Discernment & Focus

“Valero Energy Corp. is considering an overhaul of its portfolio of refineries to prepare for a time when the once-flush refinery industry faces greater pressure on its bottom line.

“Bill Klesse, the 61-year-old chief executive of the largest U.S. refiner by output, has identified a group of 10 core refineries on which it will focus its investment and attention…

“‘Some of the plants that we have in this portfolio are probably worth more to other people,’ Mr. Klesse said.

“The intent: Valero hopes to be a more-efficient refiner in a time of high and volatile oil prices and rising global competition…

“Valero hopes to focus on refineries mainly on the U.S. coasts, giving them greater access to oil from more sources, and that are set up to handle oil that is tougher to refine and therefore cheaper to buy. Focusing investment on those refineries also could help reduce downtime and improve reliability…

“Valero's shift could leave it with a better portfolio of more valuable assets. ‘Our strength needs to be that we have very good, very safe, and reliable assets in this marketplace,’ Mr. Klesse said.”

(“Valero May Sell Some Refineries as It Hones Focus; Bid for Efficiency Comes as Industry Faces New Pressures.” Jessica Resnick-Ault. Wall Street Journal: December 11, 2007. pg. A.20)

UNCERTAINTY CALLS FOR both broad discernment and sharp focus. Are we in a cyclical turn, or a new trend? or both perhaps? Breadth in scale, and depth in scope may allow for penetrating insight here... Or, it may turn into escalating commitment to a failing course of action.