Diamond Shamrock official testifies before Senate Committee.

SAN ANTONIO, Texas--(BUSINESS WIRE)-- May 9, 1996--Bob Beadle, Vice President, Retail Marketing, Diamond Shamrock, today testified before the U.S. Senate Energy and Natural Resources Committee in Washington DC in response to recent increases of gasoline prices.

The Committee is holding an oversight hearing and is reviewing the factors underlying recent price increases.

Beadle, representing Diamond Shamrock, an independent refiner and marketer, told the Senate Committee that gasoline prices are related directly to crude oil prices. Any significant change in the price of oil has a dramatic effect on the business of independent refiners who must purchase the oil that it runs in its refineries. The price of crude oil is the single largest cost factor in the manufacture of gasoline.

"To survive we must purchase crude oil on the open market every day, process it into gasoline and other refined products, and profitably market these to our customers," Beadle said.

The recent gasoline price increases evolved as world political events began to raise the belief late last year that the United Nations and Iraq were close to reaching an agreement that would allow Iraqi crude oil to enter world markets. As world oil supply and demand were generally felt to be in balance, any Iraqi crude would provide the markets with a serious over-supply, resulting in a sharp drop in prices. Refiners entered the year with significantly lower inventories that normal.

Concurrently, the industry struggled with an unexpected and untimely increase in demand from the cold winter and higher consumer consumption of gasoline and refined petroleum products. Beadle said that the refining industry has responded well to unexpected demand, by managing inventories, running refineries at maximum capacity, and importing gasoline.

"There is some evidence that the market disequilibrium is winding down," Beadle said. "Gasoline demand appears to have leveled off over the past few weeks in response to the higher market prices. Crude oil prices have declined and a sense of stability is hopefully settling over the markets."Beadle commented, "Volatility remains a constant in the marketplace, however, as crude oil and gasoline prices constantly respond to short-term changes in market conditions. These transitory conditions do not pose a large threat; it is the long-term dynamics that threatened the industry."

Diamond Shamrock, Inc. (NYSE:DRM), headquartered in San Antonio, is a leading refiner and marketer of petroleum products in the Southwest with a growing mix of related businesses. Diamond Shamrock, with annual sales of approximately $3 billion, has two Texas refineries with a throughput capacity of over 225,000 barrels per day and markets gasoline through over 2,700 Diamond Shamrock Corner Store, Stop N Go, and jobber locations.

CONTACT: Katherine Hughes, public relations, 210/641-8846, or

Mary Hartman, investor relations, 210/641-8840