Mondo Visione  Feb 6  Comment 
The energy group EWE AG and the European Power Exchange EPEX SPOT have signed a cooperation agreement within the scope of the enera project in Essen today. As part of the project, both companies commit to reveal the local dimension of the European...
Mondo Visione  Jan 17  Comment 
On 8 February ACER will hold a stakeholder event on the methodologies and parameters to determine gas TSO revenues. The event will be held at CEER’s premises, Cours Saint-Michel 30a, 5th floor, 1040 Brussels (10.30-16.30).   The Network...
Motley Fool  Aug 9  Comment 
Tight refining margins were too much for Tesoro and Western Refining's combined assets to overcome in the second quarter.
The Economic Times  Aug 6  Comment 
As many as 44 passenger seats and 12 flight attendant seats had to be declared unserviceable for this journey due to their missing TSO tags. Clearly, AI is not happy.
Motley Fool  Jul 24  Comment 
Tesoro has an unexplored market to tap that no others can access right now.
Insurance Journal  Jun 13  Comment 
A Washington state administrative judge threw out $2.4 million in fines levied against refiner Tesoro Corp. for a 2010 explosion that claimed the lives of seven workers at the company’s Anacortes, Washington, refinery. Judge Mark Jaffe said...


Tesoro Corporation (NYSE: TSO) operates as an independent petroleum refiner and marketer in the United States.[1] The Company's primary segments are divided into Refining and Retail, through which its manufactures and sells transportation fuels such as gasoline, jet fuel, diesel, and other petro-products.[2] Its refining customers include wholesale and bulk marketers and its retail customers include mainly end-users of gasoline and diesel.[3] As a petroleum refiner, Tesoro's revenues depend on the spread between its crude feedstocks and the price at which it can sell its refined products, which is known as the refining margin.[4] Supply interruptions and lower demand due to economic slowdown have led to smaller spreads, which has impaired profitability.[5]

Business Growth

Tesoro reported a loss of $29 million on revenues of $20.5 billion in 2010, versus a net loss of $140 million on revenues of $16.8 billion in 2009.[6] The revenue growth largely reflects the increased gasoline demand as well as higher fuel prices.[7] Although still reporting a net loss for 2010, Tesoro's margins have improved due to improvements in refining margins as well as increased use of cheaper feedstocks.[8]

Trends and Forces

Tesoro's profitability hinges on refining margins and fuel costs

Like that of many independent refiners, the profitability of Tesero's operations depend on the spread, known as the refining margin, made on the cost of crude feedstocks and the price at which Tesoro sells its products.[9] The economic downturn beginning in 2007 led to a drop in fuel demand, which, in turn, led to smaller refining margins. In response, Tesoro focused on several cost-saving initiatives such as curtailing production and acquiring refineries that can process cheaper forms of crude.[10] Despite these efforts, Tesoro reported net losses for 2009 and 2010. However, as the global economy begins to improve, fuel demand and prices have risen. Increasing fuel prices have the potential of benefiting Tesoro's future profitability, especially from plants that can handle cheaper feedstocks.[11] Tesoro's largest assets are located on the West Coast of the US, where unemployment and economic recovery are improving at rates slower than the US average.[12]

Tesoro's west coast operations face heightened regulatory standards

In Calfornia, legislation designed to reduce carbon emissions have the potential of reducing Tesoro's production and profitability.[13] Legislation such as the Global Warming Solutions Act aim to fight climate change by capping carbon dioxide and other gas emissions.[14] Other climate-related legislative initiatives include:

  • higher fuel efficiency standards for vehicles;[15]
  • mandated renewable fuels standards;[16]
  • potential and enacted climate change legislation, including the EPA regulation of greenhouse gas emissions under the Clean Air Act; and[17]
  • competing refineries being built overseas.[18]

Although unlikely to be immediate, the effects of these regulations have the potential of hindering the long-term growth of fuel demand.[19] Since a majority of Tesoro's operations are located in the west coast, where climate change efforts have progressed quicker than elsewhere, Tesoro is particularly disadvantaged compared to its competitors.[20] In response, Tesoro and other refiners have given contributions to lobbying efforts against these proposed legislation.[21]


Independent refiners in the US have shifted from using primarily lighter crude feedstocks to using a diversified combination of cheaper, heavy feedstocks and light feedstocks.[22] However, persistently tight margins have curtailed expenditures and expansions for many independent refiners.[23] Some refiners have focused on building their other segments, such as transportation or retail.[24] Competitors in this space include:[25]

Oil majors also engage in refining and marketing in the US. While their refining segments are subject to the same economic conditions as independent refiners, they tend to have more capital, allowing them to expand despite weak market conditions. Competitors in this space include:[26]


  1. Google Finance: TSO Company Profile
  2. Reuters: TSO Company Overview
  3. Reuters: TSO Company Overview
  4. Reuters: TSO Company Overview
  5. Reuters: TSO Company Overview
  6. Morningstar.com: Financials for Tesoro Corp., June 2011
  7. SEC Edgar: Tesoro Corp 10-k 2010 Filing
  8. SEC Edgar: Tesoro Corp 10-k 2010 Filing
  9. Tesoro 2010 10-K filing
  10. Tesoro 2010 10-K filing
  11. Tesoro 2010 10-K filing
  12. Tesoro 2010 10-K filing
  13. Tesoro 2010 10-K filing
  14. California EPA Assembly Bill 32: Global Warming Solutions Act
  15. Tesoro 2010 10-K filing
  16. Tesoro 2010 10-K filing
  17. Tesoro 2010 10-K filing
  18. Tesoro 2010 10-K filing
  19. Fox 40: Valero, Tesoro Vow To Fight California Global Warming Laws
  20. Fox 40: Valero, Tesoro Vow To Fight California Global Warming Laws
  21. Fox 40: Valero, Tesoro Vow To Fight California Global Warming Laws
  22. Seeking Alpha: Independent Refiners: Too Much Risk and Uncertainty
  23. Seeking Alpha: Independent Refiners: Too Much Risk and Uncertainty
  24. Seeking Alpha: Independent Refiners: Too Much Risk and Uncertainty
  25. Yahoo! Finance: Competitors for Tesoro
  26. Yahoo! Finance: Competitors for Tesoro
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