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Why High Oil Prices are Bad for Western Refining (WNR)

Posted June 10, 2008

“Take a look at the chart of Western Refining (WNR:NYSE)… High oil prices have been disastrous for WNR.” — Andrew Mickey

by Andrew Mickey

Baltimore — (TFN): Oil hits $140 and could be going to $200. Buy oil stocks. Oil prices go up, oil stocks go up too, right?

Actually, that statement couldn’t be further from the truth.

Take a look at the chart of Western Refining (WNR:NYSE), a company that refines oil into gasoline and other petrochemical products. High oil prices have been disastrous for WNR.

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Rising oil and gasoline prices were a boon to Western’s profits. Earnings from its refining operations grew at a near triple-digit rate in 2007. But when oil prices headed too high, the cost of buying oil started to drag down profits, and Western’s share value evaporated as fast as its earnings did.

When oil prices get too high, many subsectors of the oil and energy industry suffer. The end of easy oil means the end of making easy money in oil. Find a chart of WNR’s recent stock performance and learn where you can still make money in oil.

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Posted by Andrew Mickey · Filed Under Oil and Energy 

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