It’s Not Exactly Energy Independence, But It Will Be Different (RDS-A, BP, XOM, TOT, VLO, TSO)

Last week we noted that Royal Dutch Shell plc (NYSE: RDS-A) (NYSE: RDS-B) had applied for a permit to export U.S. crude. BP plc (NYSE: BP) has already received a permit to export U.S. crude to Canada, and Swiss-based trading house Vitol is believed to have also applied for an export license.

As crude production has grown in the U.S., the price of the U.S. benchmark WTI has lagged far behind the price of Brent, the international benchmark. That means that producers such as Shell, Exxon Mobil Corp. (NYSE: XOM), and others are leaving money on the table — and a lot of it. The difference between the two benchmark prices today is about $22 a barrel.

It’s not just the new quantities of crude coming from U.S. wells, it’s also the quality. Most of the crude from the Bakken shale and Eagle Ford shale plays is light, sweet crude that is not readily compatible with U.S. refineries that have been reconfigured over the years to refine heavier sour crudes from Venezuela and elsewhere around the world.

U.S. crude exports right now amount to a small fraction (about 47,000 barrels a day in 2011) of the roughly 9 million barrels a day the country imports. But with U.S. production at about 6.6 million barrels a day and growing, imports of light, sweet crude from Nigeria will fall to zero by 2014 according to an official at French oil company Total SA (NYSE: TOT). U.S. imports from Nigeria have fallen by 50% in 2012 alone, from 810,000 barrels a day in July 2011 to just 361,000 barrels in July of this year.

While exporting U.S. crude may be good for producers’ profits, exports may not be so good for U.S. consumers or refiners. Since the goal is to raise the price of WTI to more nearly match the price of Brent, that means that U.S. crude will cost more in the U.S. market. That also means that refiners’ margins will decline. Pure refiners Valero Energy Corp. (NYSE: VLO) and Tesoro Corp. (NYSE: TSO) are sure to make a big fuss over increased exports. Consumers, too, are not likely to happy with the results.

Ship loadings at the port of Corpus Christi, Texas, have risen to levels not seen since the 1940s, according to a report in the Financial Times. That’s before the massive oil fields of the Middle East started to come online in the 1950s, and all of these ships are bound for U.S. ports in the Northeast or in Canada. But that can change.

As U.S. crude production grows, pressure for more exports to more destinations will also grow. America may get a lot closer to being energy independent, but if crude prices — and gasoline prices — rise, we may not be a lot better off.

Paul Ausick