Permian Basin refineries saving $19 a barrel on oil because of location
A half dozen refineries in West Texas and New Mexico are reaping the rewards of proximity to cheap oil as pipeline constraints discount crude oil coming out of the region.Location, location, location. It makes a difference when infrastructure shortages make it hard to get the oil to bigger markets.
The six refineries, with 686,000 barrels a day of refining capacity, have direct access to oil out of the Permian Basin, where oil has been selling at a at a nearly $19 a barrel discount compared to Houston, according to a report by Morningstar, an independent investment research firm.
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The refineries, located in West Texas, the Panhandle and New Mexico, are making margins above $15 a barrel or $9 million a day when processing West Texas Intermediate, West Texas Sour, a heavier crude oil that is also produced in the Permian, or a mix of the two, the Morningstar report said.