Record-High Gasoline Never a Better Buy, Say Citigroup, FBR

[jpak]

http://www.bloomberg.com/apps/news?pid=20601109&sid=aphFGtB3_O1U&refer=home

Gasoline that's going for a record $3.29 a gallon at the pump is actually cheap, the way Citigroup Inc. and Friedman Billings Ramsey & Co. look at it.

A barrel of wholesale gasoline fetched 50.4 cents less than crude oil last week, marking only the fifth time in 20 years that the refined version sold at a lower price, New York Mercantile Exchange data show. Investors who sell the raw material to buy gasoline or related products may return about 20 percent by June because the differential is going to go up, estimates from the banks show.

Gasoline may rise as the U.S. summer travel season increases demand and oil refiners limit production, according to Doug Leggate, a Citigroup analyst, and Eitan Bernstein, an FBR analyst. A rally would help restore profit margins at the two largest U.S. refiners, Valero Energy Corp. and ConocoPhillips, after crude's surge this year erased a premium that reached an all-time high of $37.48 a barrel 10 months ago.

``The gasoline margin will widen out from where it is,'' said Bill Kleese, chief executive officer of San Antonio-based Valero, whose 15 U.S. refineries from Delaware to California process one of the every seven barrels nationwide. Inventories of gasoline are going to come down, and demand for the fuel is going to go up, he said.

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[Hugabear]

1. Spoken like people who probably haven't pumped their own gas in years

It's easy to make callous statements like this when you're completely insulated, and your fuel expenses are simply another entry on your expense report that your accountants handle for you.