Holly Corporation (NYSE:HOC) is a petroleum refiner with a total capacity of 111,000BPD; it’s markets are western Texas, New Mexico, Arizona, and Utah. Its main input, crude oil, has historically had volatile prices, making the company's margins volatile as well. From the first half of the year through July 2008, oil prices more than doubled, to $147^[1] a barrel, increasing operating costs and decreasing Holly’s profit margins. By the end of October, however, they fell once again below $70 a barrel.^[2]

Holly’s markets are geographically isolated from non-local refineries, making transportation costs too expensive for distant refiners to compete with local ones. However, once the Longhorn Pipeline is expanded from 72,000BPD to 125,000BPD^[3], it will let larger refineries from the Gulf Coast pump more, cheaper petroleum products into the Southwest. In response, Holly is seeking to invest $650M^[4][5] to expand its capacity, but this expansion will require it to seek debt, and the financial crisis has made credit far more expensive and difficult to procure.

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