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Re: buying gasoline

To: Randall <ryoung@navcomtech.com>
Subject: Re: buying gasoline
From: Michael Porter <portermd@zianet.com>
Date: Tue, 05 Apr 2005 01:31:31 -0600
Randall wrote:

>>Don't kid yourself Randall,
>>Valero buys huge amounts of oil from all over the globe.  They can compete
>>on price so well due to buying most of their crude on the spot market
>>instead of having long term contracts.
> 
> 
> Perhaps it's because I've been enjoying this nice Scotch ... but I don't see 
>how
> that would make it easy for them to compete against the people who own wells,
> like Shell and BP/Amoco.

In a glut market (even if temporary), they can get deals buying on the 
spot market. In the current market, it's doubtful they're making a big 
killing by buying in that way--if they were after high-demand 
feedstocks, as many refineries are. If they've retooled for high-sulfur 
oil, they're cherry-picking deals on oil nobody else wants at the time. 
That's my guess.

> Come to think of it, does Shell even sell retail gasoline any more ?  All the
> Shell stations near my house have closed, probably because they refused to
> replace their leaky single-wall underground tanks.

This may have something to do with the Chevron/Texaco merger. Shell was 
blocking the merger--until Texaco agreed to sell them their share of 
their refining/retail franchising operations, Motiva (Shell now jointly 
owns it with Aramco), and 100% of Equilon. In the process, Shell 
acquired a lot of Texaco retail outlets, and they're still in the 
process of converting those to Shell branding. Shell may have simply 
walked away from those outlets destined to be unprofitable (because of 
the need to change tanks, for example) and your nearest Texaco may soon 
become a Shell station. It may take a while for the change to become 
obvious--Shell said, last year, that they are starting the changeover in 
Louisiana. A year or two from now, the only Texaco stations still 
carrying that name will be getting gasoline from ChevronTexaco-owned 
refineries, while Shell will be getting their fuel from refining 
subsidiaries formerly part-owned by Texaco.

Cheers.

-- 
Never let anyone drive you crazy when you know it's within walking 
distance....

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