Excerpt

The following ran in the Jan. 8, 2014, edition of the San Antonio Express-News. Bruce Bullock, director of SMU's Maguire Energy Institute, provided expertise for this story.

Valero doesn't favor lifting ban on crude exports

 

January 10, 2014

By Vicki Vaughan

SAN ANTONIO — Despite the clout that comes with Valero Energy Corp.'s place as the nation's largest independent refiner, the San Antonio company will be in for a fight if it tries to block efforts to end the nation's ban on exporting crude oil.

 Bigger energy giants than Valero, including Exxon Mobil Corp. and ConocoPhillips, favor eliminating the nation's 40-year-old prohibition on exporting U.S. crude.

“We support free markets,” Exxon Mobil spokesman Todd Spitler said in an emailed comment, “and we oppose barriers to free trade and open investment in the energy sector, which ultimately raise prices, dampen economic growth and prosperity, and harm the nation's energy security by limiting the diversity of supplies.”

 Exxon's point of view got a boost Tuesday when Alaska Sen. Lisa Murkowski released a white paper urging lawmakers and President Barack Obama to allow crude exports.

Limited exports of crude are allowed now. Companies can be licensed annually by the Commerce Department to ship crude to Canada. Locally based Valero has permits to send crude oil to its Quebec refinery, but the company doesn't support wider crude exports.

 Doing away with the crude ban would eliminate American jobs and make Americans more vulnerable to geopolitical oil shocks, Valero spokesman Bill Day said.

“Valero buys raw material — crude oil — and turns it into high-value products like gasoline or diesel,” he said. “It makes more sense to keep the raw material here in the U.S., where we're using American labor and American equipment to make the higher-value product.”

 Oil producers want to export crude because they would be able to get higher prices for the oil, Day said. And some experts believe that lifting the restriction could lead to higher prices at the pump.

Tesoro Corp., San Antonio's other major independent refiner, did not respond to a request for comment.

The oil export issue is gaining traction because crude production is at a 25-year high, aided by drilling booms in shale plays such as South Texas' Eagle Ford and North Dakota's Bakken formation.

 Exxon has noted that the nation has an abundance of oil that calls for a review of the restriction on oil exports that was put in place during the Arab oil embargo of 1973. The company has projected that by 2015, energy companies will produce more North American crude than the current output of members of the Organization of Petroleum Exporting Countries, with the exception of Saudi Arabia.

 Booming oil production may prompt lawmakers to take a look at crude exports, said Bruce Bullock, director of the Maguire Energy Institute at Southern Methodist University.

 “You want to be able to export and import crude when it makes economic sense,” Bullock said. “There could be a time when you could import crude from Venezuela, say, at $80 a barrel and export sweet crude at $100 a barrel — and the U.S. economy would be ($20) a barrel better because of that.”...