Load Up On These 4 Stocks Profiting From The Cheap Gas Revolution

There’s one small sub-sector of the energy complex that sees profits swing up as oil prices move down. It’s no surprise that 2015 has been a great year for these four companies and next year looks to be just as profitable. With winter being the best time to buy shares of these stocks, it’s time to load up.

Hidden in the weeds of the energy sector bear market, the result of the 50% decline in crude oil prices, is one segment of energy services that becomes generally more profitable as the price of crude declines. Crude oil refiners typically see greater refining margins at lower energy prices. Americans love lower gasoline and diesel fuel prices. As the price at the pump drops we drive more miles and many people motor down to their local dealerships to buy less gas efficient SUVs and large pickup trucks. As a result, refining companies benefit from both greater profit margins and increased demand for their products.

Before we get to a list of top refining company stocks you need to know some facts about this unique class of energy companies.

First, the gross margins earned by a refinery are dependent on the market driven prices for crude oil and fuels and other refined products. As a result, profit margins can swing significantly from quarter to quarter and year to year as the result of changing energy commodity prices. Refiners work to control their own destinies by upgrading their refineries to be more efficient, increase throughput capacities, and to handle more grades of crude oil to produce the highest value refined products.

Second, for a variety of reasons, refineries not located on the U.S. East or Gulf Coasts tend to be more profitable than those two locations where most of the U.S. based refineries are located. The coastal refiners primarily use more expensive imported oil, while inland refineries use lower cost crudes (with lower transport costs) produced in the energy plays from Texas through the Rocky Mountains to North Dakota. Fuel prices are based on the higher production costs from using imported oil. California based refineries also tend to be very profitable, due to the closed energy ecosystem on the West Coast.

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Author: Travis Esquivel

Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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