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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Difco who wrote (43999)	9/7/2011 4:58:32 PM
From: Paul Senior	Read Replies (3) \| Respond to of 78626

NS/VLO: I still like refiner VLO. Have just a few shares though. Will add more if stock will fall on no adverse company news. These new shale plays seem to be producing lots of oil for US refiners: reuters.com "NuStar Energy LP ( NS.N) said on Tuesday it will modify and construct pipelines to carry Eagle Ford oil and other crudes to two Valero Energy Corp's ( VLO.N) Texas refineries, the latest project to tap the growing southeast Texas crude supply." Perhaps there may come a day when the bottleneck is the lack of refining capability. I heard an observer of the industry on Bloomberg say that diesel prices are going higher in future because there won't be enough diesel refining capacity, not because of oil scarcity. (I won't like higher diesel prices--- I have a diesel car.) Not sure exactly what's going on here, but apparently at least some oil companies have no interest anymore in holding on to their refineries -- MRO is splitting out its, and Conoco is selling a couple of theirs. Not surprising because the margins in refining are generally poor, especially as compared to the capital intensive and consumptive nature of the business. Maybe these refinery sales will give the refinery sector some opportunity to consolidate. Maybe the biggest/strongest/most sophisticated will become even stronger. In any case, with several integrated companies apparently wanting to jettison their refinery operations, and the refinery sector itself a very cyclical, low margin (usually) business -- there doesn't seem to be much investor interest in it. So of course, it might now be a sector of interest to contrary investors or value investors. Otoh, maybe I've got it wrong-- refinery stocks are still up quite a bit from their 12-mo lows. For now I'll stick with focusing on VLO. (And fwiw, among the lp's I have, I hold NS)