Like the illusion of Wall Street, with its vast and powerful investment banks, now shuttered, China too is an illusion perpetuated by the Globalists that gave us the 15,000 mile Caesar salad, poisoned cat food and lead based paint on babies' pacifiers. Like the illusion that money would come from thin air to always push housing prices higher, China has spent a generation pursuing its illusion. Pursuing an unattainable dream to be like the West, while 6000 years of its carefully shepherded top soil blows into the sea.
Posted: Wed Aug 06, 2008 7:01 am Post subject: Re: Refining margins watch (was Tesoro)
Quote:
olly Corporation (NYSE: HOC)
("Holly" or the "Company") today reported second quarter net income of $11.5
million ($0.23 per basic and diluted share) compared to $158.6 million ($2.89
per basic and $2.84 per diluted share) for the same period of 2007.
Quote:
"To date, 2008 has been a challenging year. Although second quarter
margins improved from first quarter levels, unplanned downtime prevented us
from fully capitalizing on these higher margin levels. Despite the downtime,
we remained profitable for the quarter, and we continue to have one of the
strongest balance sheets among our peers," said Matthew Clifton, Chairman of
the Board and Chief Executive Officer of Holly.
Posted: Thu Aug 21, 2008 1:36 pm Post subject: Re: Refining margins watch (was Tesoro)
Quote:
Crude Oil 121.32
HO 3.3020
RBOB 3.0425
Gap -0.2595
Ref Margin 12.6774 $/bbl
Ref Margin 0.3018 Cents/Gal
I like to check this whenever there is some big move in the crude oil, to see if the refined products have managed to keep up. In this case the refinery margins are a little higher than they were a week or so ago when we last checked in on this.
TSO is down to almost 17, it was 55-60 or so as recently as last fall.
VLO only about 35, almost 50% off of its highs.
FTO down about 50% off of its highs, despite using all of that tar sands crude
MRO only down about 25%
WNR the whipping boy, down from 45 to 8
HOC from 65 to 30
Carnage. At this rate, you will have no additional refineries built in the US, no additional debottlenecking, and only the absolute minimum in maintenance done, until the situation improves. Then, if demand ever does catch back up, you will see the effects: refinery outages, unscheduled downtime, explosions, fatalities, and environmental catastrophe.
Quote from me last November:
Quote:
I think you will be delighted to be sitting around the barbecue next June with a margarita when gas prices are stratospheric, bragging to the neighbors about having bought the refiners in the fall when no one was making any money.
This is why I always say: "don't believe what you see on the internet".
Posted: Thu Aug 21, 2008 2:50 pm Post subject: Re: Refining margins watch (was Tesoro)
I just hate being wrong, especially when there is money involved, but I am a good sport about it anyway.
Conceptually, these guys ought to be prime candidates for a buyout--particularly WNR which is down 80% year on year. If you are a German, or Japanese guy or Saudi and want to make a dollar-denominated investment in a scarce resource at super-bargain-basement pricing, you do not have too far to look.
The shortages DP and others are worried about in the upper midwest are a direct artifact of the same "lack of demand" that caused these guys to not make any money. Also, the situation that is about to happen with heating oil up in the NEUS has its roots in the fact that for the first time since about 1990, we did not run our refineries above 87% capacity all summer long.
So this situation is likely to be self-correcting. We will of course be observing this situation just to see what happens.
Posted: Mon Sep 15, 2008 9:34 am Post subject: Re: Refining margins watch (was Tesoro)
Code:
Crude Oil 97.4
HO 2.7874
RBOB 2.604
Gap -0.1834
Ref Margin 16.3586 $/bbl
Ref Margin 0.3895 Cents/Gal
Now we know.... the aftermath of all of this is no help for the refiners. Probably going to cost them a lot of money for repairs, and they will just not be excited about running any gas.
TSO off 8% today
Valero off 8%
FTO off 12%
WNR our whipping boy only off 5%
MRO also off 5%
Posted: Tue Sep 16, 2008 6:42 am Post subject: Re: Refining margins watch (was Tesoro)
The commodities market is broken. The wholesale price does not reflect supply or demand. We are in the middle of panic selling, and there is very little attention being paid to the situation in Texas, the national inventories, or the availability of imports. Since there is no price signal to boost production or cut back consumption, even if all those refineries come back online, we still would have the problem of inventories at critical levels. Seriously, how is this any different that the Katrina/Rita shortage?
Joined: Apr 05, 2005 Posts: 2608 Location: South of Atlanta
Posted: Tue Sep 16, 2008 11:02 am Post subject: Re: Refining margins watch (was Tesoro)
bkwillia wrote:
Seriously, how is this any different that the Katrina/Rita shortage?
Worse inventory levels going into it I believe. Definitely lower refinery utilization and much crappier margins. Might make a significant difference I think.
Those facts coupled with the complete lack of focus due to the banking debacle make it potentially a more urgent situation than after Katrina.
Posted: Fri Oct 24, 2008 9:44 am Post subject: Re: Refining margins watch (was Tesoro)
Code:
Crude Oil 64.64
HO 1.9600
RBOB 1.48
Gap -0.4800
Ref Margin 9.0112 $/bbl
Ref Margin 0.2146 Cents/Gal
We haven't checked this in ages. At these pricing levels, Tesoro and Valero are marginally profitable, and in fact may not be in the black if this keeps up for a full quarter.
At these prices, the decision to run the reactor will be that the refiners with the highest marginal cost will be the first ones out of the market. They will shut down completely rather than produce at zero contribution margin.
I will have to go back and check my old charts, but at margins of the 9-cents regime, we are bringing back the late 90's for refining margins, which is a catastrophe for any capacity expansions or other projects, so as they say, the seeds of the next boom are being sown right now.
At a wholesale price of $1.48, retail unleaded should be in the neighborhood of $2.10 at the moment.
VLO is saying the spread on Diesel is historically high at around $18/bbl, and that's against WTI prices. So it looks to me that diesel is carrying their water, so to speak...gasoline spread is -4/bbl so it wouldn't surprise me to see VLO and others quit making gasoline in the amounts they have been.
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