The level of Oil Company Upstream (Oil & Gas production) and Downstream (Refining, Distribution & Marketing volumes) changes normally go through longer term cycles. In the case of ConocoPhillips, I spent a significant part of my career working for these companies. I started my career in the mid 1970’s at a West Coast Phillips 66 Refinery. A couple years later Phillips sold the Refinery to an Independent Downstream Company; Tosco. Tosco purchased numerous refineries from other Major Oil Companies (BP, Mobil, Unocal, etc.) over the following 20 years, then Phillips bought Tosco. A couple years later Phillips merged with Conoco, followed by ConocoPhillips separating their Downstream assets to Phillips 66 in 2011.
Historically, Major Oil Companies Upstream assets are more profitable on average then Downstream assets (based on world wholesale market oil & gas prices vs. wholesale-retail markets for petroleum and gas products). Downstream Refining & Marketing profit margins are generally much more volatile and subject to more indirect price controls such as ‘price gouging’ then Upstream production. Even though U.S. Oil Companies have been accused and investigated dozens of times over the past several decades for accusations of price gouging, guess how many times they were found legally guilty of manipulating market prices? Zero. But, due to this constant government/political oversight factor/risk, integrated Major Oil Companies tend to be much more aggressive with Upstream market pricing/profit margins than Downstream Refining & Marketing markets; and associated Downstream profit margins are proportionally-downwardly affected.
So what should the average investor do? Implementing a more balanced Upstream + Downstream approach to the overall oil & gas market structure is normally the safest strategy in the longer term. During years of world-regional oil & gas supply shortages (or perceived risks to supply), Upstream generally does better then Downstream, and during years of high demand and limited Refining and Marketing capacities, Downstream will do better.