New US Refinery 'Project Gorilla' Enhances Energy Sector Attractiveness

In an earlier post about Tidwater (TDW) (screened during the recent downdraft and, sadly, not bought) I commented about my position in Holly Corporation (HOC) and the challenges of bringing a refinery to market and then turning a profit. Yesterday brought an announcement about plans to build the first refinery in the U.S. since 1976 (WSJ Online subscribers can get background here) called Project Gorilla.

I've only invested modestly in the energy sector. I go where the cheap stocks are and HOC was pretty cheap when I bought it. Also, I don't put much effort into broad, thematic investing (I'm not smart enough, frankly). That said, I've looked cursorily at ethanol which, to my understanding, requires more energy to make than it saves (vs. oil). Nevertheless, since almost half the U.S. Senate comes from farm states, you can be sure we'll have ethanol. A wind farm needs to be something like three times the size of Manhattan to generate two gigawatts, giving the average person in NYC 1/40 of his or her annual power usage. We'll have solar just as soon as someone puts a meter on the sun. While each of these alternatives get lionized in the press, I'm skeptical about their value to the individual investor.

But, at least for me, with refining capacity so difficult to add, and energy demand only going in one direction, owning a few well priced businesses in that sector is a sound approach.