Originally Posted by tsquare

You're right.. that IS the question. Let's play a little game though.

What if, PSX's problem with that refinery was not the actual refining process, but rather the transportation of that finished product. Because transportation prices are so volatile (for whatever reason) that they couldn't count on consistency for that transportation. So... PSX decides to go out and buy Joe's tanker fleet so that they can control the costs of that part of the business.

Now Joe.. who's core business is transporting goods around the world, was having trouble because pipeline transportation prices were cutting too hard into his business. He just couldn't make it work. So here comes PSX who is in the refining business, but needs Joe's services to move product. They (PSX) don't necessarily care whether the trucking business turns a profit, but rather just control the cost of that part of the business.. so they decide to make Joe an offer for his fleet. They hire all his drivers, rebuild the engines and tanks on the tankers so that they can carry extra fuel.. etc. They tell American Pipeline Corporation to get bent, that they now have a better way to move their product. Wall Street goes nuts because what on earth does a refining company know about driving trucks??

Now PSX has just brought into their control, a piece of the puzzle that heretofore was NOT in their control yet was so vital to their bottom line so as to render their bottom line flirting with red ink, and fighting against it's competition where they might be at a disadvantage. They aren't driving trucks... they aren't scheduling or maintaining trucks, but they have cut out the middleman.. American Pipeline Corporation. Joe was retained as CEO of the trucking division, and all his drivers are now working for PSX. (They get discounted gasoline for their POVs too)

How would this scenario be any different?