Tesoro says US West refinery margins to weaken in '08

By Bernie Woodall

SAN DIEGO, March 11 (Reuters) - U.S. West Coast refining margins in 2008 are expected to fall far below 2007's record levels and be down slightly from 2006, the chief economist for oil refiner Tesoro Corp (TSO.N: Quote, Profile, Research, Stock Buzz) said at an industry conference on Tuesday.

"Our outlook for the year is zero growth (in gasoline demand)," said Lynn Westfall, chief economist for Tesoro. "So that would say you're going to have to take some off (refinery margins) of 2006."

Westfall said he does not compare this year's margins to 2007 when they hit record highs.

In 2006, U.S. West Coast oil refining margins averaged $23 a barrel, according to bank Credit Suisse.

Current West Coast refining margins show a continued decline, slipping $1.78 to $18.47 a barrel, Credit Suisse said on Monday.

Tesoro's operations are focused in the western United States with refineries in Alaska, California, Hawaii, North Dakota, Utah and Washington state.

Refining margins are the difference between the price for crude oil and the price for the products sold by refiners.

West Coast refining margins will be down as the U.S. sees the highest gasoline supplies since the mid-1990s along with rising prices, Westfall said.