Can the 50-Year New Refinery Spell Be Broken?

Southern Rock can succeed, says managing member Steven Ward, because “we’re a smaller, more nimble company.” The refinery will process only U.S.-produced oil; most large U.S. refineries were built for heavier imported crudes that are more complex to handle. The project still needs state and federal permits, and expects state and local incentives to help with financing.

The last major U.S. oil refinery was built in 1977 in Louisiana. Meanwhile, the industry has been shrinking. Six U.S. refineries with cumulative capacity of 750,000 barrels closed in 2020 and 2021. Lack of U.S. refining capacity was a reason that gasoline prices spiked more than oil in 2022.

Last year,

Chevron

CEO Mike Wirth said that no large-scale refinery would ever be built in the U.S. In an email, Tudor, Pickering, Holt analyst Matthew Blair also expressed skepticism. “It seems like every year someone announces a new refinery for the U.S. But they almost never get built, given the challenges on economics and permitting.”

Write to Avi Salzman at [email protected]

Last Week

Relief Rally

China saw signs of a continuing slowdown in growth, as manufacturing contracted again and stocks fell into a bear market. U.S. stocks were mixed before the House debt-ceiling vote, but rallied as the Senate took default off the table. On a short week, the

Dow Jones Industrial Average
rose 2%, to 33,762.76; the

S&P 500
index was up 1.8%, to 4282.37; and the

Nasdaq Composite
advanced 2%, to 13240.77.

Dodging Default

President Joe Biden and House Speaker Kevin McCarthy agreed on a plan to raise the debt ceiling for two years. The deal involved a number of compromises, mostly on spending, from both sides. Then came the difficult part: gathering enough votes to pass the bill and avoid default. On Wednesday night, the House passed the bill on a bipartisan basis, 314 to 117, sending it to the Senate, which approved it by a 63-to-36 vote on Thursday night. Next up: President Biden.

Jobs, Rates, and Retail

With default fading, attention turned toward rates—the Fed crowd was talking again—and the state of the economy. New jobs and hiring beat expectations, tempered by slowing wage growth and slightly higher jobless claims. Unemployment rose to 3.7%.

Dollar General

and

Macy’s

joined

Costco

in cutting sales forecasts.

Erdogan: Five More Years

Turkish President Erdogan won a runoff election, and another five years in power. After the vote, the Turkish lira fell to a near record low against the dollar, on fears of a continuation of low interest rates, despite inflation over 40%. Western leaders also renewed pressure on Erdogan to drop his opposition to Sweden joining NATO.

Drones of War

Russia said it downed eight drones targeting residential areas in Moscow. Ukraine denied “direct involvement” in the attack, which was followed by a drone attack on an oil facility at a Russian military base. Russia continued its assault on Kyiv.

The Corporate Front

Chip stocks

Nvidia
,

Marvell Technology
,
and

Advanced Micro Devices

continued to rally on artificial-intelligence hopes, despite a tweet from Ark Investment founder Cathie Wood that Nvidia, which briefly hit the trillion-dollar market cap on Tuesday, was “priced ahead of the curve.” Wood cut her Nvidia position ahead of the rally, but talked up software stocks, including Tesla, as the next big AI

bets…C3.ai

broke the AI spell with a disappointing sales

forecast…Kohl’s

stock took a hit after it joined

Anheuser-Busch InBev

and Target in facing a boycott over Pride Month merchandise.

Walmart

resisted the pressure…

Berkshire Hathaway

lifted its

Occidental Petroleum

stake to 25%.

Annals of Deal Making

Ten European insurers, including

AXA
,
Allianz, Swiss Re, and Lloyd’s of London, left a U.N.-sponsored ESG insurance alliance, after 23 GOP state attorneys general warned they might be violating antitrust guidelines. AXA had chaired the group…Fidelity said Twitter is now worth a third of the $44 billion Elon Musk paid for it. Fidelity was a lender to the deal…

Amazon.com
’s
$1.65 billion deal for iRobot faces a European merger review.

Write to Robert Teitelman at [email protected]