Do you think it's good time to buy the refiners like VLO.. ?
2007-09-04 08:31:31 · 3 answers · asked by Rain L 5 in Business & Finance ➔ Investing
Rabbit's answer is right on the money. VLO has a lot going for it. The two key points are cheap sour crude and very limited refining capacity. In my opinion cheap oil is a thing of the past. Here is another point to consider. It actually take more energy to produce alcohol from corn then can be generated from corn. It that is not bullish for oil, I do not know what is? Our government is wonderful.
2007-09-04 08:56:17 · answer #1 · answered by Anonymous · 0⤊ 0⤋
Since there is precious little going on in the form of expanding refining capacity, they are the neck of the bottle, the tight space though which increased value is made. Valero, if I recall right, processes a lot of sour crude, high sulfur oil that takes extra effort--but the price for that oil is lower. As long as they can continue to do their job well, making the same gasoline out of the cheaper oil, then they should have a comparative profit advantage. The folks that can't do that advantageously don't bother with high sulfur oil, so they pay a premium price for the sweet (low sulfur). Go for it.
2007-09-04 08:47:37 · answer #2 · answered by Rabbit 7 · 2⤊ 0⤋
No. With winter coming on demand will drop off. More capacity is about to come back online. A refinery in Kansas was flooded and about to start up again. Supplies of oil are already high. And the prices have only spiked because of hurricanes, which is about over.
2007-09-04 09:33:06 · answer #3 · answered by jeff410 7 · 0⤊ 0⤋