NEW YORK (TheStreet) -- I was talking to Jim Cramer today about the end of the crude oil export ban, which is the way I view the recent decision made by the U.S. Commerce Department to classify "condensates" as a refined product.
The ruling was delivered specifically to Pioneer Natural Resources (PXD) and Enterprise Product Partners (EPD) to allow a very specific type of condensate that Pioneer distills to be exported. But one ruling will necessarily lead to many, as exploration and production companies in the major U.S. shale plays start to clamor for similar dispensations to export their local brands of lightly distilled crude.
All of these companies want to capture a global price of crude oil that has been running more than $6 dollars a barrel higher than their own and in some local cases as much as $20 a barrel higher. That was the incentive for Pioneer CEO Scott Sheffield to look to create this workaround through the Commerce Department instead of seeking a full end to the 40-year old export ban, which would require an act of Congress.
The E+P companies that can access these distillation services and access higher global markets will be the biggest winners.
For shareholders of refinery stocks, however, this is about the worse news that they could get. Refining is all about margin and two of the U.S.'s largest independent refiners, Valero (VLO) and Tesoro (TSO) , saw their share prices come from single digits in 2008 to trade at $50 and $60 today based upon a strong discount in the price of domestic crude oil that has been more than $5 a barrel and sometimes as high as $25 a barrel. Those discounts are about to disappear forever, and with them the terrific margins that these and other refiners have been enjoying. I see a long downturn in refinery stocks ahead.