Core Insights - Analysts expect Valero Energy (VLO) to report quarterly earnings of $2.91 per share, reflecting a year-over-year increase of 155.3% with revenues projected at $29.77 billion, down 9.4% from the previous year [1] - The consensus EPS estimate has been revised upward by 36% over the past 30 days, indicating a significant reassessment by analysts [1] Revenue Projections - Total operating revenues from refining are expected to be $28.91 billion, indicating a year-over-year decline of 7.8% [4] - Total operating revenues from ethanol are projected at $1.13 billion, down 1.4% year-over-year [4] - Total operating revenues from renewable diesel are estimated at $1.11 billion, reflecting a 9% decrease year-over-year [4] Refining Margins - The U.S. Mid-Continent region's refining margin per barrel is expected to reach $10.33, up from $7.92 a year ago [5] - The U.S. West Coast region's refining margin per barrel is projected at $13.74, compared to $7.31 in the same quarter last year [5] - The U.S. Gulf Coast region's refining margin per barrel is anticipated to be $10.65, an increase from $9.03 reported in the same quarter last year [6] Throughput Volumes - Refining throughput volumes per day are estimated at 3,007.56 thousand barrels, up from 2,884.00 thousand barrels in the same quarter last year [6] - U.S. Gulf Coast region throughput volumes per day are projected at 1,805.39 thousand barrels, slightly up from 1,799.00 thousand barrels year-over-year [7] - U.S. Mid-Continent region throughput volumes per day are expected to reach 447.87 thousand barrels, compared to 419.00 thousand barrels in the same quarter last year [7] Overall Performance - Analysts predict that the refining margin per barrel will likely reach $12.02, up from $9.09 in the same quarter last year [8] - North Atlantic region throughput volumes per day are expected to be 482.18 thousand barrels, compared to 422.00 thousand barrels a year ago [8] - The North Atlantic region's refining margin per barrel is projected at $14.50, an increase from $11.55 reported in the same quarter last year [9] Market Performance - Valero Energy shares have shown a return of -3.8% over the past month, contrasting with the Zacks S&P 500 composite's +1.2% change [10] - With a Zacks Rank 2 (Buy), Valero Energy is expected to outperform the overall market in the near future [10]

Core Insights - Valero Energy Corporation (VLO) is scheduled to report its third-quarter 2025 results on October 23, 2025, before the market opens [1] - In the previous quarter, VLO's adjusted earnings were $2.28 per share, surpassing the Zacks Consensus Estimate of $1.73, mainly due to increased refining margins and lower total costs [1] Earnings Performance - VLO has missed the Zacks Consensus Estimate in one of the last four quarters but has beaten it three times, resulting in an average surprise of approximately 130% [2] - The Zacks Consensus Estimate for third-quarter earnings per share is $2.94, reflecting a 158% increase from the same period last year [2] Revenue Expectations - The Zacks Consensus Estimate for revenues stands at $29.7 billion, indicating a 9.6% decrease compared to the previous year's figure [3] Market Conditions - Average spot prices for West Texas Intermediate (WTI) crude in July, August, and September were $68.39, $64.86, and $63.96 per barrel, respectively, which were lower than the average prices of $81.80, $76.68, and $70.24 per barrel in the same months of the previous year [4] - Lower oil prices are expected to positively impact VLO's bottom line, as crude serves as a raw material for producing final petroleum products [5] Earnings Outlook - The current model does not predict an earnings beat for VLO, as it has an Earnings ESP of -4.85% and a Zacks Rank of 2 (Buy) [6][8]

Geopolitics & Trade - Indian refiners were surprised by Trump's comments [1] - Russian oil imports are expected to decrease in the short term [1]

Core Insights - California is experiencing significant refinery closures, with the Phillips 66 refinery in Los Angeles set to close by the end of 2025, and Valero planning to idle its Bay Area refinery by April 2024, collectively accounting for approximately 18% of the state's refining capacity [5][6][7] Group 1: Job Losses and Economic Impact - Thousands of workers, potentially tens of thousands, are at risk of losing their jobs as California reduces its reliance on fossil fuels, with an estimated loss of nearly 58,000 workers in the oil and gas industries between 2021 and 2030 [3][9] - The fossil fuel industry employs around 94,000 people in California, and the closure of refineries will have a significant economic impact on local communities, such as Benicia, where Valero contributes about $7.7 million annually in taxes [8][9] Group 2: Legislative and Regulatory Actions - California's energy regulators are negotiating to keep the Valero plant operational and have recently backed off a proposal to penalize oil companies for high profits, indicating a shift in approach to support the industry [4] - Governor Gavin Newsom signed legislation to expedite oil well permitting in the Central Valley, reflecting inconsistent messaging regarding the state's climate policies and their impact on the oil industry [4][7] Group 3: Support for Displaced Workers - The state has established the Displaced Oil and Gas Worker Fund to provide career training and job opportunities, awarding nearly $30 million to various groups, although funding is set to expire in 2027 [11][12] - Governor Newsom has allocated $20 million in the 2022-2023 budget for a pilot program to train displaced workers to plug abandoned oil wells, emphasizing the need for a clear transition plan for affected workers [12][13] Group 4: Industry Perspectives - Industry representatives argue that California's climate policies threaten blue-collar jobs, with calls for a reassessment of these policies to protect employment in the sector [14] - Workers in the oil industry often earn a living wage without a college degree, but there are concerns about job security and the lack of a clear transition plan to new fields [15][16]

Core Insights - China's refinery runs reached their highest levels this year in September, resulting in a 3.9% increase in oil imports compared to the same month last year [1] - The Asian giant imported 47.25 million metric tons of crude oil during this period [1] Industry Summary - The increase in refinery runs indicates a robust demand for crude oil within the Chinese market, reflecting the country's ongoing industrial activities and economic recovery [1] - The rise in oil imports suggests that China is likely to continue its trend of increasing energy consumption, which may impact global oil prices and supply chains [1]

Industry Overview - California is experiencing significant refinery closures, with the Phillips 66 refinery in Los Angeles set to close by the end of 2025, and Valero planning to idle or cease operations at its Bay Area refinery by April 2024, collectively accounting for approximately 18% of the state's refining capacity [5][6][7] - The state was the eighth-largest crude oil producer in the U.S. in 2024, down from third place in 2014, indicating a decline in the oil industry [5] Employment Impact - The closures could lead to job losses for thousands, with estimates suggesting nearly 58,000 workers in the oil and gas industries may be displaced between 2021 and 2030, with 56% of them needing to find new jobs [3][9] - The fossil fuel industry employs around 94,000 people in California, highlighting the potential economic impact of these closures [8] Government Response - California lawmakers established the Displaced Oil and Gas Worker Fund in 2022, allocating nearly $30 million to assist displaced workers with career training and job opportunities, although funding is set to expire in 2027 [10][11] - Governor Gavin Newsom has expressed commitment to supporting displaced workers and communities, including a $20 million budget allocation for training programs related to plugging abandoned oil wells [11] Industry Challenges - The oil industry faces challenges due to California's climate policies, which are aimed at reducing reliance on fossil fuels, leading to increased job insecurity among workers [3][4][13] - There is a call for a clear plan to transition workers from the oil industry to new job opportunities, as many feel forgotten amid the changes [12][16]

Core Insights - California is facing significant job losses in the oil industry as it transitions away from fossil fuels, with thousands of workers potentially affected by refinery closures [3][4][5] - The state government is attempting to balance climate policies with the economic impact on oil workers, leading to inconsistent messaging and uncertainty for those in the industry [4][10] Industry Overview - California was the eighth-largest crude oil producer in the U.S. in 2024, down from third place in 2014, indicating a decline in the state's oil production capacity [5] - The closures of the Phillips 66 and Valero refineries will account for approximately 18% of California's refining capacity, which includes the production of jet fuel, gasoline, and diesel [5][6] Job Displacement and Support - An estimated 58,000 workers in the oil and gas industries may lose their jobs between 2021 and 2030, with 56% of those workers needing to find new employment rather than retiring [9] - The Displaced Oil and Gas Worker Fund was established in 2022 to provide career training and job opportunities, with nearly $30 million awarded to various groups, although funding is set to expire in 2027 [10][11] Economic Impact - The planned closure of the Valero refinery in Benicia is expected to have a significant economic impact, as the company contributes about $7.7 million annually in taxes, representing around 13% of the city's revenues [8] - The fossil fuel industry employs approximately 94,000 people in California, highlighting the scale of potential job losses due to the energy transition [8] Training and Transition Challenges - Workers are expressing concerns about the lack of a clear plan for transitioning to new jobs, with some currently enrolled in training programs that may not be sustainable in the long term [10][15] - The state has allocated $20 million for a pilot program to train displaced workers for jobs related to plugging abandoned oil wells, indicating efforts to support the transition [11]

Core Insights - California is facing a potential spike in fuel prices due to upcoming oil refinery shutdowns, including a significant fire at a Chevron plant, which may force the state to increase oil imports from Asia [1][2][5]. Refinery Closures - The closures of Phillips 66's Los Angeles refinery and Valero Energy's Benicia refinery could eliminate nearly 20% of California's refining capacity, leading to potential fuel shortages [2][14]. - Phillips 66's Los Angeles refinery is set to close by the end of 2023, while the Benicia complex is expected to shut down by the end of April 2024 [3][11]. Price Implications - Gasoline prices in California are already the highest in the nation at $4.66 per gallon, significantly above the national average and Houston's average [8]. - Jet fuel prices have increased by approximately 13% since the Chevron fire, with larger gasoline price hikes anticipated next year [7][8]. Regulatory Environment - California's government is reconsidering its regulatory stance to keep refineries operational after years of policies that have negatively impacted their profitability [2][10]. - The state has delayed planned price caps for refiners by five years, which were initially adopted in response to soaring prices in 2022 [9]. Supply and Demand Dynamics - California's gasoline demand is currently at 874,000 barrels per day, while refining capacity will drop to 740,000 barrels daily after Phillips 66's closure, creating a significant supply gap [14]. - The state's jet fuel demand of 176,000 barrels per day will exceed capacity by 146,000 barrels daily by the end of this year [15]. Import Dependencies - California will increasingly rely on imports from Asian countries such as South Korea, Singapore, Japan, India, and the Middle East to meet its fuel needs, which will likely increase costs and vulnerability to supply disruptions [16][17][18]. - Recent trends show California's petroleum product imports have risen to nearly 300,000 barrels per day, with expectations for further increases in the coming years [17].

Corporate Developments - Nissan Motor is undergoing significant restructuring, including plans to close its Oppama plant in Japan by the end of 2027, with earlier reports indicating potential talks with Taiwan's Foxconn to repurpose the facility for electric vehicle production [4] - Phillips 66 received a price target upgrade from Morgan Stanley, raising it to $140 from $128 while maintaining an "Equal Weight" rating, reflecting a constructive outlook on the long-term refining sector despite a tactical shift to "In-Line" [6] Economic and Political Context - Japan's Economy Minister Ryosei Akazawa is expected to leave his post, indicating potential shifts in economic policy amidst ongoing trade discussions with the U.S. [7] - The Bank of England's Financial Policy Committee warns that some backward-looking equity valuations are comparable to the peak of the dot-com bubble, and a sudden change in perceptions of Federal Reserve independence could lead to a sharp repricing of U.S. dollar assets [5][7] - France is experiencing political instability, with Socialist Party leader Olivier Faure rejecting the current budget plan and demanding guarantees on pension reform following the resignation of Prime Minister Sébastien Lecornu [3][7] Trade Relations - U.S.-EU trade tensions are escalating, with the EU announcing plans to double steel tariffs to 50%, described as a "stepping stone" towards a better trade deal with the U.S. [6][7]

Import Strategy - Indian refiners are projected to increase oil imports from Russia in the coming months [1] Geopolitical Factors - Trade talks with Washington are experiencing delays, influencing India's import decisions [1]