Valero margins get squeezed, loss widens

NEW YORK -- The largest independent petroleum refiner in the U.S. reported a loss for the third quarter Tuesday with crude prices rising sharply over the past three months even as the country used less energy and Americans traveled less.

Valero Energy Corp. reported a loss of $489 million, or 87 cents per share for the three months that ended in September. That compares to a profit of $1.2 billion, or $2.18 per share, in the third quarter of last year.

The past year has been particularly bad for refiners because the cost of oil they must buy to make gas, jet fuel and other refined products has been spiking. Demand for fuel has not rebounded, however, because of the recession.

It was the second quarterly loss in a row for Valero. The company, based in San Antonio, Texas, lost $254 million in the April-June period.

The Great Recession, which kept millions of workers out of the morning commute, is partly to blame. But Valero's problems show how the weak U.S. currency has come to affect even companies that typically see only a modest shift in results related to exchange rates.

Crude contracts, which are priced in dollars, get more expensive as U.S. currency falls and investors holding euros and other strong foreign money can buy more.

In response, Valero has tried to cut costs by costs by producing less. In September, the company shuttered its coker and gasifier complex at its Delaware City refinery. The company also shut down its coker and fluid catalytic cracking unit at its Corpus Christi refinery and kept its Valero Aruba refinery closed for an extended period.

The company said in September that at least 150 employees and 100 contract workers would be let go in Delaware City, Del., and 700 more would lose their jobs at the Aruba refinery. This month, Valero announced it would slash 100 jobs from its Paulsboro plant in New Jersey by year's end.

Valero shares lost 72 cents to $19.55 in pre-market trading.