We're now more than 12 months into a market rally that just won't quit. Shares of economically sensitive names across a range of industries have more than doubled in the past year, including the likes of machinery maven Caterpillar, metals miner Freeport-McMoran Copper and Gold, and formerly grounded American Airlines parent AMR.

And so I ask, is there anything left for the contrarian investor to get behind?

Fools, welcome to the U.S. independent refining industry, where stocks still do something other than just go up.

Just plain ugly
In general, stock returns here have been abysmal. Western Refining (NYSE: WNR) is down roughly 50% in the past year. Tesoro (NYSE: TSO) and Frontier Oil are nearly flat. Holly is the lone standout, although its double-digit gain still lags that of the S&P 500.

Fundamentals, however, look to be turning the corner.

Last week, integrated giant BP (NYSE: BP) pumped out a fiery gem of good news. Its Global Indicator Margin -- a generic measure of worldwide refining profits -- revealed a 98% sequential jump to the upside (Q4 2009 vs. Q1 2010, through March 25).

Of the six regions surveyed, Northwest Europe enjoyed the greatest improvement, but the U.S. Gulf Coast scored next best. That's a boon to the long-ailing Valero (NYSE: VLO), which sees the Gulf as home to six of its 13 currently operating conventional refineries. Incidentally, it should also help out integrated majors such as ExxonMobil (NYSE: XOM) that have facilities in the region.

Other data points confirm a stronger market. In the past weeks, crude oil differentials -- the discount at which complex refineries can purchase and process lower-grade feedstocks -- have improved substantially. Meanwhile, crack spreads in the western U.S. have nearly doubled from the start of the year.

All told, refiners' first-quarter earnings are almost guaranteed to shine in comparison to the shellackings reported in Q3 and Q4 of 2009.

But caution reigns supreme
It's a matter of basic psychology -- bad looks great when compared to horrible. And "bad" may remain the most accurate description of the U.S. refining industry for quite some time.

Consider, for instance, that although BP's Global Indicator Margin -- at $2.95 a barrel -- is much improved on a sequential basis, it still pales versus the year-ago $6.20. Moreover, while the U.S. Freight Transportation Services Index (TSI) has risen 3.3% since June 2009, it's still down more than 14% from its all-time high in May 2006.

If you're thinking that it would take one heckuva V-shaped economic recovery to push U.S. fuel demand back to former highs, I agree completely. Yet for refiners, the windfall of robust economic activity (should we be gifted with such a development) is likely to be at least partially dampened by rising fuel efficiency. It's no secret that U.S. sales of new automobiles have been rising, benefitting everyone from Ford (NYSE: F) to the beleaguered Toyota (NYSE: TM), but with small and midsize cars leading the sales gains coupled with higher governmental standards on fleet mileage, it looks to me like the average MPG of the U.S. fleet is set to do one thing only -- climb.

Even with the summer driving season fast approaching, investors may want to view a potential Q1-earnings-related pop in refiners' shares as an opportunity to get out of, rather than into, stock positions.

Am I overly pessimistic on refiners' prospects? Share your thoughts below (but please, no smoking within 50 feet of the comments section, for your own safety).

Fool contributor Mike Pienciak holds no financial interest in any company mentioned in this article. Ford Motor is a Motley Fool Stock Advisor recommendation. Try any of our Foolish newsletters, free for 30 days. The Fool has a disclosure policy.