Second, the company can turn each barrel of oil it refines into a larger volume of higher-valued refined products than its peers, which enables it to make more money. Most of the company's midstream infrastructure supports its refineries.
That focus differentiates it from its independent refining peers, which have diversified their midstream investments to include things like long-haul oil and gas pipelines, natural gas infrastructure, and export terminals. Another thing that makes PBF Energy a bit different from its large independent refining peers is that the company doesn't operate any branded retail stations.
As such, it is the closest pure refining company among the largest independents. PBF Energy stands apart for its focus. While the company has a coast-to-coast portfolio of oil refineries, it has concentrated on operating the most complex facilities near the country's two largest population centers.
That focus enables the company to turn the oil it refines into greater volumes of higher-valued petroleum products that it sells into these two premium markets.
However, its lack of diversification leaves it more exposed to the volatility of the refining market. If the crack spread shrinks, its profits will follow. HollyFrontier operates several refining complexes in the Mid-Continent and Rockies regions.
As of mid, the company's portfolio had an NCI of One benefit of operating in the Mid-Continent and Rockies regions is their proximity to low-cost North American oil supplies. The company's Rockies refineries benefit from processing the cheaper oil that comes out of Western Canada, the Bakken Shale , and the Powder River Basin.
Add this to HollyFrontier's greater complexity, and the company can make lots of money as it refines low-cost crude into higher-valued refined products. This infrastructure helps supply its refineries with low-cost local oil while also transporting its refined products to key markets, such as Las Vegas and El Paso. The company, like PBF Energy, doesn't own any branded retail outlets. However, HollyFrontier does operate a specialty lubricants business.
These operations enable the company to make high-value branded lubricants and other specialty products, which it sells in more than 80 countries. In this company's case, it operates a handful of highly complex refineries near low-cost oil supplies. That enables the company to earn high margins on each barrel. However, like PBF Energy, HollyFrontier's lack of diversification can hurt its profitability when refining margins are under pressure.
Oil refineries take raw crude oil and transform it into higher-value products, making money on the difference between the prices at which they buy oil and sell refined products. This process enables these companies to generate lots of cash, the bulk of which they use to either grow their operations or reward shareholders through dividends and buybacks. These characteristics make refining stocks appealing options for investors. That's because they offer exposure to the oil market without the extreme downside that can come from lower oil prices, since refiners tend to benefit when crude declines.
This factor should make refining stocks particularly appealing to investors who own shares of an oil-producing company. They might want to consider pairing that investment with a refining stock, since it should help mute some of the impacts of oil price volatility.
Aside from that, refining companies tend to be excellent dividend stocks. Not only do they tend to pay above-average dividends, but they also increase their payouts each year. That combination makes refining stocks ideal options for income-seeking investors to consider. Discounted offers are only available to new members. Stock Advisor will renew at the then current list price. Average returns of all recommendations since inception. Cost basis and return based on previous market day close.
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Renewable sources. Renewable energy. Biofuels: Ethanol and Biomass-based diesel. The local marketers who own and operate the plants then redistribute the products in smaller tank trucks to commercial accounts, homeowners, farms and gasoline service stations. In some instances, a bulk plant owner may resell product to another independent marketer who, in turn, will complete the downstream distribution of the product to service stations and home heating oil businesses.
The neighborhood service station may be owned and operated by an integrated oil company, a branded or unbranded refiner, an independent marketer distributor , chain retailer, convenience store or an independent service station dealer.
The gasoline in the station's pumps may be branded or unbranded and may be supplied directly by a refiner, or by an independent marketer. The local home heating oil dealer is responsible for delivering heating oil to homes and commercial buildings throughout the year. In addition to fuel deliveries, a "full service" home heating oil dealer installs and maintains heating and hot water equipment on a hour, 7-day-a-week basis.
The dealer may also sell, install and service other energy-related products such as air conditioning systems, solar equipment, energy conservation measures, kerosene, wood and coal. Aside from the fuels derived from petroleum, such as gasoline, distillate fuel including home heating oil and diesel , kerosene-type jet fuel, and residual fuel oil used in industry, marine transportation and for electric power generation, there are many non-fuel uses.
Pipelines operate 24 hours a day, seven days a week. A little known fact is that the vast majority of branded stations are owned and operated by independent retailers who are licensed to represent that brand.
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