The Ban Is Mine.

Lourdes is a hand on the diesel hydrotreater unit at the refinery I own outside Port Arthur, Texas. A hand, which is to say a woman whose hands have been on the hydrogen manifold since 2019. She has worked the unit for 7 years and 2 months. Her shift is 12 hours and 40 minutes of high-pressure hydrogen stripping sulfur off a feedstock whose country I do not have to learn. The seal on the inbound pipeline is the only foreign geography I am required to know. The hydrogen sulfide monitor on her side of the unit is the one I declined to replace in Q2. The monitor costs $11,400. The labor to install it costs another $6,200. The dead man’s switch on her colleague 3 weeks ago was the last time I was asked.

The diesel that left my refinery at 11:47 last night is in the tank of the pickup you filled at the Buc-ee’s in Port Arthur on your way to Houston last month. You paid $4.61 a gallon. Lourdes was paid $26.40 an hour, before the respirator cartridge she buys at the NIOSH-rated supplier in Beaumont because the one I refuse to issue would cost $4.85 a shift and I have 38 hands and the cartridge is the margin. The Lord made the crude. He did not refine it for me. I paid for the hydrotreater.

The National Review editorial board wrote this week that a proposed ban on U.S. diesel exports would “wreak havoc” on energy markets at home and abroad, and that controlling the price of any one refined product in a tight global market is “like pinching a water balloon.” The Editors are correct about the pinching. The Editors are wrong about who is holding the balloon. The balloon is mine. The ban is mine. The Editors are downstream of both, and downstream is the geography I am required to know.

The Editors are right that the ban would trap domestic supply and push down wholesale prices. The Editors are right that this would incentivize refiners to cut output. The Editors are right that the long-term answer is more supply, not hoarding. The arithmetic is the lesson and the Editors have learned it. What the Editors haven’t learned is the part where I come in.

I am a refiner. I export 38% of the diesel my hydrotreater produces. The export premium over the domestic wholesale is $0.18 a gallon. On 11,400 barrels a day, that is $92,232 a day. The ban eliminates that premium. The ban gives me a captive domestic market in its place. The captive market is mine because I own 41 truck stops from Lake Charles to El Paso. The truck stops buy the diesel my refinery no longer exports. The truck stops sell the diesel to your trucker, your farmer, your lineman. The truck-stop spread is $0.41 a gallon. The refinery spread was $0.18 a gallon.

Good. You’re counting.

The net to the consolidated enterprise rises by $0.23 a gallon. That is on 11,400 barrels a day. The ban hands me the difference. The Editors would call that a windfall. I call it the cost of writing a letter.

Let me widen the frame with you. When the ban pushes down domestic wholesale prices, a captive refiner does what I did in 2019 and what I’ll do in Q1 of 2027. He slashes utilization. He idles the hydrotreater. He drops Lourdes from 12-hour shifts to 8-hour shifts. He cuts her 7 years and 2 months of seniority back to a single shift a week and a half-paycheck she cannot budget against. The wage I pay her drops from $1,373 a week to $430 a week.

Here’s the part worth sitting with.

I declined the $17,600 monitor — the equipment at $11,400, the labor at $6,200 — to fund the renovation of the executive dining room at the refinery. The new marble countertops cost $11,200. The chef’s contract costs $4,800 a quarter. The catering company billed me $11,600 for the last board meeting. The monitor would have cost $11,400. The labor would have cost $6,200. The dead man’s switch on her colleague 3 weeks ago was the last time I was asked. The dining room is mine. Lourdes eats in the crew cafeteria. The crew cafeteria serves the same Sysco entrees the catering company sends.

The respirator cartridge costs $4.85 a shift. Per hand. I have 38 hands. That is $184.30 a day. $47,336 a year. Nearly three times the cost of the monitor I declined. $47,336 annually so that I do not have to spend $17,600 once. The question is whether it serves the margin better to protect Lourdes or to protect the margin. The answer is in the arithmetic.

Here is where the arithmetic turns. When the ban takes effect and wholesale falls, I cut utilization. Lourdes’s hours collapse from 12 to 8. Her paycheck falls from $1,373 a week to $430. She cannot budget against a half-check while the consolidated margin rises by $0.23 a gallon, $92,232 a day.

The ban is not something that happened to me. The ban is something I wrote. The same year I declined her monitor, I hired the firm that drafted the language. My contribution was to model the utilization scenario — the scenario that shows how captive downstream refiners adjust output when wholesale falls. The scenario that is now in the Department of Energy’s current model of the export-ban proposal. I wrote the policy. The ban is mine.

Sit with me here. This is my third year at Warden, running a case study on utilization discipline in a captive-downstream structure. The textbook is mine. The case study is mine. The textbook is in its seventh edition. The case asks: do you install the monitor or fund the dining room? The answer depends on whether the hydrotreater keeps running. My graduates sit at Saudi Aramco, at Valero, at Marathon, at Phillips 66, at the refining desk of Glencore, at the price-control desk of the DOE, at the rate-making desk of the Texas Railroad Commission. One of them modeled the utilization scenario the DOE is using on the export ban. She sent me the spreadsheet. The spreadsheet was exact. She’s the best I’ve taught.

The best answer I ever received was from a student who calculated the replacement cost of a hydrotreater operator at $8,600 — recruiting, training, 14 weeks to full speed — and set it against the $17,600 monitor. She wrote: “The monitor costs $17,600 once and protects 38 workers over 10 years. At $8,600 per replacement, the system breaks even if more than 2.05 workers are lost to attrition or illness over the decade. Industry data suggests 2.1. The monitor is not the superior financial decision.” The math was exact. The conclusion was wrong. I gave her an A.

The conclusion is wrong because it treats the 2.1 as fixed. It isn’t. I have the authority to make it 0, by installing the monitor, or to let it happen, by not installing it. The student calculated as if the number were given. I treat it as a variable. That is the lesson. What I observe is that Lourdes is still on the hydrotreater and the monitor is still not installed.

The landowner hired workers at dawn. He agreed with them for a denarius a day. He hired others at the third hour, the sixth hour, the ninth hour, the eleventh hour. At the end of the day he paid them all a denarius. The ones who had worked all day murmured. The landowner said to one of them: “Friend, I am cheating you didn’t you agree to work for a denarius? Take your pay and go. I want to give the one who was hired last the same as you. Don’t I have the right to do what I want with my own money? Or are you envious because I am generous?”

That’s the verse for this column. The denarius was always the rate I issued. Not the rate she accepted.

Lourdes’s last 12-hour shift is December 19. Her final paycheck is $430 a week before deductions. The safety log is hers to read. The cost of the dead man’s switch is mine to decline. The 12-hour shift is hers until I issue the schedule that takes it from her. The schedule is mine. The wage is mine.

The diesel ships Thursday. The marble countertop is in its second year. The discharge is within the permit. The permit was issued in 2019. I haven’t reauthorized. I haven’t checked whether the EPA has revised the limits since. I take his word for it.

The safety log is hers. The cost of the switch is mine to decline. The schedule is mine. The wage is mine. The diesel ships Thursday. The marble countertop is in its second year.

The denarius is mine.

Sterling A. Varice President, Sabine Refining Holdings, LLC Port Arthur, Texas

Sterling A. Varice holds the Hayek-Friedman Chair and serves as Dean of Instruction at Warden University’s College of Business and Economics in Richmond, Virginia. He is the author of three textbooks: Divine Mandates for Labor Utilization, Social Obligations for Profit Maximization, and Calibrated Deprivation: A Manager’s Guide to Employee Motivation.