Valero's Refinery Business Turns Sweet As Sour Crude Pays Off.(THE IBD 100)

Byline: PETER BENESH

There's nothing wrong with William Greehey's crystal ball. Back in 1984 the company he heads, Valero Energy, figured out that supplies of light sweet crude oil would shrink.

That's the easiest and cheapest oil to refine. As the good stuff ran out, demand for lower-grade, hard-to-refine crude oil would rise, Valero realized.

But heavy sour crude, as the low-grade oil is called, demands more refining technology. Valero began buying refineries and adding technology to process the poorer-quality oil.

Twenty years later, Greehey, who engineered Valero's spinoff from its parent firm in 1980, says the company "hit a home run." With 15 refineries, Valero processes about 10% of the oil used in the U.S.

The motor fuels from Valero's refineries meet the same rising environmental standards as do fuels from higher-grade oil.

"Our story today is the story we told 20 years ago," Greehey says. "We saw the environmental movement …