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Rising gasprices and investment in Western Refining Inc

 

01-04-2007

 

Western Refining, Inc., headquartered in El Paso, Texas, is an self-active crude oil refiner and marketer of refined products, operating primarily in the Southwest region of the United States, including Arizona, New Mexico and West Texas.
The company, which operates a refinery in El Paso, hopes to close the transaction in the second quarter of 2007 on the acquisition of Giant Industries with their refineries in the Four corners area in New Mexico and Yorktown Virginia. On February 27, 2007, Giant's shareholders voted to approve the transaction. This will close double the company's refining capacity,

 

building the company the nation's fourth largest publicly traded, self-active oil refiner. WNR will furthermore more than double the amount of cheap sour and heavy levels of crude it can process to 25% of its complete capacity. This should help to increase their margins and ergo their profitability.
Alon Energy with their recent acquisition of refineries on the West Coast should benefit from the higher gas prices there as well, generating a positive impact on the margins of the company. With the acquisition of Edgington and Paramount, management expects to accumulate the barrels per day from acquired refineries from 51,000 per day to 90,000. In the 4th quarter of 2006 they achieved 60,000 barrels per day, an increase of 9,000 barrels . The company will moreover submitting a hydro cracker to the California refinery to accompaniment margins. ALJ also is the largest supplier of asphalt in California and Arizona, and the number two supplier in Texas. The company is experiencing rising than expected ask for asphalt and they have not even hit the peak summer paving time. They also are selling all the diesel they can make, which carries a rising margin than gasoline.
Don't forget that Valero's (VLO) McKee refinery recently had a serious fire that will likely remove about 1 percent of US refining capacity for about a month. While not a lot, it is enough to spoke the markets.
Look to buy on lows in price in late winter or early graduated before the price of gasoline typically is rising. Look to sell when the price of gasoline peaks.
By the way, the peak 1980s year for gasoline prices was 1981 at $1.Finally, play the rise in the price of gasoline to be prepared for our rising warm weather travel bills.

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