I stated on my post for TSO the con game the refiners are using and after reading Tom Armisteds post and a comment by the AP a minute ago I want to clarify a couple of things.
Tso and the other refiners had reduced profits fot 2007 when compared to 2006. Before you shed any tears for TSO their net for 2007 was down to $566 million or $4.06 a share compared to $801 million or $5.73 a share. Lest you think their CEO may be hurting after a down year he took home over $10 million for 2007.
Tso cut run times from 89.6% of capacity in June 2007 to 82.2 % of capacity at the end of March,2008. It took from June 2007 until the last of March 2008 for gas inventorys to drop,even though they had reduced plant run time by over 7%. And the reason it took gas supplys that long to finally drop,was you the American consumer. The consumer cuts back on gas usage and how is he or she rewarded for this? Paying over a dollar a gallon more for gas.
Tom wondered how by cutting back on run time they would make more money. As gas supplys begin to drop,the price per gallon goes up and the "crack spread" widens. TSO and the others have cut operating costs by working less and also increasing profits by creating the illusion that gas supplys are short.In June 2007 TSO was operating at 89.6% of plant capacity and gas was $2.26 a gallon. By the end of March 2008 TSO was operating at 82.2 % of plant capacity and gas had increased to $3.50 a gallon. Oil prices have risen,but TSO is making more money. The ace in the whole these refiners have is they have their own retail outlets. As they drive up gas prices their own retail outlets sale a portion of what they produced and they sale the rest on the market at the inflated prices they caused.
And then you may think we do have reduced gas supplys,but you would be wrong. At the end of March 2008 gas supplys were up over 11% over 2007 levels. And as i stated on my earlier post on TSO the media would work everyone into a frenzy over how low gas supplys are,when it just isn't true.
www.investorplaceblogs.com/users/shorty4407/2008/04/refiners_are_refining_the_art.php
invest all way through blog
$28.62 (04/18/08)
