Valero Energy Corporation (NYSE: VLO) is the largest U.S. refiner in terms of throughput capacity. Valero Energy Corporation owns and operates 15 refineries located in the United States, Canada and Aruba that produce conventional gasolines, distillates, jet fuel, asphalt, petrochemicals, lubricants and other refined products. The company also owns and operates a network of gasoline and retail stations located throughout the United States.^[1]

Like many U.S. refiners, Valero’s profits are determined by the refining margin, which is the price difference between purchased crude oil and refined products. As a result, Valero’s revenue and profitability are susceptible to changes in crude prices, refined prices, and consumer demand for refined products. Valero’s refining operations also benefit from using cheaper, lower-grade crude inputs. Approximately two-thirds (2/3) of Valero’s refining capacity can use heavy, sour crude. As a result, the price differential between light, sweet crude grades and heavy, sour crude grades, known as the sour crude discount, has a significant impact on the company’s refining margin.

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