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The good news is that oil is way down – about a 12% down over the last three weeks. That means a modest decrease in the price of gas, but more importantly, a lower LEAC down the road. For anyone operating a business, that is like getting a big raise.
On the other hand, low oil prices can’t portend well for Hovensa. That’s are number one employer and their success does effect business. So I’m not sure if I’m rooting for lower or higher oil prices….
Well, oil price doesn't necessarily affect Hovensa profits, the 'crack spread' does...that is the difference in price between the barrel of crude Hovensa buys and the price of the products sold that are refined from that barrel. So if crude oil prices drop but wholesale gasoline and diesel prices stay the same then Hovensa makes more money.
I don't claim to understand Hovensa's profits/losses but I do know we on STX should be concerned if they are running in the red. This affects hiring, wage negotiations, capital projects, taxes they pay, ..........................
Refineries do close the doors. They are not immune to the economy.
http://www.ngoilgas.com/news/Recession-refinery-closures/.
Still laughing???
Hovensa being down has really hurt local business as well as the rental business these last couple of years. Its not just Hovensa but all of the sub contractors they hire. It has definitely hurt the island. Some of the subcontractors have closed up business on island. I hope it doesn't get worse, those guys spend a lot of money on island. Stt had the cruise ships but we had all these, mostly young guys spending a lot of money here and it's just dried up for a couple of years now. It'll be hard for us to get back were we were without Hovensa doing well.
Hi AllMashUp
From what I’ve read, it’s more efficient to run refineries at close to 100% capacity and it’s inefficient to shut down parts of the refinery. On the other hand, if there’s a “surplus” of refined products, I imagine that Havensa does make adjustments. But I don’t pretend to know about the business. I’m just wondering how viable Hovensa is compared to other refiners.
Hi Linda J
I absolutely understand that there isn’t a whole lot of sympathy for the oil industry and you can count me in that crowd. However, as a relative newcomer, it was never so clear how we are so interdependent until I moved to the island. When Hovensa does their turnover or hires more contractors, that affects me directly. I’ll use contractors or make purchases that have been postponed when the cash register is ringing.
When Hovensa is reining in expense, I feel that too. For example, when Stanford imploded, which is considerably smaller company, we lost some regular customers immediately. I think the economic term is “velocity of money” and on STX money changes hands fast. So I want them to prosper (but I hate paying the high LEAC rate).
Oil is the driving force behind the VI economy and accounts for better than 85% of our exports.
http://virginislandsdailynews.com/news/feds-crunch-the-numbers-on-v-i-economy-1.882521
“Oil is a big deal,” said Lauritz Mills, director of the V.I. Bureau of Economic Research, which assisted federal economists with the study. “We often think it’s tourism, but it really is oil.”
hovensa is just a small portion of hess oil...when the subcontractors start to leave it is a worry for local economy...imho when hess reduced and martin marietta left, that, IN PART, is what has led up to the current economic downfall...
wondering how many locals, on the average, are now employed by hess....
My understanding is that Hovensa is not doing well. I have friends who've had to leave because of it, and I'm talking about people with Masters Degrees and in management, not just line guys. I've been told a few things, one issue is Chavez. Venezuela is a mess and apparantly isn't holding up their end of the bargain to maintain the facility properly. I also sat next to a woman who was a VP at Hess from NJ on a flight about a year ago who said something along the lines of things at Hovensa need to either get bigger with a big investment to help keep it competitive in terms of economy of scale or it will be shutdown. This is all second hand though so take it for what it is, but the consensus I have heard among friends is that things are not great at the refinery.
Beating up big business is always trendy and popular until you beat them all the way down or to other countries that are glad to have them. Hovensa is the backbone of our economy here on STX and while a vigilant eye should be maintained assuming that you can behave unfairly towards a big business is a surefire way to shoot your self in the foot.
Sean
some of you know, I live in PA.....and trying to move my ass closer to STX..........BUT currently I have an Oil Company that is called "Tropical Oil" (I picked it out of the yellow pages b/c of the name)....and they advertise the oil comes from STX...........are they shooting oil up my ass??? cause I seriously thought I was giving money to the VI economy!!!! AND THAT IS WHY I WENT WITH THEM!!!!
Oil is the driving force behind the VI economy and accounts for better than 85% of our exports.
http://virginislandsdailynews.com/news/feds-crunch-the-numbers-on-v-i-economy-1.882521
“Oil is a big deal,” said Lauritz Mills, director of the V.I. Bureau of Economic Research, which assisted federal economists with the study. “We often think it’s tourism, but it really is oil.”
Thanks for the link, aussie.
some of you know, I live in PA.....and trying to move my ass closer to STX..........BUT currently I have an Oil Company that is called "Tropical Oil" (I picked it out of the yellow pages b/c of the name)....and they advertise the oil comes from STX...........are they shooting oil up my ass??? cause I seriously thought I was giving money to the VI economy!!!! AND THAT IS WHY I WENT WITH THEM!!!!
Hovensa (formerly Hess) has shipped refined oil products & gasoline to the mid -Atlantic and some of the NE states for many years since Hess Oil was headquarted in NJ. When I still worked in NE Ohio for a Reading, Pa based company, there were Hess gas stations in Reading, Pa.
Tropical Oil, I'm sure, is nothing more than a distributor (re-seller) of petroleum products. Up until a few years ago both Sun Oil Co refinery on Puerto Rico and Hovensa/Hess refinery on St Croix were refineries located in the tropics. I don't know how long Tropical Oil has been in business, but Sun in Puerto Rico has been closed for several years. So if my assumptions are correct & I think I am, then you are currently buying product refined here on St Croix..
Jumbie -STX.
there are still hess gas stations all over the place stateside...still selling the little trucks and so at the holidaze for the youth...quite a few hess storage tanks as well in the next town over from me...i remember the little hess station on St. Croix right at the end of sion farm across the highway...used to be quite lively back in the day...i found 500 dollars one day in the street in a wallet...with NO ID or anything...no pics, no address to return it...so i kept it...my mother worked for hess when we still lived in NJ...my ex worked for hess on the island in its hay day.
My pleasure, dntw8up. Here a link to the Bureau of Economic Analysis' website
http://www.bea.gov/newsreleases/general/2010/territory_0310.htm
