Recently, I dug into recent financial results of several downstream crude oil refiners. I am a fan of the energy subsector, but I was surprised at how well these companies can and will perform in the current energy price environment.
So surprised that I was happy to add a new refiner stock to my dividend growth-focused investment service recently.
Here’s why – and three refiners to consider for your own portfolio…
Successful fuel refining companies are some of the best-managed businesses in the U.S. They operate in an industry where the prices of both the raw materials (crude oil) and finished products (gasoline and other fuels) are set by outside market forces. Refiners have to live with whatever the commodity markets give them.
Refining profitability relates to the crack spread. The spread is the calculation of the price difference between refined products and the cost of a crude oil barrel. The benchmark 3-2-1 crack spread is the difference between three barrels of oil, two barrels of gasoline, and one barrel of distillates (diesel, jet fuel, heating oil). Put another way…
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