Rough Day for Refiners: Valero, Marathon, Tesoro & Phillips 66 Falling

Shares of some of the leading refiners are seeing hefty losses today, led by Valero Energy (VLO) which is down more than 6%.

Some of the move may be due to a report that says new pollution standards will costs hundreds of millions of dollars in construction and upgrades:

Valero spokesman Bill Day said Tuesday that the company expects to spend $300 million to $400 million building new equipment to remove sulfur from gasoline and to expand existing facilities. He said Valero expects to incur additional operating costs each year, and those costs have yet to be determined.

The Environmental Protection Agency said most refineries would be able to comply with its plan to reduce the amount of sulfur in gasoline with little to no effort. The agency is proposing to cut the sulfur content to an average of 10 parts per million, down from the current standard of 30 parts per million.

Also today, Macquarie analyst Chi Chow lowered his outlook for several refiners.

We are adjusting most of our 1Q13 EPS estimates downward as fundamentals began to weaken in mid-Mar 2013. We are lowering our EPS projections for Tesoro and Valero Energy the most. For TSO, we lower our estimate to US$0.73 from US$1.01 based in part on higher expected G&A costs, while we lower our VLO estimate to US$0.99 from US$1.36 largely on turnaround and maintenance impacts.

Tesoro (TSO) stock is down 3.6% at the latest, while Marathon Petroleum (MPC) is off 4.4% and Phillips 66 (PSX) is down 3.2%.

It’s worth keeping in mind that we may also be seeing from profit-taking after what’s been a good 2013 so far for these companies: Even after today’s losses, Valero is up 23%, Marathon is up 36%, Tesoro has risen 25% and Phillips 66 has gained 26%.