TSO - DJ Tesoro's Smith Wants Refiners To Stimulate Policy Discussion
SAN ANTONIO, Texas (Dow Jones)--The U.S. needs to cultivate policies that stimulate investment in fossil fuels, Tesoro Petroleum Corp. (TSO) chairman Bruce Smith told refiners Tuesday.
"I'm not suggesting that we throw in the renewables towel," Smith said, addressing over 1,000 industry players at the National Petrochemical and Refiners' Association annual meeting. "To reduce future supply risk, we should seek a prudent balance of supply sources," he said. In particular, he said the industry needs to work with policy makers to pursue a favorable investment environment for the development of new fossil fuels.
The speech was Smith's first foray into industry-leadership oriented speeches, focusing outside of Tesoro. With the company's expanding presence on the U.S. West Coast, the company's position in the industry has changed, an executive said, clearing the way for Smith to deliver his message Tuesday.
Smith focused on addressing common misconceptions about refinery margins, capacity growth and the need for renewables, and urged other refiners to do the same.
"Fossil fuels are readily available and will be the major component of our energy supply for many years to come," he said. While much public focus has been given to the profits of large oil companies, Smith said the focus has been diverted from investment risks and the timeline required to see capital returns on exploration projects.
In refining, he said, the timeline for expansion can be shorter than the timeline for exploration and production products, but to guarantee return on investment, stable margin environments must be maintained for nine to ten years, total. Uncertainty around climate change, possible negative margin impact of renewable fuel supply, and current elevated project costs make it difficult for refiners to commit to projects with long lead time, Smith said.
"We realize that there will be many voices in the debate about emissions and renewables," he said. "However, it is vital that our voice be heard and not overlooked," he said. Smith urged the NPRA members to join with other energy advocacy organizations, like the American Petroleum Institute, and of other industrial and consumer groups in the U.S.
Rather than focusing on energy independence for the U.S., Smith urged the industry to strive for energy security by "ensuring that we have a healthy economy and that our industries are able to compete in the global marketplace."
-By Jessica Resnick-Ault, Dow Jones Newswires; 713-547-9208; jessica.resnick-ault@dowjones.com
(END) Dow Jones Newswires
March 20, 2007 12:43 ET (16:43 GMT)
Copyright (c) 2007 Dow Jones & Company, Inc.- - 12 43 PM EDT 03-20-07
