If you're lying to your friends and stealing from your kids, you might just be addicted to crack. If you're cutting back production and reducing capital spending, well then you could have a crack spread problem.
Excluding that 800-pound gorilla, Valero battled through weakening demand and tight gasoline crack spreads to actually beat earnings estimates by more than 50%. The adjusted net income of $732 million beat the prior year's result by 29%. With respect to operations, the company is to be commended for remaining profitable during such a tumultuous period.
Unfortunately, demand continues to deteriorate rapidly, prompting a spate of refinery closures by Valero and competitors Conoco Phillips
Valero's cash position deteriorated notably during 2008 to less than $1 billion, but I still find Western Refining
I continue to view Valero as one of the very best players in the refining space, but the operating environment has grown so severe that I caution Fools from entering the sector just now. While I feel a tinge of buyer's remorse over my purchase of Valero shares many moons ago, at least I may be in good company as Warren Buffett waits for Berkshire Hathaway's
More than 4,000 CAPS members, including 925 All-Stars, expect five-star pick Valero Energy to outperform the S&P 500. Will you follow the Fools, or blaze your own trail? Join the free CAPS community today and share your own thoughts about Valero.
Fool contributor Christopher Barker reminds Fools to perform DDDD: due diligence on demand destruction. He can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He owns no shares in the companies mentioned. BerkshireHathaway is a Motley Fool Inside Value recommendation. Berkshire Hathaway is a Motley Fool Stock Advisor selection. The Fool owns shares of Berkshire Hathaway. Try any of our Foolish newsletters today, free for 30 days.
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