22, 2002; Refining Margin Also a Buy
In some respects, this
is the best time for the U.S. refining business in forty years.
While the refiners did reasonably well during the high-energy growth
1960s, the downstream business had a tough time with higher oil price in the
1970s. It has been a long comeback
in the 1980s and 1990s compounded by complex environmental regulations.
Now capacity is tight and consolidation has put that capacity in stronger
hands. Thus we are optimistic that
higher margin days are here for a while. The
crack spread calculated by subtracting futures prices for three barrels of crude
oil from two barrels of gasoline and one barrel of heating oil is in an up trend
on the chart.