I'm not a refinery expert - I think we have some on the thread.
I will note that Valero has refineries in California, where gasoline can get really high prices beacuse of growth, and because California requires "special" gasoline - the equivalent of a double mocha decaf latte whip...
Last gasoline crisis California was importing its special blend from as far away as Finland !
I think this is a big plus for upside profits and downside protection.
Refineries and Chemicals can be great areas to invest in, but we have to understand the spread between inputs (various types of crude, natural gas, etc.) and outputs -gasoline, diesel, polyethene, etc.
Lots of moving parts. Throw in a bit of a leveraged capital sturcture and it gets a bit more complicated - but the upside can be enormous.
A number of electric utility stocks, like TGN, CNP, RRI, SRP have done well after they were able to raise rates to customers and get slightly lower natural gas costs, then start paying down debt. Refiners and some chemical should be able to do as well.
Lot more work than finding an undervalued E&P 18 months ago.... |
