HOUSTON—Valero Energy Corp., North America’s largest refiner, said Tuesday its second-quarter profit fell 67 percent as refining margins for products like gasoline shrank.

The San Antonio-based company said net income for the April-June period fell to $734 million, or $1.37 a share, from $2.25 billion, or $3.89 per share, a year ago.

Revenue rose to $36.6 billion from $24.2 billion in the prior-year period.

Analysts surveyed by Thomson Financial were looking for profit of $1.33 per share on average, and revenue of $34.93 billion.

Shares rose 11 cents to $31.92 in morning trading.

As expected, refining margins fell markedly in the second quarter—mirroring the first three months of 2008—as the cost of crude and other feedstocks grew more rapidly than the prices of gasoline, asphalt, fuel oil and other products.

Those margins reflect the difference between the cost of crude and what the company makes on refined products.

The company noted the average price of the benchmark West Texas Intermediate crude nearly doubled to $123.98 in the most-recent quarter from $64.89 a year ago. At the same time, benchmark Gulf Coast gasoline margins declined 77 percent to $6.60 a barrel in the second quarter. They were nearly $29 a barrel a year ago.

Partially offsetting the weaker margins were substantially higher margins on diesel and jet fuels, whose global demand remained high.

Valero’s operating income was squeezed by other factors in the quarter, including higher costs for electricity and natural gas. Operations also were hampered by maintenance and repairs at its refineries in Aruba, Port Arthur, Texas, and Delaware City, Del.

“Despite the difficult environment for margins on gasoline and many secondary products, Valero continued to be profitable,” chairman and chief executive Bill Klesse said in a statement.

Klesse said Valero sees no immediate improvement in margins on gasoline, though he predicted margin recovery for some secondary products if crude prices stabilize or fall—as they have in recent weeks.

He said the company continues to review its capital spending and now expects to reduce 2008 expenditures by $700 million from its original estimate of about $4.5 billion.