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The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.



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is one of the largest energy companies in the world and competes with other established oil producers like

Exxon Mobil

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Previously, we focused our discussion around Chevron's upstream operations that are centered around oil and natural gas exploration. In this article we shift our focus to its refining business and discuss sales of its refined products.

Chevron does not report its total refined products sales in terms of dollars. We estimate this figure by using reported sales volume of refined products and estimated price. We estimate that Chevron earned close to $100 billion in revenues from sales of refined products such as gasoline, gas oil and kerosene, jet fuel, residual fuel oil and other products in 2010.

We also note that gasoline sales were the highest, at about $39 billion, followed by gas oil and kerosene with sales of about $29 billion. Despite lower pricing, gasoline sales were higher simply due to higher sales volume. In 2010, Chevron sold about 1.22 millions of barrels of gasoline per day compared to a little over 0.8 million barrels per day for gas oil & kerosene. At the third place, stood sales for jet fuel (or aviation fuel).

Despite substantial sales, both in terms of volume and absolute dollar amount, refined products constitute just about 8% of Chevron's stock value. This is primarily due to very low profit margins that are typical of refining business. These margins stood at around 2.33% for Chevron in 2010 compared to 53% margins for its oil & natural gas production business.

Our price estimate for Chevron's stock currently stands at $104, roughly in line with market price.

See our complete analysis for Chevron's stock



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