Independent oil refiner Valero Energy Corp. (NYSE: VLO) and Canada-based pipeline operator Enbridge Inc. (NYSE: ENB) have been granted licenses from the U.S. Commerce Depart to re-export crude oil imported into the U.S. from Canada. The license is valid for 12 months.
According to an exclusive Reuters report, Valero has been given a license to re-export a “limited amount” of imported Canadian crude back to its refineries in Canada. The license also allows the company to export crude to the United Kingdom, but a Valero official said the economics currently don’t justify the practice. Instead the crude will be used to supply the company’s Quebec refinery which has been unable to receive crude shipments by rail due to severe weather.
While the Valero license is relatively routine, the deal with Enbridge is less so. In the last year, the Commerce Department’s Bureau of Industry and Security — the agency responsible for U.S. export control — has issued eight licenses to re-export oil to European nations: three to the U.K.; four to Italy; and one to Germany. Those were the first permits the Bureau has issued since 2008 according to Reuters’ research.
According to an Enbridge spokesman the company plans to re-export less than 1.5% of its total shipment of 2.4 million barrels a day into the U.S. (about 36,000 barrels). The Enbridge spokesman told The Wall Street Journal that the export license offers the “additional flexibility and optionality our customers have requested to enable them to respond to rapidly changing market conditions and opportunities.”
Traders expect Enbridge to ship about 40,000 metric tons of crude from ports in Texas later this month. That’s about 290,000 barrels headed for refineries in Italy and Spain.
By U.S. law every drop of re-exported oil must come from the country of origin — Canada in this case — and all the diluent used to thin the crude so it can flow through pipelines must also have originated in Canada. Reuters notes that “a number” of other companies already have licenses to re-export Canadian crude, but none plans to use the licenses until the U.S. re-examines its export laws.
The big question, of course, is whether or not the licenses granted to Valero and Enbridge indicate that the U.S. is going to loosen its restrictions on crude exports in place since the Arab oil embargo of the 1970s. President Obama has not weighed in on the issue yet and Congress is divided as usual. Any change would require legislative action and the President’s signature.
In any event, U.S. crude producers already been exporting a barely-refined product that is as near pure crude oil as legally allowed.
100 Million Americans Are Missing This Crucial Retirement Tool
The thought of burdening your family with a financial disaster is most Americans’ nightmare. However, recent studies show that over 100 million Americans still don’t have proper life insurance in the event they pass away.
Life insurance can bring peace of mind – ensuring your loved ones are safeguarded against unforeseen expenses and debts. With premiums often lower than expected and a variety of plans tailored to different life stages and health conditions, securing a policy is more accessible than ever.
A quick, no-obligation quote can provide valuable insight into what’s available and what might best suit your family’s needs. Life insurance is a simple step you can take today to help secure peace of mind for your loved ones tomorrow.
Click here to learn how to get a quote in just a few minutes.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.