Things aren't simply floating downstream these days. They're sinking, in Chevron's (NYSE:CVX) case, by more than just a token amount from the same quarter a year ago.

The company managed to get $3.7 billion to its bottom line, down 26% from the September 2006 quarter. The per-share results slid more than 23% to $1.75, from $2.29. In each of the two years, the results included about $400 million in net charges for non-recurring items.

As already has been the case with other big integrated companies, including ExxonMobil (NYSE:XOM), BP (NYSE:BP), and ConocoPhillips (NYSE:COP), refining margins, which have been chopped, cut the worldwide contribution from Chevron's refining and marketing segment. Indeed, that sector contributed fully 73% less to the company's income than was the case a year ago.

Lest you assume that higher crude prices -- an average difference of about $5 per barrel year over year for Chevron -- probably brought about higher upstream results, you'll be surprised there, as well. Indeed, as the company noted, "The benefit of higher average prices ... was more than offset by the impact of lower production and higher operating expenses."

But don't assume that events at Chevron during the quarter consisted of little more than watching crude prices elevate and squeeze earnings. Indeed, the company was as busy as a cat in a sandbox, spending $5.2 billion in its global quest to find and process oil and natural gas. In the process, the company received long-awaited approval to undertake a big Australian natural gas project, and made operating and commercial progress in a variety of ways and in places as far-flung as Thailand, Angola, Indonesia, and South Korea.

It's still too early to tell when refinery margins will improve sufficiently for Chevron and its peers to return to some of the bigger downstream earnings numbers of yore, although gasoline prices have begun to move northward. But in the meantime, crude prices -- which now are an amalgamation of complex financial and supply-demand factors -- continue to press toward $100 a barrel. That astounding phenomenon alone appears to render Chevron and its peers a group that should be watched carefully by Fools.  

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Fool contributor David Lee Smith doesn't own shares in any of the companies mentioned. He does welcome your questions or comments. The Fool has a disclosure policy.