Economy trumps campaign rhetoric: Valero

Any tax or regulatory ambitions of a possible Democratic administration in the White House will take a backseat to an economic recovery that will drive energy demand, US independent refiner Valero said today.

A win in November's election for former vice president Joe Biden would increase the chances of higher taxes and additional environmental regulations, Valero general counsel Rich Walsh said on a quarterly earnings call.

But that would come well after efforts to repair the US economy that are likely to restore energy demand.

"It is really hard to layer on a whole bunch of policies that would smother an effort to recovery," Walsh said. "I think what you are going to see is a lot of campaign rhetoric right now, and then you are going to see a lot of it have to run into a wall of reality once they get through the election."

Whoever wins in November, a stimulus package supporting greater fuel demand would be an immediate priority, chief executive Joe Gorder said.

"Although we are watching it carefully and are well positioned and organized as a company to deal with whatever comes, I think we are not as pessimistic as many are about the potential outcome of a change in administration," Gorder said.

Valero is the third largest US independent refiner, the largest US producer of renewable diesel and one of the largest US producers of ethanol. The company is more than doubling its joint venture renewable diesel capacity at its Louisiana plant and considering another 26,000 b/d facility at its refinery in Port Arthur, Texas. Investments in renewable diesel especially anticipate rising demand for low carbon fuels in state-level markets across the US and Europe.

But the US and the world will continue to need petroleum fuels no matter who wields power in Washington over the next four years.

"We are believers in the long-term viability of refining," Gorder said. "Cleaner fuels will be a part of it — we obviously are making investments to take care of that. But we do believe that our refining business is going to continue to be strong and successful going forward."

By Elliott Blackburn