We are entering the stage where ideology and education about sustainability and living within carrying capacity will be augmented by the reality of identifiable consequences of our overshoot. External consequences like the peaking and decline of below ground energy and commodity resources, above ground environmental degradation of our climate, soils, fisheries and climate will have a profound effect on our culture.
2009 is the year when we start to feel it.
Posted: Tue Apr 01, 2008 10:46 am Post subject: Re: Refining margins watch (was Tesoro)
Quote:
Crude Oil 101.38
HO 2.8903
RBOB 2.6381
Gap -0.2522
Ref Margin 15.4579 $/bbl
Ref Margin 0.3680 Cents/Gal
With the expiration of the April contracts, and rolling out into May, the heating oil price did its long-awaited springtime correction, thus decreasing the poor refiners' paycheck back to under $16.
Note that the gap between unleaded and heating oil has dropped to only .25, which is about half of what it was a week or so ago.
Quote:
WASHINGTON (AP) -- Oil refiner Tesoro Corp. was awarded a contract worth up to $49 million from the Defense Logistics Agency to supply jet fuel, the Defense Department said late Friday.
When all else fails, the government will bail you out.
Posted: Fri Apr 04, 2008 11:15 am Post subject: Re: Refining margins watch (was Tesoro)
Quote:
Crude Oil 105.34
HO 2.9819
RBOB 2.7188
Gap -0.2631
Ref Margin 15.1482 $/bbl
Ref Margin 0.3607 Cents/Gal
Still no increase in refinery margins. Based on this, I am thinking the managers and the administrative assistants will just go down to Padre for spring break, rather than run the refiner this week. Get out the big wash tub full of ice and corona, maybe grill some steaks, wait it out.
Refiners are being beaten down badly today. Even FTO who is using the much lower cost feedstocks is down.
If inventory reports continue like this it must be bad news for the refiners, right? I mean, if we're drawing on crude supplies with refinery utilization so low, what's going to happen when they start cranking things up? Larger draws meaning that crude prices will march up right along side RBOB prices.
Is my analysis flawed? What will crack first - refining margins, RBOB MOLs, crude MOLs???
Whatever the answer, seems like a lot of bad news for the US economy. On the other hand, maybe the last two weeks were just anomalous in regards to lower imports
Anyway, I'm hoping something turns around for the refiners. _________________ "It is certain that free societies would have no easy time in a future dark age. The rapid return to universal penury will be accomplished by violence and cruelties of a kind now forgotten." - Roberto Vacca, The Coming Dark Age
Posted: Thu Apr 17, 2008 7:27 am Post subject: Re: Refining margins watch (was Tesoro)
Quote:
it must be bad news for the refiners
We are in one of those times right now where something has to give, the situation cannot continue like it is.
If the refiners stay shut down, the fuel supplies will get low, and the price will go up.
If the refiners start up, at the current level of imports, the crude oil inventory will go down, and the price of crude locally will go up. The refiners are not running a charity. They will not produce the fuel if they do not think they can get money for it.
So I think you can see what will happen in either case.
I am still not at all convinced that demand will drop enough to cause a dent in this situation. We have discussed this in a variety of other threads. We still gotta have the gas. We all live in the suburbs now. We can't get anywhere without driving, even if we get laid off.
Quote:
Crude Oil 114.66
HO 3.2688
RBOB 2.9499
Gap -0.3189
Ref Margin 16.8703 $/bbl
Ref Margin 0.4017 Cents/Gal
Note that the unleaded/HO gap is shrinking, finally.
Crude Oil 119.5
HO 3.3157
RBOB 3.0152
Gap -0.3005
Ref Margin 14.3324 $/bbl
Ref Margin 0.3412 Cents/Gal
Refining margins are down almost $2 per barrel, as of now. The refiners are getting beat up in the marketplace today too.
You know what that means: The boys are going to take Friday off from now on and play golf instead of running the refiners.
Right now, unleaded should be about 30 cents higher, and I think they have another 30 cents to go before July 4. Prediction: $3.40 wholesale RBOB and $4.00 retail average nationwide before July 4.
Posted: Wed Apr 23, 2008 12:59 am Post subject: Re: Refining margins watch (was Tesoro)
pup55 wrote:
Quote:
it must be bad news for the refiners
We are in one of those times right now where something has to give, the situation cannot continue like it is.
If the refiners stay shut down, the fuel supplies will get low, and the price will go up.
If the refiners start up, at the current level of imports, the crude oil inventory will go down, and the price of crude locally will go up. The refiners are not running a charity. They will not produce the fuel if they do not think they can get money for it.
So I think you can see what will happen in either case.
I am still not at all convinced that demand will drop enough to cause a dent in this situation. We have discussed this in a variety of other threads. We still gotta have the gas. We all live in the suburbs now. We can't get anywhere without driving, even if we get laid off.
Quote:
Crude Oil 114.66
HO 3.2688
RBOB 2.9499
Gap -0.3189
Ref Margin 16.8703 $/bbl
Ref Margin 0.4017 Cents/Gal
Note that the unleaded/HO gap is shrinking, finally.
So Pup55 in my esteemed opinion either way the the crap hits the fan this summer. The only way out is a timely flood of cheap imported gasoline. What a lot of people are not realizing is we are setting our selves up for a big fall by playing this game. By waiting till its too late to buy oil our suppliers overseas can only supply gasoline using the current crude prices which will be sky high
Posted: Wed Apr 23, 2008 5:28 am Post subject: Re: Refining margins watch (was Tesoro)
Quote:
The only way out is a timely flood of cheap imported gasoline.
During a normal summer, our current refinery capacity is not enough to satisfy all of the demand, even if running full out.
We are now running at 82% or something, thanks to the current pricing and margin situation. So both the increase in production plus imports will both have to happen.
We have about a 20 million barrel inventory cushion at the moment, and we are drawing 3.5 million barrels per week, so the situation will have to shake out in the next month or six weeks, which should put us into mid-June at the latest.
Both imports (for which we will have to outbid the Chinese) and refinery increases (for which we will have to pay so that the refiners make money) will have to happen.
If the demand decreases 10%, something like 1 mbpd, then maybe we can avoid the problem, but demand has only decreased 1%, and maybe not even that, if you look deeper into the figures like we did the other day. So, the current situation is not sustainable, and the easiest and most logical way out of it will be for people to pay more for gas.
Also, like we were saying the other day in the inventory thread, even if the refiners do bite the bullet and decide to increase production, there then becomes an issue with crude oil supply, because we are not importing enough of that either. We have a little larger inventory cushion in crude oil, but potentially could drain out a lot faster.
Plus we have not entered hurricane season yet, which starts June 1.
Posted: Wed Apr 23, 2008 8:11 am Post subject: Re: Refining margins watch (was Tesoro)
This could get ugly for the share prices!
VLO reports earnings on 4/29
SUN 5/1
TSO 5/8
Quote:
The gap between the price of crude and the price of gasoline and other refined products has pressured profit margins at refiners Valero Corp. (VLO), Tesoro Corp. (TSO) and Sunoco Inc. (SUN), among others.
Earnings from downstream operations including refining slumped 62% for a group of 10 major U.S. oil companies in the fourth quarter. At the same time, these companies processed roughly the same volume of oil, says the Energy Department's Energy Information Administration.
The first quarter is likely to look even worse. Earnings for the three dedicated refiners in the S&P 500 Index (SPX) are anticipated to tumble 94% to just under $67 million from $1.2 billion a year ago, according to Thomson Financial.
I suspect the VLO call on Tuesday could trigger a sell-off in the sector.
Quote:
Valero Energy Corp. released guidance Monday indicating that the oil refiner will report first quarter 2008 net income in the 10 to 35 cent per share range.
San Antonio-based Valero (NYSE: VLO) will report full earnings on April 29.
During the first quarter of 2007, Valero reported earnings per share of $1.86 per share.
Posted: Wed Apr 23, 2008 11:11 am Post subject: Re: Refining margins watch (was Tesoro)
Yep. The little model we have is calibrated for about where TSO and VLO's refinery margins are, and last year at this time they were abnormally good. Unleaded had raced far above crude oil for pricing.
This year, not so much yet. Give it a couple of weeks though and it might turn around a little bit.
Quote:
Crude Oil 117.49
HO 3.2924
RBOB 3.0196
Gap -0.2728
Ref Margin 15.8640 $/bbl
Ref Margin 0.3777 Cents/Gal
A little better this morning, but this still needs to be about 25 or 30 before anyone gets excited. This translates to about another 30 cents on the gas price.
This is just the unleaded price minus the heating oil price. Somewhere in this thread I posted a historical chart of this to the effect that for a long time, it was hardly ever negative, which is to say, the unleaded price was almost always higher. Not now, though.
Ref Margin 15.8640 $/bbl
I take the heating oil price in $/gal times 42 to convert to $/barrel, and multiply by .43.
Then, the unleaded price in $/gal times 42 to convert to $/bbl, and then multiply by .57
Then add the two products above together, which is the weighted average price of the products. Then, subtract the crude oil price from this sum, to get the refining margin, in $/bbl. It's the profit that the refiners make on an average product mix.
Ref Margin 0.3777 Cents/Gal
This is just the above, divided by 42 again, to get margin in cents per gallon.
57/43 is approximately the production ratio of unleaded to heating oil for the US refineries. Yes, I am well aware that there are other products, such as propane and jet fuel that come from this mix, but this is just a rough estimate for comparison from week to week. As it turns out, it is actually within a dollar or so of VLO and TSO's actual refinery margin under normal circumstances, so close enough for the purposes of some forum on the internet.
Of course, the actual refinery margin has to be computed on a unit-by-unit basis, using the actual feedstock price (which might not be the same as the WTI price) and the actual product mix that the unit is producing. So each of these companies knows this calculation, and it's a little different for each refinery.
That's why FTO is able to have $20 refinery margins at the same time VLO has only $12 because they can buy cheaper feedstock and can refine it into California gas which has an even higher selling price.
Posted: Tue Apr 29, 2008 7:53 am Post subject: Re: Refining margins watch (was Tesoro)
Crude Oil 117.1
HO 3.2845
RBOB 2.998
Gap -0.2865
Ref Margin 15.6748 $/bbl
Ref Margin 0.3732 Cents/Gal
Update: we are back around 16, which could be worse. I think I can make a little model that projects the TSO share price based on this number. I bet it would be fairly close.
The refiners had a pretty good day yesterday, mostly up around 1%.
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