However, net earnings from downstream operations could potentially suffer because of low refining margins.
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If increased operating costs lowers refining margins, then it could possibly justify the haircut in stock value.
Despite tight gasoline supplies and record refining margins, no new refinery has been built in America for 20 years.
For instance, if the economy starts to accelerate, refining margins could grow even higher as refining capacity gets tight.
Refining margins are notoriously volatile, which is why companies that primarily operate refineries often trade with comparatively lower multiples.
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This recent spinoff from ConocoPhillips ( COP) is a great way to play the prospects for improved refining margins.
Both companies suffered when gasoline demand and refining margins collapsed in late 2008 and the adoption of carbon-cap-and-trade seemed imminent.
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Refining margins generally tend to increase when crude oil prices rise as this leads to higher average prices for various refined products.
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In the latest quarter the company reported a 16% drop in revenues and a 10% fall in net profits as sugar-refining margins shrank.
As demand increases due to growth in the economy, we expect refining margins to also increase, putting an upward pressure on the price of gasoline and other refined products.
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With the International Energy Agency suggesting a further slump in refining margins over the last few months of 2012, there is little reason for investors to expect a very positive quarter results.
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Still suffering the aftershocks of the Macondo accident in the Gulf of Mexico, BP posted fourth quarter earnings on Tuesday, beating estimates despite production declines and significantly lower refining margins.
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While operations were solid significantly lower refining margins, added to a planned outage of their Whiting refinery as part of an upgrade, pushed their quarterly profit down more than 50% on a sequential basis.
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The company announced improved first-quarter refining margins and said it had made significant progress in efforts to stem a natural-gas leak on its Elgin field platform in the British sector of the North Sea.
The company has high exposure to refining, margins for which may not improve for another year or two, and it has the burden of the French government poking in its affairs, not letting it close some refineries that should be closed.
"Severely compressed refining and marketing margins were experienced worldwide and were the primary driver in the decline, " chairman Lee Raymond said.
The gains in oil and natural gas prices were offset by Exxon's shrinking refining and chemical margins, lower production volumes and higher operating costs.
Even the majors, which have both drilling and refining capabilities, are not immune to refining's tight margins.
Exxon's oil refining business saw higher margins but this was offset by a 7.5% drop in oil and gas production.
But those seemingly healthy results were undergirded by strong margins in its downstream refining business.
Shell said that it saw stronger margins in its oil refining division, but these were outweighed by lower crude prices during the quarter.
The profit figures were helped by better-than-expected margins in BP's refining operations.
Much like Chevron, BP saw its refining profit take a big hit in Q4 given falling margins and lower volumes.
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The refining business had been lousy for a decade: Overbuilding in the 1970s ensured thin profit margins.
Complete speculation, but if margins for jet fuel are so good that an airline wants to get into the refining business, it might make sense for Catsimatidis to ship in jet fuel from elsewhere and stockpile it at the terminal.
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