Chevron Corp's third-quarter earnings fell more than 25 percent, missing analyst estimates on sharply lower profits from gasoline production.

Margins to produce gasoline and other refined products plummeted during the quarter as prices for the fuel did not keep pace with surging crude oil prices, dragging down earnings across the industry.

Exxon Mobil Corp, BP Plc, Royal Dutch Shell Plc, and ConocoPhillips all posted lower third-quarter earnings despite the sky-high oil prices.

Chevron, the No. 2 U.S. oil company, said on Friday its net income dropped to $3.72 billion, or $1.75 a share, from $5.01 billion, or $2.29 a share, a year earlier.

Excluding about $400 million of one-time items, it posted earnings of about $1.94 a share, coming in behind the average analyst estimate of $2.07 a share.

Revenue in the quarter rose to $55.17 billion from $54.21 billion.

U.S. refining margins plummeted by as much as 90 percent from record highs reached in May after the summer driving season ended.

Chevron Chief Executive Dave O'Reilly said in a statement that the company had difficulty recovering its higher fuel costs because the U.S. market was well-supplied with gasoline.

Earnings at the company's refining and marketing segment fell 74 percent to $377 million, including a loss of $110 million from its U.S. refining and marketing operations.

There are two elements to that red figure. One is more of an industry effect -- margins. The other is an operating effect that is company specific, said Benchmark Company analyst Mark Gilman, who has a sell rating on Chevron.

This company continues to operate its U.S. refining system poorly, and this is chronic.

The company's U.S. refineries processed 168,000 fewer barrels of oil per day than last year, due to a mid-August fire at its Pascagoula, Mississippi, refinery and a planned shutdown at its El Segundo, California, refinery.

Profit from its exploration and production unit dipped to $3.43 billion from $3.5 billion last year.

Chevron's worldwide production dropped about 4 percent to 2.6 million barrels a day, due mainly to changes to the company's operating agreements in Venezuela.

Chevron shares fell 63 cents to $88.41 in early trading on the New York Stock Exchange.

Through Thursday's close, shares of Chevron were up about 21 percent this year, underperforming the Chicago Board Options Exchange's Oil Index, which rose about 25 percent over the same period.

(Reporting by Michael Erman)

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