truesee's Blog

Tampa police say woman tried to buy her 80-year-old father a prostitute over Easter weekend

Father and daughter jailed for soliciting hooker

Valero Energy, the nation’s biggest independent oil refiner, had “record exports coming from the United States” during the last three months of 2010, Chief Executive Bill Klesse recently told investors and analysts. Above, Valero's Wilmington refinery in October. (Christina House, For The Times / April 29, 2011)

Ronald D. White, Los Angeles Times

April 28, 2011, 7:08 p.m.

Gasoline prices are skyrocketing — and so are oil company profits.

Exxon Mobil Corp. earned nearly $11 billion in the first three months of the year, a rollicking 69% increase over its performance for the same period last year. That's on sales of $114 billion.

It's the same story for the other big oil companies. Royal Dutch Shell turned a profit of $6.3 billion in the first quarter, and BP — despite lingering costs from the Gulf Coast oil spill — made $7.1 billion.

What they aren't making is fuel, at least not in normal quantities. And that's a key factor in their reinvigorated financial performance.

Despite increasing demand, refiners are producing less gasoline and diesel in the U.S. than usual for this time of year. They're also exporting more to foreign countries.

Add rising oil prices, and you get the kind of sticker shock at the gas pump that some analysts say could challenge 2008's all-time highs — with regular gas already averaging about $3.88 a gallon in the U.S. and $4.22 in California, more than a month before the summer driving season kicks in.

Motorists and consumer advocates are outraged at high pump prices and say refineries need to increase gasoline supplies to reduce fuel costs.

"This is a page torn right out of the handbook of gouge-onomics," said Charles Langley, senior gasoline analyst at the Utility Consumers' Action Network in San Diego. "We call it the law of supply and demand: They supply less product and demand more money for it."

Oil makes up about two-thirds of the cost of a gallon of gas, so expensive oil always turns into expensive fuel. But as for-profit entities, refiners use a variety of means to ensure that they keep as much of that windfall as possible.

The nation's refineries are operating at about 81% of their production capacity, Energy Department statistics show. That compares with a 20-year historic average of about 89% for this time of year, according to department records.

Part of that can be explained by the increasing use of ethanol, usually made from corn, which is added after gasoline is refined. Ethanol boosts fuel supply without increasing petroleum consumption just as adding crackers to meatloaf makes more dinner with less beef.

A bigger factor, some experts say, is refiners' business strategy: Having only recently returned to strong profits and leery of potential erosion in consumption, the companies are playing it cautiously.

"They aren't going to try to match production to demand. You aren't going to see anyone running full out right now," said Brian L. Milne, refined-fuels editor for Telvent DTN, which provides commodity price information to businesses.

And here's another piece to the fuel-price puzzle: Refiners are exporting large amounts of gasoline and diesel to foreign buyers willing to pay a premium. Demand for refined products such as gasoline is expected to go back into decline in the U.S. by the end of 2011 because of increased use of alternative fuels, among other things, so refinery companies are looking to broaden their reach with new customers overseas, particularly with diesel fuel.

"U.S. refineries have been sending 15% to 20% of their production overseas for about a year now," said Andrew Lipow, president of consulting firm Lipow Oil Associates in Houston. "Demand for diesel is strong in Central America and South America and Europe and other parts of the world." That's more than double the rate of exports in 2007, he said.

Valero Energy Corp., the nation's biggest independent oil refiner, had "record exports coming from the United States" during the last three months of 2010, Chief Executive Bill Klesse recently told investors and analysts. The San Antonio company's export pace declined somewhat this year because of refinery maintenance.

"We send diesel fuel to South America. We've been sending gasoline to Latin American countries. So there's a lot of change that's happened in this business," Klesse said. In the first quarter, Valero earned $98 million, reversing a year-earlier loss of $113 million.

Energy companies say fuel prices are determined by supply, demand and competition, and that the main culprit for the current run-up is crude prices, which rose more than 30% in the last year because of conflicts in North Africa and the Middle East as well as strengthening world economies.

The American Petroleum Institute, the oil company trade group, said its own statistics showed that refiners are doing their job, delivering 4% more gasoline in the first quarter than in the same period last year.

"We are moving more product than last year and supporting the economic recovery," said Rayola Dougher, the group's senior economic advisor. "The refinery sector is more than keeping pace with that."

At the same time, Energy Department data show a drawdown of more than 18 million barrels in the nation's gasoline stocks this year to 205.6 million barrels, including a drop of 2.5 million barrels in the most recent week.

Valero spokesman Bill Day said production levels are a straightforward matter of supply and demand, and currently U.S. demand is constrained by the pace of the economic recovery.

"Demand in the U.S. is beginning to recover, but it's not recovering strongly," Day said.

This year, oil prices have been on a tear much as in 2008, boosting oil company profits and fuel prices. That was when retail gasoline reached a record average of $4.114 a gallon nationally and $4.588 in California. Averages this month have been higher than for any April since the Energy Department began tracking weekly fuel data in 1990.

The refinery industry "has made a comeback, absolutely," said Fadel Gheit, senior energy analyst for Oppenheimer & Co., noting that refining stocks gained 50% last year and have since maintained a similar trajectory.

But refinery profits can be precarious, he said, and may be squeezed if consumers balk at paying high fuel prices.

"This is not a golden age for refining," Gheit said. "This will come to an end."

As recently as 2007, industry executives thought that they were in such a golden age, when U.S. demand looked to be on a constantly rising curve. But after 2008's record fuel prices and the recession reduced fuel consumption, energy companies changed their tactics.

They are shedding capacity in the U.S. through refinery sales. Investments in their U.S. refineries are geared around equipment upgrades, not expansion. And when they do talk about increasing production to meet rising demand, they mean overseas, not in the U.S., and they mean making more diesel, not gasoline.

"These companies see their future earnings growth overseas, not in the U.S., where demand is still rather flat," Lipow said.

For motorists, the proof is at the pump.

Los Angeles resident James Fong said he was bothered by growing oil company earnings even though he owns two of the most fuel-efficient cars around: a 2001 Honda Insight and a 2010 Toyota Prius.

"I look at other people and see that they are only getting half a tank of gas because that is all they can afford," said the 54-year-old AT&T systems technician. "It's not good for us, but they are going to do whatever they can to make the money."

"I wish," Fong said, "I was in the oil business."

 

Police: Clayton Teacher Strips At School

UPDATED: 5:13 pm EDT April 27, 2011

Cardinal Francis George (left) Rev. Michael Pfleger (Tribune photos / April 27, 2011)

Staff report

7:28 p.m. CDT, April 27, 2011

 

Citing what he called threats from the Rev. Michael Pfleger to leave the church, Cardinal Francis George has removed the outspoken priest from St. Sabina parish and has suspended his "sacramental faculties as a priest."

Pfleger had publicly feuded with the cardinal about possibly being reassigned to Leo High School, telling a radio show recently that he would look outside the Catholic church if offered no other choice.

"If that is truly your attitude, you have already left the Catholic Church and are therefore not able to pastor a Catholic parish," George wrote in a letter dated today.

"A Catholic priest's inner life is governed by his promises, motivated by faith and love, to live chastely as a celibate man and to obey his bishop," the cardinal continued. "Breaking either promise destroys his vocation and wounds the Church.

"Many love and admire you because of your dedication to your people," the cardinal wrote. "Now, however, I am asking you to take a few weeks to pray over your priestly commitments in order to come to mutual agreement on how you understand personally the obligations that make you a member of the Chicago presbyterate and of the Catholic Church.

"With this letter, your ministry as pastor of Saint Sabina Parish and your sacramental faculties as a priest of the Archdiocese are suspended."

The cardinal ended the letter by saying, "This conflict is not between you and me; it's between you and the Church that ordained you a priest, between you and the faith that introduced you to Christ and gives you the right to preach and pastor in his name. If you now formally leave the Catholic Church and her priesthood, it's your choice and no one else's. You are not a victim of anyone or anything other than your own statements."

Kimberly Lymore, associate minister at St. Sabina Parish, read the following statement early tonight:

"On March 11, 2011, Father Pfleger met with Cardinal George, where he was asked to take over as president of Leo High School.

"On March 19, 2011, Father Pfleger sent a letter to Cardinal George saying he was neither qualified nor experienced being president of a high school, but that he was willing to help Leo High School in any way that he could.

"There has been no response by phone call or letter from the cardinal. Today Father Pfleger was called to a meeting at 4:30 at the Pastoral Center. At that meeting, Father Pfleger was given a letter that he was suspended and Cardinal George did not want to discuss it.

"The leadership of Saint Sabina will have an official response tomorrow. We are in shock. For your information, the press received this letter before Father Pfleger and the church heard about it through press calls."

Lymore said Pfleger was in the church tonight but he did not appear when the statement was read.

During the flap over his possible assignment to Leo, Pfleger appeared on the "Smiley & West" public radio program that he had been banned from speaking at events in the archdiocese and blamed pressure from conservative Catholics and the National Rifle Association for his most recent clash with George.

"I want to try to stay in the Catholic Church," Pfleger said. "If they say 'You either take this principalship of (Leo High) or pastorship there or leave,' then I'll have to look outside the church. I believe my calling is to be a pastor. I believe my calling is to be a voice for justice. I believe my calling is to preach the Gospel. In or out of the church, I'm going to continue to do that."

In a later interview with the Tribune, Pfleger clarified that he feels called to preach and push for social justice in a Catholic context. He said he loves the Catholic Church and prefers to stay there, but he would not go to Leo full time.

"I've always said I could not do something that I don't feel called or equipped to do," he told the Tribune. "A full-time position at Leo is not something I'm equipped to do. I think Leo has made it clear they don't see any need for me to come there. For both sides, it would be a lose-lose."

On the radio, Pfleger said conservative Catholics want to return St. Sabina, a mostly African-American parish, to the way it was before he got there nearly three decades ago and silence what they believe to be progressive messages from the pulpit.

For a couple of years, he said he has been the target of petitions and letter-writing campaigns by the NRA. Letters are often copied to the cardinal, Pfleger said.

"The NRA ... says I've been much too vocal about assault weapons and much too vocal about guns being registered and being accountable to gun owners," Pfleger said on the radio. "So all that combined and I guess the cardinal didn't have anything to do one morning and decided he wanted to get rid of me again."

But in his letter, the cardinal said he had no ulterior motives in wanting Pfleger at Leo.

"As you know, this was an honest offer, not driven by pressure from any group but by a pastoral need in the Archdiocese," George wrote. "You promised to consider what was a proposal, not a demand, even as I urged you to accept it."

The cardinal says his private conversation with Pfleger "was misrepresented publicly as an attempt to 'remove' you from Saint Sabina's. You know that priests in the Archdiocese are 'removed' only because they have been found to have sexually abused a minor child or are guilty of financial malfeasance.

"In all other cases, priests are reassigned, moving from one pastoral office to another according to the policies in place for the last forty years," George wrote. "That process has now been short-circuited by your remarks on national radio and in local newspapers that you will leave the Catholic Church if you are told to accept an assignment other than as pastor of Saint Sabina Parish."

2:32 p.m. EDT, April 27, 2011 

 

YouTube