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Strategies & Market Trends : Value Investing
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To: ValueGuy who wrote (41949)3/24/2011 5:42:04 PM
From: Jurgis Bekepuris  Read Replies (2) of 78726
 
Refiners always look good when the crack spreads are high and they have a handle on oil prices they pay. When spreads tighten or they have to buy rapidly appreciating oil with no derivative protection, they are in the world of pain. The margins on refining are very tight, so the companies go from making money to losing money very fast. IMHO pure refiners are for traders only. Integrated companies with some refining can be bought by long term investors if they acknowledge that a large part of the company in terms of sales earns very small returns in terms of income. Even then, it's not clear whether investor wins compared to a company with no refining operations.
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