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The soaring price of oil threatens to squeeze family budgets and corporate profits alike. But a handful of companies and their shareholders stand to cash in.
West Texas Intermediate crude, a U.S. benchmark, hit $105 per barrel Monday, up from $75 in September and $45 two years ago. Oil is used in the manufacture of many goods, including clothing, asphalt and circuit boards, and in the transport of much else. U.S. gasoline prices averaged $3.50 Monday, up from $1.97 two years ago, leaving consumers with less to spend on nonessentials.

The stock market had until recently seem undeterred. The S&P 500 index rocketed more than 25% higher between September and mid-February. Since then, gathering Mideast unrest, including clashes in Libya that have choked off half its oil production, have sent the index 3% lower, leaving investors and analysts wondering whether high crude prices will stick, and sting.

Which companies prosper from dear oil? Not the ones consumers might suspect. Most gas stations, for example, struggle to maintain already-thin profit margins. Casey’s General Stores ( CASY: 37.00*, -0.71, -1.88% ) , owner of more than 1,500 convenience stores with gasoline pumps, turns just two cents of each sales dollar into profit and does better on food than fuel. Its shares have sagged 7% since mid-February.

Soaring oil prices are giving a lift to oil drillers, of course, but gains are also extending to crop processors, natural gas utilities and, thanks to a regional pricing quirk, some oil refiners. Below are three examples.

Archer Daniels Midland
Year-to-date stock gain: 22%

Profits for Archer Daniels Midland ( ADM: 36.65*, -0.34, -0.91% ) jumped 29% last quarter on strong worldwide demand for U.S. grains and higher margins for ethanol, a gasoline substitute. Rising crude prices make ethanol more lucrative, and the Environmental Protection Agency recently agreed to allow a higher mix of ethanol at gas stations. Wall Street’s profit forecasts for Archer Daniels’ fiscal year ending June 30 have climbed to $3.34 a share from $2.90 a share over the past two months. That puts the stock at 11 times earnings with a dividend yield of 1.7%.

El Paso
YTD price gain: 33%

As crude prices have climbed over the past two years natural gas prices have slumped, in part because oil is easily transported by ship to markets where it’s in fierce demand, while natural gas is transported by pipeline to domestic markets where demand is moderate. El Paso ( EP: 17.83*, -0.18, -0.99% ) stands to profit from rising crude in a few ways, however. First, it produces natural gas liquids (ethane, propane, butane) which tend to more closely track crude prices. Second, it can shift production resources toward oil, which it has done over the past year. Third, rising crude and Middle East unrest can only strengthen the argument for energy policies that favor a shift to greater natural gas use in the U.S. El Paso trades at 18 times projected 2011 earnings.

Holly
YTD price gain: 42%

Holly ( HOC: 53.63*, +1.24, +2.36% ) and rival oil refiner Frontier Oil agreed last month to an all-stock merger. Refiners risk erratic profits when oil prices turn volatile because they must buy crude and sell finished petroleum products, so refiner shares were slow to participate in the broad market’s rally since 2009. However, these two small, Texas refineries hold a key pricing advantage that has expanded their margins and share prices in recent months. The above price for West Texas Intermediate crude is some $11 lower than that for Brent crude, a European benchmark, due to a supply glut in the West. Refiners in the eastern U.S. often pay near-Brent prices for their crude, so Holly can get top dollar for finished products made with its relatively cheap crude. Shares sell for 12 times earnings.

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