- 18 - CRA was merged into petitioner in July 1982. Petitioner has owned and operated all of CRA’s refineries since that time. Until it merged into petitioner, CRA always filed a separate Federal income tax return. After the merger, petitioner maintained inventories of crude oil and refined petroleum products. From the beginning, petitioner’s management has sought to vertically integrate its petroleum business. In particular, petitioner has sought to conduct its own exploration, drilling, and production of crude oil and natural gas, refining and wholesale marketing of petroleum products, and the associated gathering, transportation, and distribution of raw materials and refined petroleum products. Petitioner’s primary objectives in this regard were to secure a dependable and consistent supply of crude oil for its refineries, to provide its patrons with a full range of high quality petroleum products in an economically efficient manner, to maximize the economic benefits to its patrons, and to reduce its patrons’ dependence on profit- seeking oil companies. Vertical integration in the petroleum production business creates several business risks. Oil exploration and production activities generally require substantial capital investment with no guaranty that exploration willPage: Previous 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Next
Last modified: May 25, 2011