Going against the vast majority of the oil industry, a small group of refineries is plotting its way forward in the intensifying debate over whether to lift the decades-old ban on crude-oil exports.
In a call on Wednesday, at least six independent refinery companies and one airline that owns a Philadelphia refinery, Delta Airlines, discussed how much interest there was in organizing a lobbying effort, according to two industry sources.
The participants included big names like Valero, Marathon Petroleum, and Delta, along with smaller companies such as New Jersey-based PBF Energy and Philadelphia Energy Solutions (PES).
The companies that are reportedly planning to take the lead are PBF Energy and Delta Airlines, according to an industry source who was given a readout of the call. Officials of both companies did not immediately respond to requests for comment.
PES CEO Philip Rinaldi declined to comment about the call, but he indicated refining crude oil before exporting it ultimately helps the country more. He acknowledged it helps his company’s bottom line, too.
“For the first time in a half century, there’s an opportunity to restore the country to a manufacturing-based economy, one where you add significant value to cheap-based energy and then export that cheap energy in the form of high-valued added product,” Rinaldi said in an interview Thursday. “As a large oil refiner on the East Coast of the United States, that’s a policy that benefits my business. I recognize there is a business self-interest, but we think it’s the right thing to happen for the country too.”
A meeting is planned for next week in Washington to discuss the potential lobbying effort in more detail, according to the industry source. The source also said Valero and Marathon indicated they would not participate in the effort.
Bill Day, a spokesman for Valero, confirmed the call occurred but did not provide details. Day did say last week that his company does not support lifting the ban and instead supports the current policy, which is that companies must apply for licenses through the Commerce Department to export crude oil. Few of those licenses are approved, and most are to ship oil to Canada.
National Journal reported earlier this week that a rift was brewing within the industry between domestic refineries, such as the ones on Wednesday’s call, and oil producers, including U.S. companies like Continental Resources and international corporations like Exxon Mobil, which both produce and refine oil. Because the export ban applies only to crude oil, refiners are profiting by exporting refined oil products like gasoline, diesel, and jet fuel at record rates amid the country’s boom in oil production, which is up 56 percent since 2008.
Calls to lift or at least revisit the ban, which dates back to the aftermath of the 1973 oil embargo by Middle East producers, have been growing in the last couple of months. Senate Energy and Natural Resources Committee ranking member Lisa Murkowski, R-Alaska, threw her support behind the policy change earlier this week. When asked about the emerging rift, she responded bluntly.
“They’re going to have to deal with that within the industry,” Murkowski said. “From a policy perspective, it’s good policy, again, to allow for that level of trade. My interest is not to protect the refineries’ bottom line.”
Refiners that oppose lifting the crude-export ban won’t get much support from their trade associations. American Petroleum Institute CEO Jack Gerard said Tuesday that all of his more than 500 member companies support lifting the ban. Charlie Drevna, president of the American Fuel and Petrochemical Manufacturers, a smaller trade group representing primarily refineries, said last week his group’s official position is to support lifting the ban. Both leaders said their reasons were based on the notion that they support a free market.
However, Drevna and Rinaldi of PES, sounded similar tunes in certain ways. They both called for a broader look at the debate rather than narrowing lifting or changing the crude-oil export ban. They both said another law governing the shipment of goods in U.S. waters should be revisited as well. The Jones Act, dating back more than 90 years, requires all goods — including energy products — that are shipped in U.S. waters from one part of the country to another to be transported on a vessel built in the U.S.
“You have Jones Act restrictions,” Rinaldi said. “How do you lift the ban and make this energy cheap to everybody else in the world and then say except for oil refineries on the East Coast where we’re going to penalize you another five bucks a barrel by forcing you on a Jones Act vessel?”
The refiners’ potential lobbying effort is still very much in its infancy stage, and how much if any traction it gains is unclear. For precedent, the industry doesn’t have to look far. Last year, a group of natural-gas users, led by Dow Chemical, launched a coalition that opposes a large increase in the amount of natural-gas exports, another trend stemming from the country’s skyrocketing oil and natural-gas production of the last several years. Exports of natural gas don’t face a ban like crude oil, but they do face significant restrictions on shipments to countries that are not free-trade partners with the U.S. Those with free-trade agreements, including Europe, Japan, and India, all want U.S. natural gas. Dow and other users of natural gas are concerned exporting that fuel could increase domestic prices, which are not set on a global market like oil.
Aside from this nascent lobbying force, the growing chorus of voices calling to lift the crude-oil export ban faces tough odds at changing the status quo. The gridlocked Congress rarely changes long-standing law, and ending the ban could be seen as threatening to increase gasoline prices, a potent political attack during an election year. Murkowski hopes the Obama administration will be legally able—and politically willing—to lift the ban itself. But it’s unclear whether the administration could or would do that.
- 1 Trump Couldn’t Possibly Win—Except That He Probably Will
- 2 As Threats to the Grid Loom, the Catastrophe Lobby Gears Up
- 3 Despite Progress, a Cloudy Future for Criminal-Justice Reform
- 4 Smart Ideas: The Future of the CBC, Hastert, and Political Showbiz
- 5 New Hampshire Is Ground Zero for Abortion-Rights Groups
What We're Following See More »
The team behind the bestselling "Clinton Cash"—author Peter Schweizer and Breitbart's Stephen Bannon—is turning the book into a movie that will have its U.S. premiere just before the Democratic National Convention this summer. The film will get its global debut "next month in Cannes, France, during the Cannes Film Festival. (The movie is not a part of the festival, but will be shown at a screening arranged for distributors)." Bloomberg has a trailer up, pointing out that it's "less Ken Burns than Jerry Bruckheimer, featuring blood-drenched money, radical madrassas, and ominous footage of the Clintons."
Conrad Burns, the colorful livestock auctioneer and radio executive from Montana who served three terms as a senator, died on Thursday at age 81. Burns "was ousted from office in 2006 under the specter of scandal after developing close ties to "super-lobbyist" Jack Abramoff," although no charges were ever filed.
In an exchange not ripped from the page of The Onion, Vice President Biden revealed to a Vatican cardinal that he's been betting reporters on which cars are faster. After meeting privately with Pope Francis, Biden met with Cardinal Pietro Parolin, the Vatican Secretary of State. Within moments of greeting one another, Biden said that he'd met with the pope and, gesturing to the press pool, "I've met with these guys too." Singling out reporter Gardiner Harris, who recounted the exchange, he said, "I had to pay this man $10. He's from the New York Times. We had a bet: which is the faster car, the newer Cadillac or the new [Tesla]. ... The Tesla's two tenths of a second faster. But I lost. I paid my $10." He joked that he's "seeking absolution."
Donald Trump held his first rally in California Thursday night, and things were chaotic: "Hundreds of demonstrators filled the street outside the Orange County amphitheater where ... stomping on cars, hurling rocks at motorists and forcefully declaring their opposition to the Republican presidential candidate. Traffic came to a halt as a boisterous crowd walked in the roadway, some waving American and Mexican flags. Protesters smashed a window on at least one police cruiser, punctured the tires of a police sport utility vehicle, and at one point tried to flip a police car."
Two powerful House members—Transportation and Infrastructure Committee Chairman Bill Shuster (R-PA) and Veterans Affairs Committee Chair Jeff Miller (R-FL)—are throwing their support behind Donald Trump.