Over the past year, we have been hearing a lot of news about soaring crude oil prices. The easiest thing that we could think about is investing our money into independent oil refiners. Companies such as Frontier Oil (NYSE: FTO), Valero Energy (NYSE: VLO), Tesoro (NYSE: TSO), Alon USA Energy (NYSE: ALJ) or Western Refining (NYSE: WNR) are among those potential stocks on the waiting list.

Though it may seem surprising, Kiplinger.com advises us of exactly the opposite. Kiplinger underlines the fact that refiners represent a way to loose a lot of money... contrary to pipelines, oil producers and energy service companies. This came as the result of people's needs to transform crude oil into gasoline, diesel, jet fuel or heating oil.

The big difference between the cost of crude and the price of refined products is called the "crack spread", and this is where the problem comes in. In May of last year, the crack spread peaked at $27, and even moved up as high as $40 in some locations. This compares to the historical norm of closer to $20. But starting with the spring of 2007, things started changing, and the spread began to narrow... now the spread has fallen down to around $8.50 for some companies.

Crude oil surged $2.53 to $98.03 per barrel in early trading Tuesday on a Texas refinery fire and concern OPEC will cut production at its March meeting.

A strong explosion Monday created a fire and shut off production at an oil refinery operated by Alon USA Energy (NYSE: ALJ) near Big Spring, Texas. The facility can refine 70,000 barrels of crude per day.

Heating oil jumped about 6 cents to $2.71 per gallon, unleaded gasoline surged about 7 cents to $2.56 per gallon, and natural gas rose 26 cents to $8.92 per million BTUs.

Independent energy trader Jim Dietz told BloggingStocks Tuesday that given the U.S.'s barely-adequate refining capacity, any incident in the refinery system can cause a price spike.

"There is so little spare capacity in the system, even a fire at a minor location can have traders flashing the buy card," Dietz said. "The U.S. has decided to allow new refinery construction, but the next new facility won't be ready for about 5 to 6 years. Expansions at existing refineries will provide some additional spare capacity later this year." Dietz added that he has no open daily positions, and is short oil with monthly contracts.

MOST NOTEWORTHY: The coal sector, independent refiners and Alexion Pharmaceuticals were today's noteworthy downgrades:

• Goldman downgraded the coal sector to Cautious from Neutral, citing valuations and expectations for lower coal prices. The firm downgraded CONSOL Energy (NYSE: CNX) Peabody Energy (NYSE: BTU) to Neutral from Buy and Arch Coal (NYSE: ACI) to Sell from Neutral.
  
• Lehman downgraded independent refiners, including Alon USA Energy (NYSE: ALJ), to Negative from Neutral and continues to believe that 2H07 marked an inflection point for U.S. refiners, which are transitioning from a multiyear up-cycle into a new downtrend.
  
• Alexion Pharmaceuticals (NASDAQ: ALXN) was lowered to Market Perform from Outperform at Wachovia following the company's Q4 results, as they believe management's revenue guidance represents a best-case scenario.

OTHER DOWNGRADES:

• Lehman lowered Bayer (OTC: BAYRY) to Equal Weight from Overweight and Whole Foods (NASDAQ: WFMI) to Underweight from Equal Weight.

MOST NOTEWORTHY: Intel Corp (INTC), Advanced Micro Devices, Inc (AMD), Post Properties, Inc (PPS), Analogic Corp (ALOG) and the base metals sector were today's more noteworthy upgrades:

• DA Davidson raised Intel Corp's (NASDAQ: INTC) rating to Buy from Neutral based on market share gains and unexpected PC growth.

• American Technology upgraded Advanced Micro Devices Inc (NYSE: AMD) to Buy from Neutral as the firm expects shares to trade higher near-term with data not likely to get worse over the next six months. The firm suspects AMD could win a notebook platform at Toshiba Corp (TOSBF) and expects further offerings at Dell Inc (DELL).

• Banc of America upgraded shares of Post Properties Inc (NYSE: PPS) to Neutral from Sell and raised their target to $53 from $42 after REIT Wrap, a real estate industry newsletter, reported the company may have already received several unsolicited bids.

• Stanford upgraded Analogic Corp (NASDAQ: ALOG) to Buy from Hold based on improving fundamentals in the security and medical businesses.

• Goldman upgraded the base metals sector to Attractive from Neutral as the firm believes above-consensus metal prices for 2008-2009 are sustainable. The firm favors copper fundamentals over nickel, zinc and aluminum and views Freeport-McMoRan Copper & Gold Inc (FCX) as its top pick.

OTHER UPGRADES:

• Lehman upgraded Alon USA Energy, Inc (NYSE: ALJ) to Equal Weight from Underweight.

• Bear Stearns upgraded Shanda Interactive Entertainment Ltd (NASDAQ: SNDA) to Outperform from Peer Perform.

• Wesco International, Inc (NYSE: WCC) was upgraded to Strong Buy from Outperform at Raymond James.

• BMO Capital raised ResMed Inc (NYSE: RMD) to Outperform from Peer Perform.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).