Both Marathon and Valero suffer from a double whammy of a shrinking spread between the cost of West Texas Intermediate, or WTI, and Brent crude, and a sharp rise in the cost of ethanol credits, officially called Renewable Identification Numbers, or RINs.
The ethanol credits hit a new high of $1.32 yesterday, after selling for just pennies at the beginning of the year. We wrote more about this yesterday when the ethanol credits were selling for $1.25.
In its announcement, Marathon said it expects to report profits of $570 million to $600 million, or about $1.75 to $1.85 per share. The consensus estimate had called for earnings per share of $2.58. In the second quarter of 2012, Marathon posted EPS of $2.38.
No word yet from refiners Phillips 66 (NYSE: PSX) or Tesoro Corp. (NYSE: TSO), but it is hard to imagine that either will meet expectations for the second quarter.
Shares of Marathon are down 4.8%, at $69.60 in a 52-week range of $43.62 to $92.73.
Valero’s shares are off another 1.3% today, at $34.92 in a 52-week range of $24.62 to $48.97.
Shares of Phillips 66 are down 2.5%, at $57.78 in a 52-week range of $34.50 to $70.52, and Tesoro’s shares are off 2.1%, at $53.00 in a 52-week range of $25.79 to $65.75.
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