Sector Snap: Oil Refiners
NEW YORK (AP) — Shares of oil refiners sank again Wednesday on worries about the costs they could be forced to pay to comply with proposed changes to government gasoline standards.
The Obama administration wants to reduce the amount of sulfur in gasoline and tighten auto emission standards to reduce pollution. The Environmental Protection Agency said Friday that the proposal would raise gasoline prices by less than a penny a gallon and add about $130 to the price of new vehicles, beginning in 2025.
But the oil industry points to its own study that puts the increase in gasoline costs at 6 to 9 cents a gallon.
CVR Refining LP on Wednesday estimated its costs to meet the new standards at less than $20 million. The full amount of the upgrade was reserved as cash on the company's balance sheet when its initial public offering closed in January.
And on Tuesday Valero Energy Corp. said it expected to spend $300 million to $400 million building new equipment and expanding existing facilities to meet the new standards. Valero also expects to spend more each year on operations to support new processes, but exact costs have yet to be determined.
The Obama administration proposal has been praised by environmentalists, as well as by automakers, who say it will help the U.S. catch up with the cleaner fuels used in other nations. Opponents say gasoline prices are high already and Americans shouldn't have to pay more. The oil industry, Republicans and some Democrats had urged the EPA to hold off on the tighter regulations.
The EPA must hold public hearings before finalizing the rules, which it plans to take effect in 2017.
Here's how shares of some oil refiners traded Wednesday afternoon:
— CVR Energy Inc., down 96 cents, or 2 percent, to $48.19.
— Alon USA Partners LP, down $1.58, or 6.7 percent, to $22.10.
— Valero Energy Corp., down $1.44, or 3.4 percent, to $40.97.
— Tesoro Corp. down $2.69, or 4.9 percent, to $52.33.
— Phillips 66, down $4.32, or 6,5 percent, to $62.52.
— Marathon Petroleum Corp., down $3.72, or 4.4 percent, to $81.76.