NEW YORK ( TheStreet) -- Imagine for a moment, that you run a company that must sell its goods at a lower price point, yet simultaneously must pay more to produce this good. This seems like a reasonable cause to send a company's shares downward, which is exactly what has occurred with refinery stocks. The rally in crude oil, coupled with muted prices at the local gas station, has created a troublesome environment for oil refining companies. Investors, though, have recently savored the gift of a run-up in oil prices; and consumers have welcomed the gradual slide in prices charged at the pump. As appreciated as this pairing is for consumers and investors, it's terrible for the refiners who must pay those higher energy input costs and receive the lower retail pump revenue. We believe this trend is due to reverse shortly.
Crude oil ( USO) prices have advanced along with other risk assets over the last several years, making notable and recent price leaps in reaction to the situation developing within Syria. As global economies lurch along, either organically or by the coercion of central banks, both commodities and global stock markets have rallied sizably. During this time, crude oil, gasoline ( UGA), diesel and heating oil ( UHO) have all mostly advanced in step, until recently. It is this divergence that has sent refinery stocks into a tailspin. Prices at the local gas station have begun to lose their high correlation to crude oil over the recent past. Gasoline has made a series of lower price highs since the summer of 2011, while crude hit a new high in August. Fortunately, companies like GasBuddy.com, have made pump prices readily available for all 50 states and most major cities. Viewers can quickly see the price charts showing retail gasoline prices that have not tracked alongside prices of crude oil recently. Instead they have, on balance, been declining. Now, this is great news for U.S. consumers and their wallets, but not for companies such as Valero ( VLO), Western Refining ( WNR) and Marathon Oil ( MRO). Lastly, the complications facing British Petroleum ( BP), which is still battling the repercussions from its 2010 Deepwater Horizon oil spill and the subsequent claims process, could be enough to remove it from a list of candidates for a portfolio.