Refinery gasoline profits up; diesel profits weaken

Refiners are shifting their attention to boosting gasoline profits as their diesel profits slide.

The latest sign is the fall of diesel prices below $2 per gallon in the Kansas City area. That's only 35-cents per gallon more than gasoline.

The difference between gasoline and diesel prices has been double or more of that figure during the past year.

Here's what is happening: The margin or spread for the refiner, which is the difference between crude oil costs and wholesale diesel prices, was 65-cents per gallon earlier this month. Now it's down to 35 cents.

Meanwhile, refiners were actually losing money on gasoline sales early in January. But they're working to change that and briefly boosted the margin to 35-cents per gallon.

They found that hard to hold, but the margin is still about 11-cents per gallon.

Traditionally, diesel prices start to weaken as the end of winter approaches as demand for heating oil changes. Diesel and heating oil are made out of the same part of the oil barrel.

There was a break in that pattern for the last couple of years as worldwide diesel demand soared. But now we could be returning to the historical pattern as the weak economy affects diesel demand.

Of course, gasoline demand is down as well although it is showing some signs of bouncing back. The question now is if refiners will be able to boost gasoline margins to make up for at least some of the profit that diesel delivered.