Continued from page 1

Hitting a wall?

While exports of gasoline have been soaring, analysts say, the trend could be cut short if U.S. refiners reach a limit on how much surplus crude oil they can absorb. Before the premium shale oil boom, U.S. refiners spent billions of dollars retooling their factories to handle heavy crude that they expected to import from the Canadian oil sands, Venezuela, Mexico and other sources. Now, they have too much capacity for such heavy crude and may be nearing the limits of how much light, sweet crude they can handle, some analysts say.

Michael Fitzsimmons, an engineer and energy analyst, said U.S. refiners may be unable to absorb much more surplus premium crude. With U.S. refineries hitting capacity, particularly those in the huge refining complex along the Gulf Coast of Louisiana and Texas, he said, they are in a position to take advantage of the crude producers upstream, forcing drilling companies to heavily discount the price of high-quality crude and enabling the refiners use the low-cost oil to fatten profit margins on their own refined products.

Refiners such as Phillips 66, Valero and Chevron have been profiting at the expense of shale oil drillers such as Continental Resources and Whiting Petroleum, which don’t own refining operations, Mr. Fitzsimmons said.

Mr. Sieminski questioned whether refiners are likely to reach a point where they cannot absorb any more surplus crude oil. He noted that facilities that process light, sweet crude do not have to be as big and complex as the refineries that process heavy crude, and “there’s a lot of construction” right now to build those simpler refineries, called “splitters.”

Mr. Sieminski estimated that U.S. refineries will have added enough splitters by 2016 to process another 800,000 barrels of crude oil a day. The gasoline they produce will go mainly for export.

Calls for crude exports

The refining bonanza has fueled a growing campaign to lift the ban on crude exports, which was enacted during the 1970s oil crisis. Mr. Sieminski said his agency has received many requests from Congress for studies on possible effects of crude oil exports, including whether such exports would result in higher fuel prices for Americans.

Squeezed by declining prices for Midwestern crude, major oil companies such as ConocoPhillips and Exxon Mobil have been arguing to lift the export ban so they can earn higher prices overseas. ConocoPhillips CEO Ryan Lance noted last month that Mexico and many South American and European countries have the capacity to refine premium crude and could serve as outlets to ease restraints at U.S. factories.

Sen. Lisa Murkowski, Alaska Republican, has taken the lead in advocating an end to the ban in Congress. Short of lifting the ban, she said, President Obama could use his executive authority to create exceptions to the ban if he determines it is in the national interest. For years, the U.S. has exported crude oil from Alaska to Japan, for example, under a presidential exemption from the export ban.

The Senate Energy and Natural Resources Committee held a hearing on the issue of crude oil exports in January, and Ms. Murkowski and Chairwoman Mary L. Landrieu, Louisiana Democrat, asked the Energy Information Administration last month to study the effects of lifting the ban.

“While we are aware that the EIA has limited resources and numerous reporting requirements to the Congress, we would like to convey the interest of our committee in the issue of crude oil exports, which are largely banned by statute,” the lawmakers wrote.

Mr. Fitzsimmons said he doesn’t expect the government to allow the export of crude oil, which remains a politically fraught topic. But even the idea that Mr. Obama could approve exemptions from the export ban is discouraging refiners from tooling up to handle more premium crude, he said, increasing the pressure on shale oil companies and their prices for crude.

He expects the refining boom to continue at the expense of the shale oil revolutionaries who made the export boom possible. “Shale oil producers will be victims of their own success,” he said.