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| And so as long as that holds up, then I think ethanol has got a good outlook |
| The ethanol obviously has had a good year this year with lower corn prices and low natural gas prices |
| We are pleased to report strong financial results for the third quarter |
| In fact, we set a record for third quarter earnings per share |
| Finding margins were supported by strong product demand against the backdrop of low product inventories, which remained at 5-year lows despite high refinery utilization rates globally |
| So you're heading into winter with low inventories, and we would expect strong diesel cracks through the winter and could get very strong if we have a colder winter |
| And Doug, what I'd say about the cokers, it operated very well for the quarter, certainly consistent with our expectations |
| Our refineries operated well and achieved 95% throughput capacity utilization in the third quarter, which is a testament to our team's continued focus on operational excellence |
| We continue to prioritize strategic projects that enhance the earnings capability of our business and expand our long-term competitive advantage |
| So diesel demand remains very strong |
| So inventories remain below the 5-year average level, demand remains good |
| And so I think we still see a lot of good opportunities for ethanol globally that I think will keep us in a very strong margin environment |
| And so the project is generating good strong economic value, both by lowering feedstock, some of the things Gary is talking about and also enabling us to increase throughput |
| And then -- but at the same time, your system has gotten a little more diesel-oriented with the Port Arthur coker and Valero has a history of really strong sort of capture results and execution results in the fourth quarter when there's typically a lot of volatility and dislocations around all these markets |
| The strength in demand was evident in our U.S |
| You always got to remember, I was an integral part of really Joe's team really from the beginning of his [indiscernible] you've mentioned, it's been a very successful one |
| wholesale system, which matched the second quarter record of over 1 million barrels per day of sales volume |
| Operating income was higher than the third quarter of 2022, primarily as a result of higher production volumes and lower corn prices in the third quarter of 2023 |
| So we're in good shape there |
| This includes operating our assets efficiently in a safe, reliable and environmentally responsible manner, maintaining capital discipline by adhering to a minimum return threshold for growth projects and honoring our commitment to shareholder returns |
| And then maybe switching on the refining side, as we think about PADD 5, it was really quite strong through third quarter on a relative basis across the country and into the early part of the fourth quarter |
| So you talked about gasoline cracks, but we hit so much [ph] which just remains really strong here |
| And then with our platform, we're still the most advantaged from a cost and CI standpoint |
| We also like projects and improve our reliability and then, of course, we like to hold renewable line in terms of its ability for us to drop the carbon intensity of our fuels |
| But largely speaking, our strategy is the same because it was successful and it's currently successful |
| So the ethanol margins have been, I would say, higher than what we would call a mid-cycle but it's not really exceptionally higher than mid-cycle |
| We revamped the 2 big hydrocrackers, this is all in an effort to make our system more robust and its ability to move around and specifically be able to move towards making more and more distillate out of our assets |
| And we continue to see waste oils advantaged versus vegetable oils from a CI standpoint |
| So in these periods where we have greatly above-average free cash generation, that will probably continue to be our practice |
| And then you're right that to the extent that butane has a higher octane than the pool, it does allow you to put more of the lower octane component into the blend [indiscernible] one of those right now that looks pretty attractive |
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| Our guys' estimate, we lost about 125,000 barrels a day of diesel demand due to the warmer weather |
| Operating income was lower than the third quarter of 2022, primarily due to lower renewable diesel margin in the third quarter of 2023 |
| 2Q margins were obviously quite soft indicators been weak |
| We could see that biodiesel and veg oil RD is negative now |
| The real margin loss there is really because as fat prices have since adjusted in the spa [ph] market but obviously, there's a lag of our fat prices that kind of carried on that have since started to catch up with this drop in credit prices |
| is probably down about 1% year-to-date from where it was last year, and that's mainly due to the warmer winter we had last year |
| And then the DOE put out some fairly pessimistic demand numbers |
| So you've talked a little bit about RD margins being pressured here |
| So the combination of all that news kind of caused a precipitous drop in the RINs kind of right at the end of the quarter and into the beginning of the fourth quarter |
| And so all that kind of hit at once and caused a fairly significant sell-off in gasoline |
| Separately, as reported by Navigator last week, they cancelled their CO2 pipeline project |
| So there's, I think, a kind of a more of a temporary view that the D4 [ph] was going to drop even more |
| I think as I mentioned before, there's this kind of constant talk about oncoming production, increased rates, Arthurs [ph] projects that has always said at some point the D4 is going to be under pressure especially since the EPA did not raise the D4 obligation in their last set rule |
| And on the crude oil side, in terms of light heavy differentials, given the heightened geopolitical risks in the Middle East and coupled with the incremental Venezuelan production following the recent sanctions relief and taking also into account the potential near-term start-up of just focus [ph] |
| And so when one refinery goes down, it's going to create a lot of shortness in the market |
| Yes, I think you had several factors that contributed to the sharp sell-out on gasoline |
| Fat prices continue to come off |
| We've seen some of your larger peers use equity to buy up comped recently? And if I think about some of the potential areas you could expand into like chems, like low carbon fuels, those valuations have come down relative to where Valero trades |
| I think we saw the RIN prices drop pretty quickly kind of in that September and into October |
| The second question is -- it's a very -- it's a smaller part of your business, but it's always -- you can create volatility in earnings is ethanol |
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