You know that the market has baked in some pretty high expectations for a petroleum refiner when the company can nearly double its refining margins, yet still disappoint some investors. Such was the case for Holly (NYSE:HOC), as a solid quarter wasn't quite good enough to satisfy the Street.

By most standards, you'd say that the third quarter was pretty good. On a consolidated basis, Holly processed about 2% more crude per day, increased its refined products output by more than 3%, and sold more than 4% more refined products per day. Utilization was a robust 96.9% for the quarter, and the refinery gross margin improved from $7.41 a barrel last year to $14.43 a barrel this quarter.

The downside? Per-barrel margin expectations were more in the range of the high $15s for this quarter. Consequently, Holly's reported earnings per share missed the median target.

I'm not all that surprised to see the reaction in these shares; investors spent a lot of time in October selling the shares of refiners after a very strong run in the first nine months. Not only are there concerns now that lower demand will depress energy prices, but there's still a fair bit of volatility in the system. For instance, Holly's crack spread for gasoline dropped 32% month-on-month in October, while the diesel crack spread rose 57%. For those not familiar with the lingo, crack spread basically means the difference in price between a unit of crude oil and a similar unit of refined product, like gasoline or diesel.

While Holly's facilities were well out of range of the storms that damaged facilities owned by the likes of Marathon (NYSE:MRO), ExxonMobil (NYSE:XOM), and Valero (NYSE:VLO), the shares trade more or less in step with the refining sector. Consequently, I'm not sure that the newly announced $200 million share repurchase announcement is going to make a big difference.

For better or for worse, the fate of Holly's investors will be pretty close to that of refinery stocks in general. Although that sector has had a good run and there are still positive industry fundamentals (minimal new capacity and so on), energy stocks in general have gotten more volatile of late. That suggests to this Fool that investors still hanging on to these shares will need to buckle in for the swings and swoons that are almost sure to come.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).