I just tucked my truck gasoline. I paid almost 2.60 dollars per gallon, which I think is expensive.
Hard to believe that prices this summer were the highest since 2014. We have almost four years have been the low price of gasoline … or what feels low.
However, based on the cost of oil, gasoline, we pay more now, on a relative basis, than we did in 2008.
Quite a bit more. It makes me think that there is an investment opportunity.
Let me show you …
Something strange is going on with gasoline
The cost of oil is only 45% of the cost of gasoline. Other – taxes (21%), the conversion costs (18%) and distribution (16%).
However, with the cost of gasoline is something strange. We see this from a simple comparison, how many liters of petrol we buy one barrel of oil.
Theoretically, this ratio should not vary greatly. However, something is wrong with the price of gasoline. As oil prices decreased from 2008 to the present time, the cost of gasoline has risen in price compared to the price of oil.
Petrol rose in price on the price of oil.
Refineries – a good choice today
By 2017, the oil price was 62% of the cost of gasoline. But in 2009 one barrel of oil took 50 liters of gasoline. Given that only 42 barrels of oil gallons, then turned off.
If oil prices go, oil refineries is difficult to make gasoline. That's because gasoline prices are rising, consumers save money.
In 2009 there was the least run since 2003 in the United States. This causes refineries to keep low the cost of gasoline, even paying for the high oil prices.
However, as oil prices fell in 2016, refineries replenish the earth, squeezing consumers. They paid more gasoline … sending rate and profit.
Giant oil refinery Valero Energy Corp. revenues fell from 113 billion dollars in 2008 to 63 billion dollars in 2009. From 2013 to 2015, when prices fell, Valery profit rose from 5.7 billion to 8.2 billion dollars. This was 44% more profit, even if oil prices fell from $ 100 to $ 30 per barrel.
Today we see something similar. As oil prices declining from recent highs of 66 to 60 dollars or less, you can expect that the price of gasoline will decrease slowly. This means that this year, refiners will probably be fine.
And the sector should continue to work. A recent pullback makes refining complex today appealing.
If you want to put money to work in the oil without direct impact on oil prices, now is a good choice.