By Cezary Podkul and Selam Gebrekidan
NEW YORK Jan 9 Independent U.S. refiner PBF
Energy has begun talks with a half-dozen of its rivals
to consider jointly lobbying Washington against lifting a
decades-old ban on U.S. crude oil exports.
New Jersey-based PBF, run by veteran refinery investor
Thomas O'Malley, organized a telephone call earlier on Wednesday
to discuss creating a lobby group that would seek to maintain
existing restrictions on crude exports, according to two people
with knowledge of the call.
HollyFrontier Corp., Delta Air Lines' Monroe Energy
, Philadelphia Energy Solutions and Alon USA Energy
joined the call, as did larger rivals Valero Energy
Corp. and Marathon Petroleum Corp., one of the
sources said. Valero spokesman Bill Day confirmed the call.
The discussion, which one source said was likely to be
continued next week with many of the same participants, is the
first evidence of a more focused lobbying effort that may
counter rising calls to ease the ban, which was imposed in 1975
after the Arab oil embargo.
Valero was the first company to publicly speak out in
support of the limits, which are already dividing the industry.
Two of its largest rivals, Marathon and Philips 66 --
refining companies that were recently spun out of integrated oil
firms -- have said they would not stand in the way of easing the
But other allies are starting to emerge as the debate over
one of this year's biggest energy policy issues heats up.
"In general, we think it's a good thing for the country to
keep this crude oil contained here," Philip Rinaldi, chief
executive of Philadelphia Energy Solutions, told Reuters on
Thursday. "But there are tensions, and there are some issues of
free trade, and that is worth debate."
Key among them is a nearly 100 year-old law known as the
Jones Act, which limits domestic shipping only to U.S.-flagged
vessels. Rinaldi said the restriction is raising the price of
crude oil, driving up costs for East Coast refiners.
"I think the arguments that people will make for lifting the
crude oil export ban will be largely about free markets. Oh my
goodness, the greatest restriction to free markets right now is
the Jones Act," Rinaldi said.
A spokesperson for PBF Energy declined comment. Spokespeople
for Monroe's parent company, Delta Airlines, and PES also
declined comment. HollyFrontier did not immediately reply to an
email sent after working hours on Wednesday.
Alon has "started the process of becoming informed about a
potential lifting of the ban," a spokesman said when asked about
the call. He said the company would take a position once it
gathered more information on the issue.
A spokeswoman for Marathon declined comment.
Opposing the lifting of the crude oil export ban could
weaken refiners' hand in pushing for reforms of the Jones Act,
as they might be seen supporting one market obstacle while
pushing for the abandonment of another.
That poses a thorny dilemma for refiners as they decide
whether or not to join the PBF-led effort. It is not yet clear
how many of the refiners will support the effort, or how much
money they will put toward financing it. But Valero and Marathon
are said to have indicated on the call that they will not join
the lobbying effort, according to one of the sources.
PBF Energy and Monroe Energy -- both of whom were active in
last year's successful effort to knock back rising ethanol
quotas -- are the most likely leaders and financiers of any
lobbying effort, the source said. A follow-up meeting or call is
set for next week to set the strategy for the effort.
A growing number of oil producers and some politicians say
it is time to reconsider the crude oil export ban, particularly
now that the rapid rise in shale oil production threatens to
exceed domestic refiners' demand for light, sweet crude --
potentially causing a drop in domestic prices.
But opening up overseas shipments would likely hurt
refiners, who benefit from a glut of cheap, domestically
produced crude oil that currently cannot be sold overseas.
The purpose of Wednesday's call was to gauge the refiners'
interest in forming a lobbying group, according to one of the
sources. The existing refiner industry group, the American Fuel
and Petrochemical Manufacturers, will not oppose easing the ban
because it supports free markets, its president has said.