Posts by Hoekstra Trading LLC
Fuel economics – Why do Renewable Identification Number (RIN) costs pass through to fuel price?
A 9-year, multi-billion dollar legal dispute between EPA and refiners is rooted in disagreements about fuel economics. One of the roots is the RIN pass-through theory. EPA says that, with the RIN credit system, market forces raise the equilibrium price of refined fuel blendstocks by an amount that offsets refiners’ cost for buying RINs. The…
Read MoreRefiners rebuffed again on RIN price passthrough part 3 – does this wipe out 1/3 of small refiners’ value?
In Thursday’s denial of 36 petitions for small refinery exemptions to their Renewable Fuel Standard (RFS) obligations for the 2018 compliance year, EPA states it has determined that any small refinery seeking an exemption from its RFS obligations must 1) demonstrate that any disproportionate economic hardship it claims to experience is caused by compliance with…
Read MoreFor making clean fuels, 14 US refineries bite the dust
By clean fuels here, I mean conventional (not renewable) clean gasoline and clean diesel that meet clean fuel specifications for sale in the US. I count 14 US refineries on the casualty list. These 8 have converted (fully or partly) to renewable diesel in 2021 and 2022: These 6 have been closed or idled for…
Read MoreRefiners rebuffed again on RIN price pass-through – part 2
Yesterday, EPA denied 36 petitions from refiners seeking small refinery exemptions (SRE) to their Renewable Fuel Standard (RFS) obligations for the 2018 compliance year. The denial repeats and builds on the large of body of evidence showing small refiners do not face disproportionate economic hardship as a result of their RFS obligations (see this blog…
Read MoreWhy are (were?) we importing oil from Russia?
In 2021, the US imported 700,000 barrels per day (BPD) of crude and refined products from Russia. Of this, 220,000 bpd are (were?) being used by Valero as feedstocks at their refineries in Norco LA. and Port Arthur Texas. These Russian barrels are classified as products, not crude oil. My conjecture is they serve as…
Read MoreValue of octane hits all-time high
The value of octane in the United States just hit an all time high of 12.6 cents per octane-gallon: For decades, premium gasoline cost 3 cents/octane-gallon more than regular, meaning we paid 18 cents/gallon for a 6 octane difference (93 octane premium – 87 octane regular), on average, at the pump. That has now quadrupled…
Read MoreRefining catalysts True or False?
About refining catalysts: True or false?1) The market share leader has the best catalysts2) You can rely on vendor data3) Catalyst performance has tripled in the last 15 years4) Engineers resist change5) Procurement people are bean-counters6) Catalysts are chosen to maximize profitability7) Catalysts choice must be customized for each unit8) If unit performance is bad…
Read MoreUpdate on the MPC-PSX stock price spread
Throughout 2021 and 2022, I have been tracking the difference in performance of Marathon Petroleum (MPC, green) and Phillips 66 (PSX, red) stock. The first blog post, from Dec 8, 2021, showed the difference being 60% gain for MPC versus 1% gain for PSX. The S&P 500 index is shown for reference: Now, 100 days…
Read MoreDo refiners buy catalysts on relationships or economic value?
Which would a catalyst sales person rather have: a strong personal relationship with the key decision maker, or the catalyst offer with best economic value? I have asked this question of 100+ catalyst sales people. Most say they’d rather have the personal relationship because it has more impact in affecting sales. Having worked my entire…
Read MoreConstipated refineries
Recently, it was reported that PBF Energy is considering restarting some secondary units at is partially-idled refinery in Paulsboro, New Jersey. When explaining this possibility, CEO Tom Nimbley diagnosed the situation as constipation: . . as we started to see demand recovery and growing up our utilization, particularly in Delaware to take advantage of the…
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