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LeKitKat,

It was both substantial heavy crude discounts and extremely high refining margins. Valero posts pricing information here:

http://www.valero.com/InvestorRelations/Pages/IndustryFundam...

If you look up 2007, in the column "LLS less Maya", you see numbers in the "15" range for 2007. Then if you look in the column "Conv 87 Gasoline less LLS" you see a value around 22. Thus for converting a heavy crude oil barrel into gasoline, they whould make "15" for the crude discount, plus "22" for the refining margin less their costs per barrel. I do not remember what those were at the time but I recall it was calculable from their 10-k filing.

If you look at these two metrics, 2011 was a pretty good year. Of course at the moment, refining margins are pretty bad (which they seem to always ben in Dec/Jan).

If you see these numbers move up, and not the corresponding run-up in price, its time to load up. At the moment---kind of indeterminate.

Rob
long VLO
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