In the second quarter, refiners bought crude oil at lower prices and sold gasoline at record high prices. As a result, companies like Exxon Mobil, Chevron, and Valero could see record profits when the industry reports earnings this week.

Exxon (Charts, Fortune 500), which actually refines more barrels of oil than it pumps, could see over $11 billion in earnings, which would be the biggest quarterly profit in corporate history.

"I think you're looking at some pretty strong numbers," said Ken Carol, an oil analyst at Johnson Rice & Co. "I wouldn't be surprised to see them have record earnings."

Exxon is expected to earn $1.95 per share in the second quarter, a 14 percent increase year overyear, according to Thomson Financial. Some of that boost in earnings per share is due to an aggressive share buyback program, although exactly how many shares Exxon has bought back this quarter won't be known until the company reports earnings on Thursday.

For instance, Carol said BP's profit on refining a barrel of oil went from $9.50 in the first quarter 2007 to $16.60 in the second quarter.

Sunoco is expected to see earnings per share jump 19 percent, according to Thomson Financial. At Valero (Charts, Fortune 500), the nation's largest independent refiner, profits are expected to swell 26 percent. Tesoro is expected to see a 35 percent jump, and Frontier is looking at a whopping 55 percent surge.

ConocoPhillips (Charts, Fortune 500) is expected to see a 7 percent decline in earnings when it reports Wednesday. And BP (Charts) blamed refinery outages for a 1 percent fall in profits when it reported early Tuesday.

Big Oil: Another Profit Record In Sight

meanwhile …..

When the price of gas increases at the pump, Americans are used to blaming the usual suspects: the Iranians, Arab countries, the OPEC cartel, Chavez. Yet, there exists another guilty party, one altogether closer to home: oil companies that possess inadequate refinery capacity.

The New York Times has recently headlined "the record failures of national refineries" that contribute to the high price of gas (up 35 percent since the beginning of the year). According to that newspaper, one-third of the 150 American refineries have experienced "disruptions" these last six months: fires, repeated mechanical breakdowns and even a flood. At best, they operate at 90 percent of their total capacity.

In thirty years, not a single new refinery has been built in the United States - the oil companies having settled for repairing and adding capacity to existing refineries. Suddenly, as explained recently by Carolyn Merritt, director of the Chemical Safety Board, "the shortfall in modern equipment brings about disruptions and increases the risk of catastrophes."

These last few years, the profit margin linked to refining has gone from an average of five [dollars] to 25 dollars a barrel. The oil companies, which are raking in record profits, would consequently have the means to buy themselves some new equipment. But "by creating a tight supply situation, they control the price and have no interest in increasing capacity," laments Mark Cooper from the Consumer Federation of America. All the more so as consumers have not cut back on their stops at the pump.

In the beginning of July, with prices over 0.6 Euros/liter versus 0.4 Euros/liter a year ago, Americans have nonetheless just missed beating the record for the number of barrels burned in one month.

Oil Groups Too Rich to Invest