Tom Whitehurst

Valero and Rockefeller share similar traits

   Understandably, the folks at Valero Energy Corp. don't like to talk about their similarities to John D. Rockefeller and Standard Oil. They'd rather talk about their differences.
   There are, indeed, differences. Valero chairman Bill Greehey is gregarious, media-friendly and has all his hair, unlike old John D. Last week, Greehey did a short-notice interview with CNN about California's questionable failure to exempt refineries from rolling blackouts. An interview with Rockefeller a hundred years ago would have been about as likely as, well, television.
   One thing in common
   Like it or not, Valero has one thing in common with the famous monopolist - a voracious appetite for swallowing up refineries. Like Rockefeller in the mid-19th century, Valero has few peers that share its view of refining as a huge market opportunity.
   On Monday, Greehey was in Corpus Christi announcing Valero's acquisition of the former Coastal Corp. refinery. Last month, Valero announced that it was acquiring Ultramar Diamond Shamrock. All of a sudden, Valero is the nation's largest refiner.
   Rockefeller either upgraded or tore down the refineries he acquired, achieving the goals of improving efficiency and eliminating competition.
   Valero announced that it would spend $552 million in Corpus Christi in the next three years to integrate and upgrade the ex-Coastal refinery and Valero's nearby refinery.
   But the competition part is perhaps the key difference that Valero sees between itself and Rockefeller. Valero sees itself fostering competition where it wouldn't exist otherwise.
   That's because major oil companies seek to control the industry from the well to the pump, Valero says. The majors pursue the profit margins available in exploration and production, and work hard to market their product to the consumer, while treating refining like a stepchild.
   The majors want crude prices to be high because that's their product, and Valero wants them low because that's its feedstock. The lower that Valero can get its feedstock, the cheaper it can sell its product to retailers.
   "Our interests are aligned with consumers because we've got a niche," Valero spokeswoman Mary Rose Brown said. "A guy who just produces crude makes his money with a high crude price. He doesn't care about the refinery costs. A company like Valero that just refines, we're looking at cutting our refining costs. And since we don't have a large retail presence, we pass it on."
   Valero buys refineries that can be made more productive with quick, easy capital improvements, Brown said. The previous owners didn't bother to make those improvements because they didn't have the incentive.
   "We're spoilers," Brown said. "We've staked out the middle ground. We benefit from investing in the capital that they don't want to."
   OK, so maybe Valero doesn't like the Rockefeller image. That's understandable.
   More similarities
   But Valero also has been recognized for corporate philanthropy, which Rockefeller practically invented. And Rockefeller's employees were known to be well-paid and well-treated. He ran a low-turnover shop. For the past two years, Valero has been on Fortune's list of 100 Best Companies to Work For.
   One hopes that Valero's image can survive these nettlesome similarities to Rockefeller.
  
  

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