Here is update on Valero’s troubled refinery sales – not best sales strategy to lead with comment that Aruba wouldn’t be profitable today (very few refineries anywhere are able to avoid those strage economics for this strange period of time).
And as long as these three previously profitable refineries remain down – or are sold off, Valero drops out of its Global 8th ranking to 12th just below Chevron at 11th. The loss of the 630 MBD capacity from its 3 refineries would put it below CNPC, Saudi Aramco & Petrobras.
Selling large complex gulf/coastal refineries at the extreme bottom of the market and located in captive US market that has ~no grassroots option due to environmental block the government allows to drive the EPA despite supply needs of US, and then purchase ethanol plants doesn’t seem like solid economics.
Since a number of US ethanol producers have gone bankrupt because of the reduced government subsidy and lack of demand plus the shortfall of US supply due lower corn production & weather impacts. These issue have also allowed the public time to discover that the 7% Ethanol has been costing them the loss of 3-5MPG/gallon of blended gasoline! Some states during summer 2008 & 2009 were selling gasoline without ethanol and had the issue become very noticeable.
Regards
