Posts by Hoekstra Trading LLC

This economic analysis presents investment costs and returns for a hypothetical refinery with a 55,000 barrel/day fluid catalytic cracker (FCC) in a market that will adopt a new 30-ppm clean sulfur gasoline specification. The refinery’s current FCC naphtha, which has been suitable for use in gasoline, will then be too high in sulfur for that…

The relentless rise in octane value is seen in the U.S. average retail premium-regular pump price differential, expressed here in units of $ per octane-gallon, up to date through today: To convert this number to actual pump price differential in $/gallon, multiply by 6 octane (=93-87). The building pressure on octane cost is also seen…

Hoekstra Trading LLC collaborated with Dr. Marcio Wagner Da Silva of Petrobras and Dr. Thomas Murphy of Valuation Risk & Strategy LLC in this article on economics of investment options for Tier 3 gasoline. Read the article in Hydrocarbon Processing February 2023 Recommendation Every refining executive should have a comprehensive understanding of the technical, regulatory,…

This chart shows a steadily growing gap between the price of Marathon Petroleum Company stock (MPC, in green) and Phillips 66 stock (PSX, in red) since the first trading day of 2021.  Since the summer of 2021, I have been pointing to this gap and saying it will continue to grow because it is caused…

If you buy premium gasoline you’ve probably noticed its price differential versus regular has been increasing. That is a sign of the rising value of octane which is the primary yardstick of gasoline quality and price. This blog series is about a new gasoline sulfur specification called Tier 3 which is causing lower octane quality…

A meeting in Washington D.C. In June 2022, U.S. Secretary of Energy Jennifer Granholm called senior refining executives to Washington DC asking for their recommendations on how to increase gasoline supply from U.S. refineries.  To our knowledge, the only recommendation coming from that meeting was to relax sulfur specifications on fuels, including the new Tier 3…

A commodity that’s gone straight up While the stock market, crude oil, fuel prices, and cryptocurrencies have  gone up and down wildly, the price of one important commodity has been quietly going straight up for years.  That commodity is octane.  Figure 1 shows that the retail price of octane, measured by  the difference between the…

The U.S. EPA has released the average gasoline sulfur number for U.S. gasoline in 2021. It is 10.04 parts per million (ppm) sulfur. This complies almost exactly with the Tier 3 standard requirement of 10 ppm. 2020 was the first year the Tier 3 standard was fully in-place and U.S. refineries over-achieved with a final…