Gasoline Retailers Likely to Beat 3Q Expectations; But Tough 4th Quarter Looms, According to OPIS

WALL, N.J.--The first of numerous oil company updates to investors hit the street yesterday. ConocoPhillips warned of significantly lower worldwide refining margins in the just completed third quarter, but cited significantly higher marketing margins. In the quarter, benchmark U.S. refining margins dropped $4.67 bbl on the East Coast; $6.26 bbl at the Gulf Coast; $1.85 bbl in the Midwest; and by $10.77 bbl on the West Coast.

What ConocoPhillips didn’t say was that within the marketing space, retail margins in the U.S. just completed perhaps the strongest 50 day run on record. Third quarter numbers for convenience retailers are likely to exceed even the most bullish expectations.

Data from the OPIS Retail Fuel Watch newsletter [http://www.opisnet.com/retail/opisfocus_pr.asp] shows the numbers for the quarter and found that notwithstanding some sore spots, gasoline retailers had one of their best quarters of the decade. Major and independent refiners with substantial retail systems saw those assets yield lofty returns that might be singled out when top executives do earnings’ conference calls. Below is a sampling of chains with estimated profit margins...

A MAGICAL THIRD QUARTER FOR RETAIL MARGINS (July, August, Sept 06)

Chain                Avg. Retail Price         Estimated Margin
-----------          -----------------         ----------------
Albertson's             $2.846 gal               13.6cts gal
Cumberland Farms        $2.796 gal               24.8cts gal
HEB                     $2.661 gal               18.8cts gal
Kroger                  $2.661 gal               14.3cts gal
QuikTrip                $2.662 gal                9.5cts gal
Racetrac                $2.744 gal               19.8cts gal
Safeway                 $2.920 gal               15.2cts gal
Sheetz                  $2.734 gal               20.5cts gal
Speedway                $2.743 gal               12.4cts gal

Follow this link: http://www.opisnet.com/retail/news_pr.asp to find out the estimated margins for BJ’s, Casey’s, Circle K, Costco, Fina, Mapco (Delek), Murphy (Wal-Mart), the Pantry, Sam’s Club and Wawa.

Not all refiners had a brilliant quarter, however. Chains with extensive operations in the upper Midwest saw margin improvement, but prosperity didn’t last long in rust belt states.

Read the complete story [http://www.opisnet.com/retail/news_pr.asp]and find out what pockets of the U.S. are continuing to see stellar profit margins and which regions are experiencing profit pinching.

OPIS is the principal provider of downstream oil industry news, spot, rack (wholesale) and retail gasoline prices, providing more than 100,000 prices a day to thousands of traders, marketers, and end-users. More than 1 billion gallons of fuel are sold annually in the U.S. based on OPIS prices. For more information on the OPIS Retail Fuel Watch, contact Fred Rozell, 1-800-275-0950 x2568.