Hosking Partners LLP on Marathon Petroleum Corporation
Thesis
Hosking sees Marathon Petroleum benefiting from a favorable refinery supply and demand imbalance. A shortage of new Western refining projects persists because of restrictive planning rules and environmental standards, while gasoline consumption remains unexpectedly resilient. Middle East disruption provided an additional tailwind to refinery economics in Q3. Unlike tankers, the manager believes the refinery upcycle still has room to run over the longer term.
“The ability to bring on new refining supply, particularly in western nations with restrictive planning and environmental policies, is limited”
Key risks
- Margins could retreat if geopolitical disruptions fade.
- The thesis relies on sustained demand for refined fuel despite predictions of declining gasoline use.
- Additional refining supply, although constrained, could eventually weaken industry pricing.