Valero Energy Corporation (VLO), Marathon Petroleum Corp (MPC): Are Regulations Causing Higher Gas Prices?

The ones that are in much more trouble are those who do not have access to the export markets. We’re looking at you: HollyFrontier Corp (NYSE:HFC) and CVR Refining LP (NYSE:CVRR). HollyFontier estimates that RINs could hit the companies operational cash flow by about 9% based on its 2012 performance. Its not as much as Valero Energy Corporation (NYSE:VLO) right now, but that doesn’t take into account the other troubles that could lie ahead for these refiners. These two companies have all of their refining capacity in the mid-continent region of the United States. So not only can they not deflect some of its products to export markets easily to avoid RIN costs, they are also more likely to suffer as the spread between Brent and West Texas Intermediate has gotten narrower throughout the past quarter.

The RIN/WTI spread double-whammy could be a tough to pill to swallow for the smaller refiners out there like Holly Frontier and CVR Refining LP (NYSE:CVRR).

What a Fool believes
The problems for the refiner business come not from the use of ethanol. On the contrary, there are several companies that support the product and are hopeful that biofuels from cellulose can make it to the market. The larger issue today lies with the way the current Renewable Fuel Standard credits are structured. Since consumer habits for fuel consumption have changed, so, too, should the incentive structure and target levels for biofuel production.

The article Are Regulations Causing Higher Gas Prices? originally appeared on Fool.com.

Fool contributor Tyler Crowe has no position in any stocks mentioned. You can follow him at Fool.com under the handle TMFDirtyBird, on Google +, or on Twitter, @TylerCroweFool. The Motley Fool has no position in any of the stocks mentioned.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.