Meet the oil companies getting crushed by $108 oil: the refiners. They buy oil from independent producers, superheat it to 1,100 degrees under intense pressure, and then sell the resulting products like gasoline, diesel and jet fuel to wholesale marketers.

The business is highly regulated and capital intensive, so a new 100 million barrel-a-day refinery hasn't been built in the U.S. since 1977. And profits can be equally hard to find. While refiners are active hedgers, this year's 18 percent rise for crude oil has been accompanied by a rise of just 12 percent for gasoline -- so margins have been under pressure.

A number of factors havepushed West Texas Intermediate oil higher : new pipelines and rail links which have "unlocked" mid-western oil, unrest in Egypt and Brazil, and a broader economic rebound. Meanwhile, oil companies have been less inclined to raise prices at the pump given the likely fallout from $5 gas. This doubled-barreled squeeze on refiners' margins means quarterly earnings are down.

Wall Street seems not to have noticed and is buying the stocks as though this is as bad as it gets for these companies.

Note that not a single analyst rates Phillips 66 (PSX ) or Valero Energy Corp. (VLO ) as a "sell". Hope springs eternal? By contrast, traders have taken a more skeptical view on two other refiners: HollyFrontier Corp. (HFC ) and Western Refining Inc. (WNR ) have dropped 7 percent and 3 percent, respectively. Maybe HFC and WNR more accurately reflect fundamentals. Meanwhile, I might question the purchase of Tesoro Corp. (TSO ), which has added more than 18 percent this year, or VLO, which has gained more than 11 percent.

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