Valero Energy Corporation (VLO), HollyFrontier Corp (HFC): Where in the World Is Our Gasoline Disappearing to?

It remains to be seen how long Venezuela will keep up its import pace. One of the main reasons for its increased demand is that the country is having problems keeping its refiners running at full capacity. While it’s possible that Venezuelan demand will slack off as it gets its refiners back on line, the country’s oil minister denies that it even imports gas, suggesting that the structural issues could run much deeper.

As the Venezuelan government subsidizes our continued pain at the pump, it has enabled several of our refiners to cash in, at least for now. Topping the list is Valero Energy Corporation (NYSE:VLO) which represents about 20%-25% of total U.S. petroleum product exports. Another big winner is Philips 66 which boosted its exports by 50% in the fourth quarter. Meanwhile other refiners like Tesoro Corporation (NYSE:TSO) and HollyFrontier Corp (NYSE:HFC) are both enjoying the highest margins they’ve seen in years.

However, those margins could be on the way down. The EPA recently proposed new rules that some view as a potential death sentence for refining profits and the elimination of any hope that we’ll see gas prices drop. The new rules would significantly reduce the sulfur, nitrogen oxide, and benzene content in gasoline and bring it up to California and European standards. It would cost refiners billions to bring the gas up to those standards. That’s why both California and Europe have much higher gas prices than the majority of the U.S., and it would undoubtedly mean even higher future prices as more of our gas disappears overseas in an effort to get around these new rules.

If there is one silver lining, it is that this could force us to finally allow natural gas to change the fuel industry. Clean Energy Fuels Corp (NASDAQ:CLNE) is already working hard to build out America’s Natural Gas Highway. As gas prices stay elevated and new rules come into play it could entice more heavy users to switch to cleaner-burning natural gas. While we wouldn’t be paying the mere pennies that Venezuelans pay to fill up, natural gas fuel is selling at a significant discount to gasoline which would still yield huge savings. Though, as the debate over natural gas exports heat up, even natural gas could begin to do its own disappearing act.

The article Where in the World Is Our Gasoline Disappearing to? originally appeared on Fool.com.

Fool contributor Matt DiLallo owns shares of Phillips 66. The Motley Fool recommends Clean Energy Fuels.

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