M. Neale Hickerson – Vice President, Investor Relations Matthew P.

Clifton – Chairman and CEO David L. Lamp – President Bruce R.

Shaw – Senior Vice President and CFO Scott C. Surplus – Vice President and Controller

Jeff Dietert – Simmons & Co. Paul Sankey – Deutsche Bank Securities Jacques Rousseau – Back Bay Research Chi Chow – Tristone Capital Daniel Burke – Johnson Rice & Co.

Kenneth Pounds – Nutmeg Securities Adam Comora – EnTrust Capital

Good morning everyone. I’d like to welcome you this morning’s third quarter 2008 earnings conference call.

I’m Neale Hickerson, Vice President of Investor Relations at Holly. With us this morning are Matt Clifton, Chairman and CEO of Holly Corporation; Dave Lamp, President of Holly, Bruce Shaw, Senior Vice President and Chief Financial Officer; and Scott Surplus, Vice President and Controller.

We issued a press release this morning announcing our third quarter 2008 results. This press release can be found in our website at www.hollycorp.com.

For our call this morning, we’ll begin with Bruce, who has prepared remarks and detail around our quarter’s performance. Dave, will then update us on capital projects that we have underway at our refineries, and then Matt will have some additional comments on our earnings and our year in general.

At the conclusion of these remarks, we’ll take your questions as time permits. Before we move to our financial results and comments, we are required to make the following Safe Harbor disclosure statement.

Also please note the Safe Harbor statement in our earnings press release this morning. The following is a Safe Harbor statement under the Private Securities Litigation Reform Act of 1995.

The statements in this earnings call related to matters that are not historical facts are forward-looking statements based on management’s belief and assumptions using currently available information and expectations as of this date. These are not guarantees of future performance and do involve certain risks and uncertainties, including those contained in our filings from time-to-time with the Securities and Exchange Commission.

Although the company believes that these expectations reflected in these forward-looking statements are reasonable, the company cannot give any assurances that they will prove to be correct. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements.

The company assumes no duty to publicly update or revise such statements whether as a result of new information, future events or otherwise. Lastly, please note that information presented on today’s call speaks only as of today, November 4, 2008, and therefore any time-sensitive information provided may no longer be accurate at the time of any replay or rereading of the transcript of our call.

And now I would like to turn things over to Bruce Shaw.

Thanks Neale. My remarks this morning will cover four areas.

First a reminder of Holly’s reconsolidation of HEP effective March 1st; second, our earnings for the third quarter; third, a few balance sheet highlights and an update on capital spending; and, forth, a summary of our ownership value in Holly Energy Partners. First I would like to remind you that Holly reconsolidated Holly Energy as of March 1st.

When HEP acquired the pipeline and tankage assets from Holly on March 1st of ‘08, GAAP rules required Holly to reconsider its beneficial interest in HEP. As background HEP is a publicly traded MLP in which Holly owns approximately 46% including our 2% general partner interest.

After careful analysis we determined that our beneficial ownership exceeded 50%, due primarily to the increase in Holly’s expected general partner incentive distributions after the transaction. Effective March 1, 2008, we no longer account for Holly’s interest in HEP under the equity accounting method.

Instead HEP balance sheet items, including debt and HEP revenue and expenses except for inter-company transactions are included on Holly’s consolidated financial statements. Accordingly we have recorded non-Holly interest in HEP as minority interest starting March 1st.

You will note that we have included segment information in our press release that allows you to see the impact of the reconsolidation on key balance sheet and income statement accounts. In addition we cover more detail on our 10-Q fillings.

Second, our earnings. Earnings for the third quarter were $49.9 million or $1.00 per diluted share as compared to $58.1 million or $1.04 per diluted share for the third quarter of 2007.

Our lower net income for the quarter versus the third quarter of 2007 resulted primarily from a higher effective tax rate quarter-over-quarter. Our pretax income was relatively flat versus third quarter of ’07.

For the quarter higher gross margins at both plants, higher volumes at our Navajo refinery and lower G&A costs were offset by lower production volumes at our Woods Cross refinery due to its scheduled maintenance turnaround and higher refinery operating expenses. Navajo’s gross margin per barrel averaged $12.69 per barrel for the quarter versus $10.66 per barrel for the same quarter last year.

For our Woods Cross refinery our gross margin per barrel averaged $28.04 in the quarter versus $19.79 for the same quarter last year even though Woods Cross processed about 4000 barrels a day of low priced black wax crude during the quarter, lower than its typical pre-expansion amount because of certain scheduled maintenance turn around related constraints. The increase in operating expenses of $18.9 million quarter-to-quarter, if you exclude HEP’s opearating expense of approximately $11 million, the majority of the remaining $7.9 million difference resulted from higher utility costs and personnel costs.

The increase in DD&A expense was almost entirely due to inclusion of DD&A expenses for HEP of approximately $6 million. G&A expenses of $14.1 million, which included approximately $1.6 million for HEP, were significantly lower than the $18.8 million in the same period last year, due to lower incentive compensation expenses and certain information system implementation expenses incurred in the prior year period.

Forth quarter margins have started out quite strong reflecting the rapid decline in crude prices and the relative product price strength and stickiness in our key markets. We estimate that October’s gross margins for Navajo and Woods Cross exceed our Q3 average gross margins.

However, as we start November we would expect the recently low gasoline cracks in the larger national markets to exert downward pressure on our margins. Third, let me cover a few balance sheet highlights.

At the end of the third quarter we had $230 million of cash in marketable securities, including $2 million for HEP, and no Holly debt and no drawings under our $175 million revolving credit facility. Not that this cash balance takes into account capital spending of approximately $93 million for the quarter of which $9 million was for HEP.

We expect capital spending to be about $110 million in Q4 and that will leave about $350 million left to spend in 2009. Please recall that HEP has an option to purchase our interest in the UNEV pipeline once completed and we expect to grant a similar option to HEP on the crude pipelines.

If HEP chooses to exercise these options, Holly would get over $300 million of this CapEx back. Last, a few highlights of our HEP ownership.

With HEP units trading in the $25 per unit range, our subordinated and common units are worth about $180 million today. This does not include the value of our general partner interest.

On November 14, HEP will pay its recently announced distribution of $0.755 per unit for which Holly expects to receive $5.5 million for it’s common and subordinated units, plus approximately $1.2 million for its GP interests which includes $900,000 of incentive distributions. I’ll finish with a short word on our stock repurchase program.

We have approximately $45 of stock repurchase authority remaining under our existing board approved program. We have not repurchased any stock since our last earnings call on August the 6th.

Even though we believe our stock is currently undervalued, we feel that in these turbulent financial times the maintenance of our stellar balance and strong liquidity position is a higher priority. Therefore, we plan to conserve our cash while monitoring the strength of refining margins over the next two to three quarters.

With that I’ll turn things over to Dave for an update on our major projects.

Thanks Bruce. My remarks will provide an update on the progress of our refinery expansion and stock flexibility projects.

Just to remind you these projects will increase Holly’s overall crude capacity by 18% and increase the amount of disadvantage crudes we can process by 42%. Let me start with the Woods Cross projects.

We are essentially mechanically complete on the Woods Cross hydro-cracker, nash unit and selected off sights. We are in the process of commissioning these units now.

I would expect we will be fully operational on these units in late November and fully operational in December for their processing. Our current cost projection is estimated 112 million, versus a budget of 98 million.

The cost overrun is due to offsite scope additions, material escalations, increased labor rates. That is about a 14% increase over what we expected.

The black wax portion of the projects are complete and we are very close to budget. The Navajo projects are being executed in two phases.

Just to refresh your memory, phase one involves the expansion of the refinery to 100,000 barrels per day by installing a new mild hydro-cracker hydrogen plant, the revamp of our Lovington crude and vacuum unit as well as the installation of a new sulfur plant. These projects are approximately 85% complete and we’ll begin startup in the first quarter of 2009.

Our current cost projection for phase one is 202 million versus a budget of 189 million which includes the sulfur plant. Permit, timing delays, scope changes due to additional pollution control equipment as required by the permit, material escalations and increased labor costs are responsible for these cost overruns.

Phase two includes the addition of a solvent de-ashphalter and the revamp of our Artesia crude and vacuum unit to process heavy Canadian crude. These projects are approximately 40% complete with and field construction solvent de-ashphalter is underway.

We expect phase two to be ready for start up in the fourth quarter of 2009. Our current cost projections for phase two is 91 million versus a budget of 84 million.

A better scope definition of the Artesia crude and vacuum unit revamp and material escalations are responsible for this increase. Access to Canadian crude via Cushing including the reversal of the Centurion Pipeline and the construction of a connecting pipeline are on schedule and on budget.

Now I will turn it over to Matt, our Chairman and CEO.

Thanks Dave. Since Bruce and Dave did a good job recapping our quarterly results and providing a status update of our major capital projects, I though I would just say a few words about our company’s long-term strategy and how our current projects fit into that strategy.

Holly being a pure play independent refiner for well over 30 years has clearly lived through the best and worst of margin environments. Because of this long industry history, we have strived to be prudent and fiscally responsible year after year in our capital deployment, recognizing not only the capital intensive nature of our business but also the historic volatility of our industry’s margins.

Consistently being number one among our peer groups in return on assets and invested capital is one of our proudest accomplishments and a metric we believe is key to long-term success. Although sometimes criticized for being too conservative by some, we have maintained an extremely strong balance sheet to weather turbulent times.

We have a long history in prudently reinvesting earnings from the good times to implement capital projects that are aimed at continually improving the competitive nature of our refineries. The projects that we will be completing shortly will again improve our competitive position by dramatically enhancing our ability to increase high-valued ultra low sulfur diesel yields while processing more and more lower cost crudes.

This will serve to improve results in challenging margin environments while our increased production capacity will improve our bottom line further as profitable increased sales opportunities are captured. All refineries are clearly not created equal.

The markets it serves, the access to crude it enjoys and its capabilities to get the highest value yield from the lowest cost feed stocks determines the consistent financial success of a particular refinery. The group of projects we will have fully implemented in approximately one year will upgrade both refineries to produce more high valued products from a higher percent of lower cost crudes, will expand both refineries capacities by approximately 25%, will open a new Las Vegas market for our Woods Cross refinery, and tie our Navajo refinery to Cushing to receive crudes from all over the world.

Taken together these projects whose benefits will be realized in phases over the next year starting next quarter, we will dramatically improve our competitive position and profit potential. We are extremely proud of our employees, our assets, the markets we serve and the financial strength and flexibility we have built.

We believe these characteristics differentiate Holly from our peers. Although we feel our stock is currently undervalued, we believe the strategy we continue to execute --one of continual improvement and fiscal conservatism will create long-term shareholder value.

In closing I would like to thank the tireless efforts and ingenuity of our employees. Their efforts are deeply appreciated and clearly are key to our continued success.

With that I will turn it back to Neale.

I’d like to ask Rachael, our operator, to repeat the procedure for asking questions. We are ready to move to that phase in our call this morning.

Good morning. Jeff Dietert with Simmons and Company.

I would like to ask about Salt Lake gross margins for the third quarter. On the second quarter conference call you mentioned July margins were in the 15 to $16 per barrel range and I had to turn around roughly August 11 to September 5 and that just sounds like a tremendously strong remainder of September.

Could you talk about what contributed to the strong margins at Woods Cross?

Sure, Jeff. I’ll take a stab at it and then Dave or others can jump in.

First of all Woods Cross, even though it was in turn around for kind of a good part of the month of August and beginning of September, it still was running kind of partially as units came up and down. So we actually experienced margins, some margins through that time period.

The other thing is I would say in terms of the difference between kind of the second quarter and third quarter for Woods Cross, is in the second quarter our Wyoming sweet, kind of that Guernsey differential that we watch in the sweet crude that we run spread out almost doubled from six to $7 a barrel up to an average of about $11 a barrel in the quarter. And that is in addition to the black wax that we run that I think was around $21 or so under WTI for the quarter.

So some products kind of product price string up there versus the kind of Navajo markets that in them also just incredibly kind of good kind of crude prices for the quarter.

Very good. You have talked about the feed stock flexibility adding 10,000 barrels a day of black wax and 5000 barrels of Canadian heavy at Woods Cross.

Could you remind me how much of that supply is under term contract and how much of your buying is under shorter term arrangements?

First thing, and then I will turn it to Dave, just to be clear we can run about 5000 of that distressed crude before the projects. We are going to be able to run about 15,000 barrels a day after.

So it is really a difference of about 10,000 barrels a day, not 15 and we can mix together. We are flexible within that 15,000 after the project whether it is black wax or whether it is Canadian depending on which differential is kind of more advantageous at the time.

And Dave can talk a little bit about our long-term contract.

Today we have under contract 5000 barrels plus 2000 barrels from two different suppliers. One does not deliver the full 5000 yet because they are still in a drilling program, but we expect them to be at 5000 within the next year.

And, Jeff, all those amounts that Dave talked about were black wax. We don’t have any long-term contracts currently on the heavy Canadian.

Very good. Thanks, guys.

Hi, everyone. As you talked about your fantastic track record in terms of return on capital employed, keeping cash on the balance sheet obviously is going to dilute that.

Can you just talk about how high you can go? You were already looking in such good financial shape, I just wondered how much cash you will actually build on your balance sheet, if there is any kind of limit that we should think about in term of how we model it going forward?

Thanks.

Well, I don’t know we have any specifics in mind. You know I think as Bruce said, we will continue to monitor how industry margins and how our margins and EBITDA is over the next couple of quarter as we are starting to finish up our refinery projects.

But as you can imagine we have between the refinery projects and the pipeline projects that we are executing during ’09, we have some pretty healthy capital requirements. And there we feel good about the cash in our balance sheet and our historic ability to generate cash.

But it is a long winded way of saying I guess we will just see where we are at the middle of the year and to the extent that we have built up excess cash as we have done in the past. We have looked at stock repurchases or increased dividends to reward shareholders.

But the essence of the guidance which you just gave us is that you are unlikely to buy back any stock for the next two to three quarters, basically.

That would be our expectation unless we see some dramatic differences in the industry margins.

I do not know if this is just a worthless question or not, frankly—but in terms of acquisitions, what would you say about that right here?

I think that probably would not be high on our priority list. I think that it is clear as we tried to articulate we think it is important to have a conservative balance sheet and to not be over-leveraged in this industry.

So I would think acquisitions right now we do not see anything that we know that is for sale that we would be interested in and if there was something we would be reluctant to put on a lot of leverage at this point in the industry cycle.

Sure, I understand. And I guess the overall attitude is pretty negative here.

It is just the usual concern that the economy is slowing and the likelihood is we have a pretty rough 2009? Or is there anything specific that you would point to that worries you in terms of your markets?

Thanks, I will leave it there. Thank you.

No, I do not think there is any concern in our markets. I think if anything our markets have held up particularly on the gasoline side and particularly in October, well actually for the third quarter and the start of the forth quarter relative to other markets our gasoline cracks look very good.

But you know if you look around the country at negative cracks on gasoline in the Gulf Coast and New York harbor it is a concern there. We think that like most people are saying, we think that diesel will stay pretty strong throughout the year and gasoline is just an unknown and it is just a matter of whether the lower prices in gasoline will pick up demand back towards the levels that they were last year.

Do you guys still see strong diesel demand growth in your region?

We are seeing a lot of -- we are not having any problem moving our distillates. We have moved more and more towards Phoenix, is our largest market out of New Mexico.

The New Mexico refinery. And we have moved more to the Phoenix market both primarily because of Kinder expanding that line out to Phoenix and limiting a constraint that we historically had.

So I think the things that have improved demand in the New Mexico refinery market is the opening up of Phoenix as an outlet for incremental diesel and the fact that PEMEX is taking more and more diesel and gasoline out of the El Paso-Juarez area than historic periods to make up for their shortfall in petroleum products.

That is interesting. Thanks, guys.

Good morning gentlemen

Hi, Jacques.

Just wanted to get a little more color on, following up on Jeff’s question, on the crude slate at the Woods Cross refinery as to how much of the distressed crude is being processed currently.

Jacques, we are doing about 6500 barrels per day of the black wax. Canadian is not advantageous to us right now so we are not processing any of that.

That is pre the hydro-cracker. We should be starting up that hydro-cracker, as I mentioned, in December and we will be readjusting.

But we probably will be right now be increasing the amount of black wax depending on what happens in the markets. Usually in winter demand goes down.

So we will just have to see where we end up.

I think, Jacques, too as you know the crude markets have been moving around quite a bit. As Bruce mentioned, we had pretty wide reduction on Guernsey Rocky Mountain sweet crude versus WTI in the $12 range.

So that is getting very competitive with the black wax laid in there and with a good yield. We have seen recently that the heavy Canadian crude discounts have blown out to 20 to $22 discounts to WTI.

So as we bring that hydro-cracker up to the extent that we have the capability of running bought distressed crude volumes over what we can get on the black wax side, the Canadian is going to get more attractive. But month to month it is going to be an LP study to pick and choose the crude to give you the highest yield at the lowest cost to the feed stocks.

Sure. One other question on the current conditions.

You mentioned that October the margins were better than the $15 or so average in the second quarter. Can you break that out on a refinery by refinery basis?

Well, Jacques, I think what I meant to say or intended to say was that if you look at the refinery gross margins we posted on average for the third quarter, we have seen October starting out above that for both refineries, slightly.

Okay.

So I think for Navajo that was around a $13 range; Woods Cross it was 27 for $28 per barrel.

Great. One last one.

Do you have a volume forecast for the fourth quarter?

I think, Jacques right now we would see Navajo running, we’re running all out at Navajo at I think 85 a day and bringing in some feed stocks on top of that. At Woods Cross it kind of depends on normally in the Salt Lake City area depending on the weather you usually have a slowdown particularly on gasoline demand in the winter up there.

To keep runs up the last couple of years we have been trucking some gasoline down to Las Vegas when the ARB is open. So we probably are running anywhere from the 20 to the high 27s or something depending on whether that ARB is open and our ability to move gasoline and how the economics are on the incremental barrels.

So I think it is probably just whether the market is a constraint. But I think we will physically have the ability by late November or so to run up to 30 a day.

And then it is just when the market opens up for us to do that.

Okay, great. Thank you.

Thanks, good morning. Back on Woods Cross, could you comment once the hydro-crackers start, how is that going to change your product yields going forward.?

Chi, that will increase our diesel production dramatically. You know the yield is about 40%, mild hydro-cracker, so, it is about a 40% conversion which is selected to diesel.

So, we will back down gasoline and shift more towards diesel.

Okay. So, looks like in the third quarter, you bumped diesel up to 35% already and so, do you have some sort of feel for the next between gasoline and how high you can push diesel?

The numbers I looked at last time were about 5% increase on crude assuming that conversion at the rate we planned to run the hydro-cracker at.

Five percent swing between diesel and gasoline?

Right.

Okay, great. And then secondly, did you say this 2009 CapEx was $350 million?

That's right, Chi.

Okay. If the credit markets don't improve for HEP, do you have any concerns on the ability to fund that program if Holly have to carry the pipeline projects longer?

Well, right now, yes, a lot depends on what margins do in the refining side from Holly's perspective. I think that between the cash on the balance sheet right now and the credit facility even under a pretty tight margin environment, we should be able to finance that through the 2009 period when we think we'd be wrapping up the Las Vegas Project.

I think the alternatives if they were really closed HEP, the markets were closed, there is probably obviously other MLPs that would be interested in taking the position, but right now, we think that Holly would be okay in the funding without strapping it too much.

And just as a reminder, the Lovington Artesia crude line, is that a first quarter completion and then what's the timing on the Centurion pipeline?

The new line between Lovington Artesia will be January '09 completion and then they slaughter to Artesia line tie-in to Centurion will be in the third quarter '09.

At about $90 to $100 million between the two of them?

Between the two of them, that's right.

Okay, thanks a lot.

Good morning. I guess I wanted to touch on the share buybacks once more and just to follow up Chi's question.

That is if the return to a buyback program really contingent on your confidence that HEP will again have access to the markets? Can you buyback shares while continuing to hold the pipeline projects on Holly Corp's balance sheet?

Well, I think potentially, we could. I mean a lot depends on the profitability in the next few quarters.

Obviously, between what were the cash flows are coming in at Holly versus the outflows on the capital will influence what we could do. I think we were just thinking only on the downside case that if we had the type of low margin environment at the beginning of the first half of 2009 that was the industry experience in the first half of 2008, then we think that we'd probably be prudent to be doing buybacks at that time if it was better and at the level that we have experienced in the third quarter, for example, and we could see that it's getting comfortable that we have ample cash to consider buybacks during 2009.

Okay. And then with regard to the Iraqi's markets and the gasoline crack sheet you've seen there pretty exceptional in the third quarter and it looked like they remained that way in October.

I guess you guys don't typically do that but is there any way that it was a more of real time look at what you're seeing at Woods Cross right now in terms of specifically gasoline crack?

Well, I think that we had some things that traditionally, as you're probably aware, the Rocky's gasoline cracks start going south in the late fall and into the winter as demand falls off, what has kind of bolstered the Salt Lake City gasoline cracks in October was the effect of us being down in September and then Chevron took their refinery down for turnaround in November. So, the market was somewhat shorter than normal going into the winter.

So, we did see strong cracks in September and October, I was up there. But they have begun to weaken quite a bit, I think, like the rest of the country.

Okay.

That's right. They were very strong at the beginning of October and here, at the very end of October, we were seeing gasoline cracks below $5 a barrel in the Salt Lake City markets.

This is just to give a bell weather for Navajo refinery. The gasoline cracks were seen Phoenix in a range between $10 and $15 a barrel depending on whether it's just no lead or whether it's CBG or kind of different grade.

You said you're seeing $10 to $15 in Phoenix?

Yes.

Okay. I appreciate that additional color, guys.

Thank you.

Nutmeg Securities, thank you. I was like curious, you said the company wasn’t going to do some buybacks, is there any opportunity or willingness to try to build crude inventories at these little prices that we are experiencing perhaps only temporarily?

I doubt that we would do that. I think, traditionally, what we've tried to do is keep our inventories low and just basically be moving product out right away and not trying to bet on knowing which where the market is moving.

Okay. There has been a lot of talk, gasoline demand down 6%, 9%, but several refineries have only said they have seen maybe 1%, do you have any data about demand numbers in your markets?

Well, the best demand data we have comes out, for example, for Navajo, it comes out of the Arizona Department of Transportation. Now, their data was only running up through June or July of this year but showing 1% to 2% kind of decline for gasoline and diesels combine and these are pretty steady most of that time on the gasoline side.

Now, as Matt and Dave both mentioned in Woods Cross in the winter time, we will see seasonal declines in gasoline demands but we have not seen anything materially different than 1% or 2% changes in that market either, I do not think.

Alright. Finally, okay, we have heard about some of these smaller refineries having credit problems and so forth, have you noticed any operating weakness or lower volumes from some of your competitors that might have contributed to improve margins for your fuel?

Not really. I think that Western has a refinery up in the four corners' part of New Mexico and they have been moving crude incrementally from the midline area to sell that refinery up just due to the shortage of crude, indigenous to feed that refinery and I am not sure they are continuing to do that.

So, if there was one market that was may be had some of those effect, it was probably that small market up in the Bloomfield, four corners' area at New Mexico. The other thing was the hurricane affected the longhorn pipeline significantly and that helped our margins in Arizona and New Mexico.

That's over now.

Alright. Okay, great.

Thank you.

Yes. Hi, most of them have been answered and I just also want to say good quarter, guys.

Can you talk a little bit about what's happening with the bottom of the barrel, asphalt prices, that sort of thing, what the outlook is there?

The asphalt prices have been, I guess, from mid-summer on have firmed up quite a bit. We're seeing prices in—

$700 a ton roughly.

Yes, $600 to $700 a ton which is a big premium obviously to the current crude cost. Fuel oil prices have been pretty strong but I think last week, I know they moved down from an average gulf coast price of like $56 or mid-50s in October, down asphalt prices in the $39 a barrel range, so, there is some near-term weakness on the fuel side.

We sell some of our bottom of the barrel fuel oil but it's probably more weighted towards the asphalt generally.

So, if you are to aggregate where we are at bottom of the barrel in the third quarter, how much money we made or loss and sort of what the outlook is for the fourth quarter?

Well, we do not only make any money on the bottom of the barrel but we can lose, kind of relative to crude, we are much better off, I think, Matt, as you were saying that we were in the first and second quarter especially in the second quarter where crude prices ran way up and asphalt prices were pretty sticky and low from a wholesale perspective. So, just kind of on a margin basis, we gained over $25 or $30 a barrel on the refinery wholesale side between the third quarter kind of wholesales prices of the asphalt in the second quarter.

Okay.

We are in the second quarter, we had negative cracks of $40 to $50 a barrel on asphalt when crude ran up and at $600 a ton on asphalt, there, you are talking about $40 a barrel above the current $65 crude cost. So, it has been a pretty dramatic swing on the bottom of the barrel.

So, you see that continuing into the fourth quarter? The way, I think, you guys, do you price your asphalt primarily once a year in the fourth quarter?

No, we are typically quarter to quarter or month to month now.

Okay.

I think what's changed in the industry with pretty good. This last year with a steep rise in crude, more and more people have gone to index and bidding asphalt, manages its indexed month to month or quarter to quarter basis on changes of crude oil or based on changes of asphalt prices on the spot market.

So, we would see, traditionally, that we move a fair amount of asphalt through our Phoenix terminal incessantly through the winter just because they usually have pretty good weather out there. On New Mexico asphalt, it will start slowing down to a trickle and we will be building asphalt inventory somewhat for the winter and then moving it out in the spring.

Okay. And now, maybe also could you just touch upon the fact that you guys are expanding capacity, what you think your local markets, the appetites of the additional products that you guys are bringing in?

Specifically down in New Mexico and Arizona, I guess.

Right. I think there, it is in a lot of what we would be targeting for is increased sales into Arizona which basically we bumped up against the west coast competition via the Kinder Morgan line from LA to Phoenix and the Kinder line that we moved on from El Paso to Phoenix.

So, there it is kind of moving against competition and as I have mentioned in our market, we have seen some increased demand for controlling products south to the border out of El Paso. So, those are the primary targeted areas where we'd see opportunities to move more products.

Occasionally, you see September prices get extremely high. In short, the product, there are sometimes opportunities to truck incremental product out of Bloomfield up filled in Northern New Mexico into the grand junction area or south west of Colorado.

But that's not large buyers. Primarily, I think we'd be targeting the Arizona market.

Okay. Thanks, guys.

We certainly appreciate everyone listening today. We appreciate your interest in our company.

We look forward to sharing results with you again, late January or early February of next year. Thanks a lot everyone.