Valero Energy on Wednesday said it supports the current system, which has become the target of attacks from a growing number of US politicians.
Bill Day, the San Antonio-based refiner's top spokesman, claims export restrictions have significantly reduced the nation’s dependence on foreign oil, kept domestic refining utilisation high and insulated consumers from “geopolitical shocks than can cause volatility in oil prices”.
In a statement emailed to TradeWinds he was also quick to point out that Valero and other exporters are able to send small quantities of US crude to places like Canada under the framework of the current system, which typically prohibits shipments overseas without a presidential waiver.
“Unlimited exports of crude oil are not in the country’s best interest,” Day continued. “As a manufacturer of petroleum-based fuels, Valero believes it makes more sense to keep crude oil here in the US where it can be refined into value-added products for domestic and export use.”
Politician blasts ban
Valero voiced its opposition to proposed policy changes a day after an influential US politician joined the campaign to ease export restrictions by urging the Obama Administration to review laws like the Mineral Leasing Act of 1920 and the Outer Continental Shelf Leasing Act.
Alaska Senator Lisa Murkowski, the top Republican on the Senate Energy Committee, took aim at the ban in a speech delivered during an event hosted by the Brookings Institution, a bipartisan think tank headquartered in Washington, DC.
“We need to act before the crude oil export ban causes problems in the US oil production, which will raise prices and therefore hurt American jobs,” she argued before unveiling a report designed to frame public discourse about the restrictions.
“There will come a time when we will have an unsustainable glut of this light crude,” Murkowski continued, adding: “Failing to renovate the crude oil export architecture could very well lead to disruptions in supply and production.”
Later, Murkowski spokesman Robert Dillon told reporters that the Senator does not have immediate plans to introduce legislation to lift the ban or intend to hold hearings about it, which is why many continue to believe no radical changes will be implemented anytime soon.
Renewed interest in the restrictions, which have been in place for nearly 30 years, comes at a time when the shale oil revolution and uptick in offshore drilling activity has helped domestic production reach highs that have not been seen in 25 years.
Jones Act lands in the line of fire
If efforts to end the ban were successful, advocates are quick to point out that this would have a devastating impact on the operators of Jones Act tugs, barges and products tankers, which have seen day rates surpass $100,000 as a result of the renaissance.
When asked if Valero is concerned about the impact an easement or outright reversal might have on the US shipping industry, Day noted it is significantly less expensive for his company to ship US crude to Canada than between two domestic ports.
In a presentation that accompanied Valero’s third-quarter earnings report it noted the cost of moving crude from the US Gulf to Canada will likely amount to around $2.00 per barrel in the coming years, which is roughly half of what it expects to pay to transport crude coastwise.
