Retail gasoline prices begin today at $3.14 gal, representing a daily U.S. consumer payout of about $1.247-billion for fuel. That’s down from the $1.25-billion to $1.27-billion dollar numbers that have been with us since Memorial Day weekend, but probably not enough to inspire a consumer spending spree.

   More downdrafts are likely on the street, particularly in the states that saw the most excessive increases in April and May. We’ve seen prices drop by about 12cts gal on the West Coast and by anywhere from 9-20cts gal in Midwestern states and that trend should continue. Michigan has led the charge lower, with unleaded regular dropping 20cts gal, but the wolverine state had advanced beyond $3.50 gal and motorists there are still paying about 50cts gal more than they paid on this day last year.

   Today is the day that statistics on inventory, production, and demand are released by the Department of Energy.  However, the reports that bracket Memorial Day weekend can be funky, with gasoline demand particularly difficult to pin down. I have great confidence that next week will see a large gasoline inventory build, but much less confidence that it will occur this week. If you have an investment riding on gasoline’s performance, watch the import numbers closely - -- we need the foreign cavalry to keep sending reinforcements in order to have comfortable supply this month and next.

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     Yesterday, I sent out a story to OPIS customers, hoping to provide some statistical color on just how well U.S. refiners have performed so far in this second calendar quarter.

     Let me reproduce the lead for the story, herewith:

      This will sound like a fourth grade fractions’ test, but what does two thirds of a quarter add up to? If you’re Mrs. Crabtree, it adds up to two sevenths. But if you are a U.S. refiner, it adds up to the most profitable second quarter of any year on record.

      Did you catch the error? Two thirds of a quarter does not of course add up to two sevenths; it adds up to one sixth (two twelfths).  It explains why I am not a petroleum engineer, or working on particle accelerators.  The truth is that I spent more time trying to recall whether Mrs. Crabtree (From the Little Rascals) was a Miss or a Missus and I have subsequently discovered that she was indeed unattached. I’m sure that those of you looking to pounce on an error thought to yourself that “Isthmus be my lucky day.”

   But back to the numbers. The first two thirds of the second quarter did produce incredible margins for U.S. refineries and the chart below gives come context to the record returns. 

  SECOND QUARTER REFINING MARGINS TO DATE

Refining Center      Crude Avg(WTI)     Unl. Gas Avg. ($/bbl)    Diesel Avg. ($/bbl)  

-------------------       ---------------------     --------------------------    -----------------------

California (‘07)          $63.73 bbl              $2.53705 ($106.56)      $2.15536 ($90.53)

California (’06)          $70.65 bbl              $2.46365 ($103.47)      $2.30839 ($96.95)

.

Pac NW    (’07)            $63.73 bbl              $2.50333 ($105.14)      $2.14845 ($90.23)

Pac NW    (‘06(            $70.65 bbl              $2.41528 ($101.44)      $2.27125 ($95.39)

Gulf Coast (’07)           $63.73 bbl              $2.23121 ($ 93.71)       $2.06445 ($86.71)

Gulf Coast (’06)           $70.65 bbl              $2.10718 ($ 88.50)       $2.11823 ($88.97)

Chicago     (’07)           $63.73 bbl              $2.38986 ($100.37)      $2.11636 ($88.89)

Chicago     (’06)           $70.65 bbl              $2.13854 ($ 89.82)       $2.16350 ($90.87)

Okla/Kan   (’07)           $63.73 bbl              $2.38456 ($100.15)      $2.15179 ($90.38)

Okla/Kan   (’06)           $70.65 bbl              $2.12878 ($ 89.41)       $2.17057 ($91.16)

Phila          (’07)           $63.73 bbl              $2.27505 ($ 95.55)       $2.05002 ($86.10)

Phila          (’06)           $70.65 bbl              $2.24475 ($ 94.28)       $2.12431 ($89.22)

   Footnote: Gasoline retailers are also on a track that could see them perform better in the second quarter 2007 when compared to a year ago. But the increase is scant - - -average gross wholesale-to-retail margins were 12.9cts gal in April/May 2007 compared to 11.5cts gal for the entire quarter in 2006.

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 One final observation.   It’s a good thing that Congress and the Lords of the Securities and Exchange Commission have streamlined the language for public companies or for firms about to enter the public arena.

   Yesterday, we saw an amended S-1 filing for CVR Energy, the company owned by Goldman Sachs and hedge fund Kelso that operates a 108,000 b/d refinery in Coffeyville, Kansas that will soon trade publicly. The birth of this new public company is one of the great success stories in refining (and fertilizer) this century.

   But my eyes crossed into the realm of strabismus when I read the following paragraph in the devilish 666 page document. Readers, can you understand this?

   “The Partnership will be primarily managed by the managing general partner, but will be operated by our senior management pursuant to a management services agreement to be entered into among us, the managing general partner and the Partnership. We will pay all of our senior management’s compensation, and the Partnership will reimburse us for the time our senior management spends working for the Partnership. In addition, we will have approval rights regarding the appointment, termination and compensation of the chief executive officer and chief financial officer of the managing general partner, will designate one member of the board of directors of the managing general partner and will have approval rights regarding specified major business decisions by the managing general partner.”

 Miss Crabtree, if you are out there, please help!