Most Gasoline Retailers Expected to Beat Q3 Projections

WALL, N.J. -- Third quarter numbers for fuel station retailers will exceed analysts' most bullish expectations, according to research done by the Oil Price Information Service (OPIS).

According to data from the OPIS Retail Fuel Watch, third quarter numbers show that gasoline retailers have had one of the best quarters in the past decade, with the exception of few companies. Major and independent refiners alike saw their retail systems produce high returns that could be referenced when executives release earnings during conference calls, OPIS stated.

For July, August and September of 2006, OPIS noted these gas retailers -- in both the convenience and grocery channels -- with their estimated profit margins in cents per gallon for the third quarter:

-- Cumberland Farms, 24.8 cents
-- Sheetz, 20.5 cents
-- Raceway, 19.8 cents
-- HEB, 18.8 cents
-- Safeway, 15.3 cents
-- Kroger, 14.3 cents
-- Albertson’s, 13.6 cents
-- Speedway, 12.4 cents
-- and QuikTrip, 9.5 cents

The good fortune did not extend to all gas retailers, however. Those with extensive operations in the northern Midwest saw some improvement in margins, but it did not prove to be long-term, OPIS reported.

One retailer, San Antonio, Texas-based Valero, is expected to post third quarter earnings that are lower than expectations due to a drop in its gasoline margins, reported Thestreet.com.

"Despite the recent weakness in gasoline margins, distillate margins and our crude discount remain very good," CEO Bill Klesse told the Web site. "The seasonal fall in gasoline margins was more severe than we had expected."

Klesse continued: "We believe that with the commencement of fall maintenance in both the U.S. and Europe, and with the falling retail pump prices supporting continued strong gasoline demand, the picture for gasoline margins is improving."

Shares will earn $2.25 to $2.35 for the quarter -- excluding a gain on the sale of the Valero LP partnership -- lower than analysts' expectations of $2.38 a share. Valero bought back 10 million shares during the quarter.
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