stockrowWhat it does
Valero Energy Corporation manufactures and markets petroleum-based fuels, low-carbon fuels and petrochemical products. Founded in 1980, it is headquartered in San Antonio, Texas. R. Lane Riggs is its chairman, chief executive officer and president.
Its petroleum refineries turn crude oil and other materials into products including gasoline, diesel and jet fuel. Valero sells those products to wholesalers, distributors, retailers and large users such as airlines and railroads. It also supplies independently owned fuel outlets that carry its brands. The company sells primarily in the United States, Canada, the United Kingdom, Ireland and Latin America.
Valero also produces fuels from renewable materials. Its Diamond Green Diesel joint venture with Darling Ingredients makes renewable diesel, renewable naphtha and a renewable component for aviation fuel. Renewable diesel can be used interchangeably with petroleum-based diesel. Valero’s ethanol plants process corn into ethanol, which is primarily blended into gasoline, as well as animal feed and other products.
At December 31, 2025, Valero owned 15 petroleum refineries in the United States, Canada and the United Kingdom, with combined throughput capacity of approximately 3.2 million barrels per day. Its 12 ethanol plants were in the U.S. Mid-Continent region. The joint venture operated two renewable diesel plants on the U.S. Gulf Coast. Valero subsequently said its Benicia refinery was safely idled and that it had no plans to restart it.
How it makes money
Valero manages its operations through Refining, Renewable Diesel and Ethanol segments. It earns revenue by selling the fuels and other products those businesses manufacture, as well as some petroleum products obtained from third parties. Its margins depend on product selling prices relative to the cost of the materials processed.
Refining processes crude oil and other feedstocks into transportation fuels and petrochemical products. Its sales are made through wholesale terminal racks and bulk channels. Refining margins are primarily affected by fuel prices and the cost of crude oil and other feedstocks; operating expenses include energy, maintenance and employee compensation.
Renewable Diesel includes the consolidated Diamond Green Diesel joint venture. It sells renewable diesel, renewable naphtha and a renewable aviation-fuel component to be blended with conventional fuels or used by customers in their operations. Segment margins are affected by fuel prices, feedstock costs and the value of related low-carbon fuel tax credits. Qualifying renewable fuels also generate compliance credits under the U.S. Renewable Fuel Standard.
Ethanol processes corn and sells ethanol and co-products, including livestock feed. Its margin is primarily affected by prices for ethanol and corn-related co-products and the cost of corn. Ethanol is sold under term and spot contracts, while Valero’s independently owned branded fuel sites are supplied under multi-year contracts.
For the third quarter of 2026, net income attributable to Valero stockholders was $6.8 billion; Refining operating income was $8.8 billion, Renewable Diesel operating income was $353 million and Ethanol operating income was $272 million. In 2025, Refining segment margin increased by $2.1 billion compared to 2024, while Renewable Diesel segment margin decreased by $703 million.
Customers and how it sells
Valero sells refined petroleum products in both wholesale rack and bulk markets. At terminal truck racks, its principal customers are wholesalers, distributors, retailers and end users receiving truck deliveries. The majority of rack volume is sold through unbranded channels; the remainder goes to distributors and dealers operating branded sites under multi-year supply contracts.
Approximately 7,000 outlets carry Valero brand names. They are independently owned, rather than a company-owned retail network. Brands include Valero, Beacon, Diamond Shamrock and Shamrock in the United States, Ultramar in Canada, and Valero and Texaco in the United Kingdom and Ireland. Valero-branded sites are also supplied in Mexico.
Bulk petroleum customers include petroleum companies, traders, railroads, airlines and utilities. Products reach bulk customers primarily by pipeline, ship and barge. Valero’s refining and logistics network serves the United States and international markets, including Canada, the United Kingdom, Ireland and Latin America.
The renewable diesel joint venture sells its products for blending and to end users in domestic and international markets. Valero sells ethanol in U.S. bulk markets and exports it globally; its distillers grains are sold primarily to animal feed customers in the United States, Mexico and Asia.
Suppliers and costs
Valero buys crude oil and other refining feedstocks through term and spot contracts from national, international and U.S. oil companies. Term contracts use market-related prices, and most crude bought under them is priced at the producer’s official stated price. Valero does not produce its primary feedstocks other than distillers corn oil from its ethanol plants.
Diamond Green Diesel uses animal fats, used cooking oils and inedible distillers corn oils, as well as vegetable oils and other renewable materials. Darling Ingredients must offer the joint venture a portion of its feedstock requirements at market pricing, but the venture is not required to buy that material. Valero sources corn for ethanol from local farmers and commercial elevators.
Feedstocks are a major cost, alongside natural gas, electricity, water, transportation, maintenance and regulatory compliance. Valero’s refining business must buy qualifying renewable fuels or compliance credits to meet its U.S. renewable-fuel obligations. In 2025, Renewable Diesel feedstock costs rose as tariffs affected certain foreign supplies and increased demand for domestic materials. Foreign feedstocks used at Diamond Green Diesel did not qualify for production tax credit benefits in the third quarter of 2026.
- Revenue$122.7B
- Cost of revenue−$117.3B
- Selling, general and administrative−$1.0B
- Other operating costs−$1.2B
- Operating income$3.2B
Competitive position
Valero competes for crude oil and other feedstocks, retail outlets and customers for refined products. Par Pacific Holdings operates in the same refining space. Valero also faces competition in low-carbon fuels and ethanol, where new entrants or existing producers may develop lower-cost ways to serve demand.
Some competitors produce a substantial portion of their own crude oil, operate extensive retail networks or have other businesses that can offset weaker refining results. Valero does not own a retail network and purchases nearly all of its feedstocks.
Valero owns pipelines, terminals, tanks and marine facilities that support its refineries and exports. Many refineries connect to marine facilities and common-carrier pipelines. Its Gulf Coast refineries can process different crude grades, and the company has sought opportunities to increase its ability to process heavy sour crude.
Our reading: The refinery and logistics network provides a meaningful distribution advantage, but it does not eliminate competition for feedstocks or protect margins from market prices. Our reading: Feedstock flexibility at the renewable diesel plants can provide an advantage in some markets, although tariffs, credit eligibility and feedstock costs limit its consistency.
| Competitor | Where they compete | Threat (our reading) |
|---|---|---|
| Par Pacific Holdings, Inc. | Refining | Medium |
Growth opportunities
Valero’s growth projects focus on improving crude and product flexibility, changing the mix of products and using existing refining capacity. It completed the St. Charles refinery fluid catalytic cracking unit optimization project in the third quarter of 2026, on schedule and within budget. The $230 million investment has increased production of products including alkylate and gasoline.
Valero has also been pursuing efficiency and capacity expansion projects at its ethanol plants. It is evaluating smaller capacity increases and pursuing carbon sequestration projects at a couple of sites, which the company expects to increase ethanol volumes and lower the fuel’s carbon intensity. Valero continues to see export demand for ethanol.
At the Diamond Green Diesel Port Arthur plant, a completed project gives the venture the option to upgrade approximately 50 percent of its renewable diesel annual production capacity to a renewable aviation-fuel component. Qualifying sales have generated clean fuel production credits. Valero also evaluates carbon capture and storage opportunities intended to lower the carbon intensity of its products.
It was reported on 30 October 2026 that a transaction involved an approximately 700-acre former refinery facility adjacent to Valero’s Houston refinery. It was reported on 4 November 2026 that the transaction was expected to close by year-end 2026, subject to customary conditions including antitrust clearance.
- $114.0BFY2021
- $176.4BFY2022
- $144.8BFY2023
- $129.9BFY2024
- $122.7BFY2025
Structural risks
- Volatile margins: Product prices and the prices of crude oil, corn and other feedstocks can move independently. Valero generally purchases feedstocks before processing them and selling the resulting products, so price changes during that interval can affect results.
- Feedstock and utility availability: Supply disruptions, tariffs or unfavorable prices can curtail production or reduce margins. Refineries and plants also depend on natural gas, electricity and water; some Texas refineries have experienced water supply challenges.
- Regulation and incentives: Renewable fuel programs impose compliance costs on refining, while demand and margins for low-carbon fuels depend in part on government support, credit values and eligibility rules. Tariffs have affected foreign feedstocks used by Diamond Green Diesel.
- Operational interruptions: Accidents, mechanical failures, severe weather or other disruptions can stop or curtail operations, causing lost production and repair costs. Valero expects Port Arthur diesel hydrotreater repairs to be completed by year-end 2026.
- Demand and competition: Fuel efficiency, reduced travel and alternative-fuel vehicles could reduce demand for Valero’s products. Competitors with their own crude production, retail networks or other revenue streams may be better positioned during periods of reduced margins.
Bottom line
Our reading
Valero is a fuels manufacturer whose results depend heavily on the spread between product prices and purchased feedstock costs, with renewable fuels adding exposure to credit values and policy [item1, item1a]. Its refining, logistics and feedstock flexibility support access to markets and supplies, but they do not remove exposure to commodity cycles, operating disruptions or regulation [item1, item1a]. Recent projects seek to improve product mix and expand ethanol capacity rather than simply add refining volume [call_prepared, call_qa].