A year and half ago the Israeli state privatized its oil refining business and BAZAN (the Haifa Refinery)'s shares fetched 3.2 shekels. I bought. Current price is 1.5 shekel. Oil refining is a difficult business and its perspectives are gloomy:
"As a very cyclical industry, these business models do not support high leverage. At the trough of the cycle, it's very difficult to secure financing anyway," Mark Sadeghian an analyst at Fitch Ratings in Chicago.If Obama succeeds and people start driving with ethanol and electric batteries, who will buy the refineries's products? (pic: the Sunoco fire, Tulsa)
The Tulsa refinery deal will fetch about $745 per barrel of refining capacity, close to levels last seen in 2003 and about 80 percent less than the $3,920 per barrel of capacity that Alon USA Energy Inc paid for Valero Energy Corp's Krotz Springs, Louisiana refinery last July. Just two years ago, Tesoro Petroleum Corp bought the Wilmington, California refinery from Shell for over $16,000 per barrel of capacity.
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