Refiners Primed to Regain Pricing Power
NEW YORK (TheStreet) -- Imagine for a moment, that you run a company that must sell its goods at a lower price point, yet simultaneously must pay more to produce this good. This seems like a reasonable cause to send a company's shares downward, which is exactly what has occurred with refinery stocks.
The rally in crude oil, coupled with muted prices at the local gas station, has created a troublesome environment for oil refining companies. Investors, though, have recently savored the gift of a run-up in oil prices; and consumers have welcomed the gradual slide in prices charged at the pump. As appreciated as this pairing is for consumers and investors, it's terrible for the refiners who must pay those higher energy input costs and receive the lower retail pump revenue.
We believe this trend is due to reverse shortly.
During this time, crude oil, gasoline
Prices at the local gas station have begun to lose their high correlation to crude oil over the recent past. Gasoline has made a series of lower price highs since the summer of 2011, while crude hit a new high in August. Fortunately, companies like GasBuddy.com, have made pump prices readily available for all 50 states and most major cities.
Viewers can quickly see the price charts showing retail gasoline prices that have not tracked alongside prices of crude oil recently. Instead they have, on balance, been declining. Now, this is great news for U.S. consumers and their wallets, but not for companies such as Valero
Lastly, the complications facing British Petroleum