To: bentway who wrote (407916 ) 8/18/2008 6:28:55 PM From: tejek Respond to of 1572777 I don't get why crack margins worsen as the summer progresses unless gas prices are artificially raised and so they are higher than heating oil prices. Maybe because there is little competition for fuel?Ugly Thoughts for a Pre-PPI Monday August 18, 2008 By Brad Zigler We've all seen oil prices tank since the Independence Day holiday, hoping that the salutary effect lower crude prices should have on refiners' profit margins would quickly bring relief at the pump. While some easing in retail gasoline prices has occurred, it's coming out of refiners' pockets. Margins, as measured through the crack spread (see "Time For Crack Spreads?"), have shrunk more than 2%, despite a 22% drop in crude input prices. Most of that, true, is due to seasonal factors. At this time of year, refining margins ordinarily aim southward as heating oil inventories are built. Last year at this time, refining margins were a lot fatter. In mid-May, refining margins were mind-numbingly fat, in fact, at 42.7%. By the start of the heating oil season, however, they'd been pared to only 6.7%. There was a similar story the year before. Margins peaked in June 2006 at 31.5% and reached their nadir at the end of October, still in double digits, at 10.7%. This year, margins reached their summer peaks on a much lower plateau. With a good two and a half months to go before the cold season's start, the November/December refining margin is already below 7.5%. It's not just oil refiners getting pinched. On the ag side, soybean processors are feeling squeezed, too. Soybean processing is a lot like oil refining. After taking in soybeans, subjecting them to chemical and physical processing, you produce finished soybean oil and meal. Margins for that business are also in decline (see "Soybean Crush Crushed"). Read more................. seekingalpha.com