Valero Energy

With the focus on lofty gasoline prices still fresh on many minds in the wake of Superstorm Sandy and refiners soon looking to transition production from winter to summer blend fuels, I wanted to look back at a topic which recently garnered national interest. Who could forget TV crews broadcasting live as gas lines went on for miles and eerily resembled what was seen here in the States during the 1973 Oil Crisis? This has me thinking President Obama has a chance to make the advancement of fuels a top priority in his second term and that could spell opportunity for investors.

The carnage that Sandy left across many states, including my hometown in New York, should be yet another wake-up call that the lack of refinery capacity in the U.S. is still a major issue that simply won’t go away. Did you know there are currently about 144 operable U.S. refineries, the fewest since at least 1949, which is as far back as Energy Department data goes? Whichever way you slice it, refinery numbers in the U.S. continue a three-decade contraction which means investors must consider the future of fuels. Keep reading →

It is an urban myth that if the oil industry drilled more, gasoline prices would decrease. The myth relies on the premise that as more oil supplies are introduced, market forces would take over and domestic prices would fall. But it turns out that increasing domestic production has virtually no effect on gasoline prices.

The US already increased production. According to the Energy Information Administration (EIA), US oil production reached 310,403,000 barrels per month in October 1970 that became the historic peak. Ever since that time, production changed course and it has been in a steady decline. By 2005, production sank more than 50 percent to approximately 150,000,000 barrels per month. The bottom was reached in September 2008 when production sank to 119,477,000 barrels per month. Since then, for the first time since the 1980’s, monthly production changed direction and it has been trending upward. Last July, the US touched a new record of 196,405,000 barrels per month, a production level the US has not witnessed for over a decade. Keep reading →