiners are currently running 74 percent higher than long-term averages.

Bryant Gimlin, an analyst with Gray Oil Co., Fort Lupton, CO, told the Post that the nationwide average refining margin on diesel for Monday, Jan. 9 was $10.74 per barrel, compared to a four-year average of $6.17 per barrel.

Though that’s not nearly as high as the $24.73 per barrel refiners enjoyed in September 2005 after Hurricanes Katrina and Rita hit, it’s still significantly higher than normal.

Gimlin said that refiners are claiming that the margins are high because demand is still strong, both domestically and in developing countries like China and India.

Also, experts say margins remain higher because some of the refining capacity knocked out by the hurricanes is still off-line, the Post reported.

The American Petroleum Institute reported that, as of December 2005, more than 7 percent of U.S. refining capacity was still off-line.

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