Sun Baked GL
Veteran Member
- Joined
- Jun 6, 2000
- Location
- Furnace Valley, AZ
<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>February 2, 2001 - http://interactive.wsj.com/articles/SB981067340502698817.htm
Heard on the Street
New EPA Rules May Fuel Refiners' Profits
By PETER A. MCKAY, Staff Reporter of THE WALL STREET JOURNAL
Consumers fumed last summer as retail gasoline prices soared, particularly in the Midwest, partly due to new federal environmental rules requiring fuel additives. A new wave of regulations may produce similar angst among motorists this summer -- but investors in certain fuel refiners could be driving home bigger profits to offset the pain.
The new Environmental Protection Agency rules are aimed at reducing sulfur content, and refiners have been complaining that their implementation will force expensive refinery upgrades or closures of ones that don't justify the cost of upgrading. Last month, Premcor Inc. cited the new rules in closing a plant in Blue Island, Ill., signaling what may be the start of a spate of similar shutdowns that would reduce gasoline supplies, driving up consumer fuel costs, according to analysts and investors.
But for investors, the good news is that such shutdowns could also drive up refining companies' profits. That's because the new low-sulfur refineries aren't expected to come on line as quickly as the old ones go off, analysts say. So if, as some expect, refining capacity falls, creating a supply crunch, refiners could enjoy higher prices for their products -- even as some may publicly fret over the difficulty of keeping their refineries open under the stiffer rules. Possible beneficiaries include BP Amoco, Tosco, Sunoco and Ultramar Diamond Shamrock.
"A lot of companies are just coming through, doing the engineering work on their refineries to see what they will cost to improve. But they're not going to find a pretty picture in terms of the expense, if they haven't already," says Andrew C. Fairbanks, an analyst at Merrill Lynch who wrote a recent report on refiners. "The Blue Island closure is the first unequivocal casualty of this trend."
That announcement, he adds, "reinforces our view that the EPA's new clean-fuels regulations will prove to be a positive for better profitability in the U.S. refining industry," with the largest impact on Midwest refiners such as Ashland, Tosco and Sunoco. "We think it is now even more likely that refining margins and company earnings will meet or exceed our estimates in 2001."
read more …
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[This message has been edited by Sun Baked GL (edited February 02, 2001).]
Heard on the Street
New EPA Rules May Fuel Refiners' Profits
By PETER A. MCKAY, Staff Reporter of THE WALL STREET JOURNAL
Consumers fumed last summer as retail gasoline prices soared, particularly in the Midwest, partly due to new federal environmental rules requiring fuel additives. A new wave of regulations may produce similar angst among motorists this summer -- but investors in certain fuel refiners could be driving home bigger profits to offset the pain.
The new Environmental Protection Agency rules are aimed at reducing sulfur content, and refiners have been complaining that their implementation will force expensive refinery upgrades or closures of ones that don't justify the cost of upgrading. Last month, Premcor Inc. cited the new rules in closing a plant in Blue Island, Ill., signaling what may be the start of a spate of similar shutdowns that would reduce gasoline supplies, driving up consumer fuel costs, according to analysts and investors.
But for investors, the good news is that such shutdowns could also drive up refining companies' profits. That's because the new low-sulfur refineries aren't expected to come on line as quickly as the old ones go off, analysts say. So if, as some expect, refining capacity falls, creating a supply crunch, refiners could enjoy higher prices for their products -- even as some may publicly fret over the difficulty of keeping their refineries open under the stiffer rules. Possible beneficiaries include BP Amoco, Tosco, Sunoco and Ultramar Diamond Shamrock.
"A lot of companies are just coming through, doing the engineering work on their refineries to see what they will cost to improve. But they're not going to find a pretty picture in terms of the expense, if they haven't already," says Andrew C. Fairbanks, an analyst at Merrill Lynch who wrote a recent report on refiners. "The Blue Island closure is the first unequivocal casualty of this trend."
That announcement, he adds, "reinforces our view that the EPA's new clean-fuels regulations will prove to be a positive for better profitability in the U.S. refining industry," with the largest impact on Midwest refiners such as Ashland, Tosco and Sunoco. "We think it is now even more likely that refining margins and company earnings will meet or exceed our estimates in 2001."
read more …
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[This message has been edited by Sun Baked GL (edited February 02, 2001).]
