FINAL BLOG
8/24- 18.9
8/25- 18.89
8/26-19.00
8/27-19.04
8/28-19.00
AVERAGE: 18.968
11/30-15.89
12/1-16.08
12/2-16.04
AVERAGE: 16.003
PERCENT CHANGE -15.63%
Value Chain
Valero Energy Corporation is such a diverse and large company. It has numerous jobs that it assigns to refineries all over the country. Its diversity allows it to stand apart from several of its competitors and gives it more fields to compete in.
Purchased supplies and inbound logistics
According to Valero’s website the company gets its crude oil from “producing leases, domestic oil trading centers, and ships delivering cargoes of foreign and domestic oil.” Since Valero has 14 refineries each refinery receives crude oil from various places including California, Oklahoma, Kansas, Colorado, and some foreign oil supplies. The crude oil from these places is transported via extensive pipelines that they run throughout the country. The McKee refinery is one of the most connected refineries Valero owns, it has third-party pipelines that connect to major crude oil sources. Before the crude oil can go through production many times it waits in storage. One of Valero’s main storage refineries is in Ardmore Oklahoma.
Operations
One of the more interesting things about Valero’s value chain is because the company has so many refineries and produces so many different products; many of the refineries have specialties. The products Valero makes vary based on each plant location and includes gasoline, diesel, jet fuel, renewable, asphalt, propane, sulfur, base and process oils, solvents, aromatics natural gas liquids and petroleum coke. Depending on what is being made dictates what process the oil goes through. A few of the major examples include: The Delaware City refinery uses its petroleum-coke gasification unit and co-generation power plant to produce gasoline, diesel, home-heating oil, and ultra-sulfur-low diesel. The majority, 70%, of all production of the Benicia plant is CARB oil which is clean-burning fuel. The Ardmore Oklahoma refinery produces large amounts of petroleum based products. Finally, the plant in Corpus Christi produces light petroleum, asphalt, and petroleum coke. Each refinery slightly varies based on its location, resources, and how much demand there is for each product. To find out more about what each plant does in terms of operations visit Valero’s website at http://www.valero.com/OurBusiness/OurLocations/Refineries/Pages/CorpusChristi.aspx
Distribution and Outbound Logistics
Valero uses several forms of transportation to deliver its products to their final destinations. It generally uses rail system to transport gas, petroleum, asphalt, and petrochemicals. Valero uses barges to move crude oil, feedstock, and finished products. They move specialized products for customers via truck. The last form of transportation used to move and store petroleum is pipelines.
Valero opened its first distribution center in 2005 in San Antonio Texas. The opening of the center was a big accomplishment for the company because it allowed the company to provide approximately 600 of Valero’s convenience stores with products such as candy bars, milk, coffee, etc.
Sales and Marketing
One of the many ways that Valero was able to distinguish itself from the competition was by using crude oil to produce a cheaper and equally efficient product. However, recently the discounts for crude oil have decreased.Prices to purchase crude oil and sweet oil are beginning to equal out. The equaling of prices has caused some serious problems with Valero and has made the companies stocks drop considerably in this past year.
Valero has also adopted the slogan of being the “All American Gasoline.”
Another way that Valero tries to sell its products to consumers is through their commitment to the community and the environment. The company’s website is full of accomplishments that it has received for its employees participation in volunteering. The company also advertises how eco-friendly the company is becoming. This strategy appeals to the many of the consumers that are caught up in the “green revolution.” They pride themselves on being the first refinery to switch to ethanol production, use wind turbines to reduce their carbon footprints, and have invested 5 billion dollars in projects for the environment.
Service
A message on Valero’s website to all new customers states that the company provides “excellent customer service by delivering the products business partners need when they need them, offering knowledgeable sales and customer service representatives and providing resources to make it easy to do business.”
One of the ways that Valero has tried to make service to the customers easier is by providing point-of-sale-systems which allow the customer service reps to multi-task in order to best help the customer. These systems allow the representative to view what is going on all over the store. It can connect up to 32 pumps and has credit card encryption which allows the customer to have privacy.
Profit Margin
Valero’s recent profit margin was reported at -5.39%
| Last Trade: | 17.45 |
|---|---|
| Trade Time: | Nov 11 |
| Change: |  0.17 (0.98%) |
| Prev Close: | 17.28 |
| Open: | 17.36 |
| Bid: | N/A |
| Ask: | N/A |
| 1y Target Est: | 20.00 |
| Day’s Range: | 17.28 – 17.68 |
|---|---|
| 52wk Range: | 13.94 – 26.20 |
| Volume: | 9,016,412 |
| Avg Vol (3m): | 11,812,900 |
| Market Cap: | 9.82B |
| P/E (ttm): | N/A |
| EPS (ttm): | -7.00 |
| Div & Yield: | 0.60 (3.50%) |
Sources:
http://www.valero.com/
http://www.allbusiness.com/retail-trade/food-stores/4486633-1.html
http://www.valero.com/OurBusiness/Pages/RefiningOurBusiness.aspx
Service to the Community and in the Workplace
The word Valero comes from a Spanish word which means “to be of value.” This idea has been instilled in Valero since its beginnings in the 1980s. It has inspired the company to be committed to its employees and the community surrounding their several factories. Besides its vast amounts of products, Valero also prides itself on its commitment to service.
To prove just how dedicated they are to giving back to the community the past CEO and chairman Bill Greehey won this year’s 2009 Ketchum Award for Outstanding Volunteer Fundraiser. The former CEO now has his own company but while in charge of Valero he helped the refinery win United Way’s Spirit of America Award. The award is given out to one company annually that achieved excellence in community service. Greehey helped Valero win the award twice; making it one of only two companies to achieve this feat.
Greehey has been at the root of Valero’s service and commitment to better working conditions. The twenty-six years that he ran Valero it was ranked third in Fortune Magazine’s “100 best places to work for.” Although many employees once praised their CEO for being constantly personable and willing to be a “working man” amongst the factory workers, Greehey has claimed that the success of Valero rests in the Human Resource department of the company.
HR is important to Valero, they are the first ones who are sent to newly purchased refineries in order to figure out salaries, benefits, retirement, etc. in order to make sure that their new employees will be able to have a comfortable working environment. HR immediately informs their new employees about the benefits, awards, and special events that happen at Valero.
An example of how much Valero cares was their quick response to Hurricane Katrina. Valero immediately sent food that was cooked and prepared to all of their employees that were affected by the hurricane. They also provided a “safe fund” which provided employees with damaged houses money in order to get immediate repairs instead of waiting for the insurance money. Also, employees who showed up at the factories during the Katrina disaster were instantly given 1,500 dollars without having to repay it. The refinery not only helped out its employees in the hard times that followed Katrina, but had the employees buy clothes and give them out to any and everyone who needed them in the communities that were affected.
Valero employees with donations for a children’s charity
Valero’s commitment to service is reflected in its employees and their 100,000 hours of service that they provide annually. The employees volunteer in anything from youth centers to organizing fund-raisers. They raise money to donate to charities world and nationwide, specifically focusing on children’s charities. Along with its large amount of service hours, Valero has also created its own Emergency Response Team (ERT) which responds to various emergencies in the community. In February 2003 a few ERT respondents rescued an injured railroad worker who fell into a 35 foot deep swampy area that was inaccessible by vehicle.
Valero employees volunteering at the local San Antonio food bank
Valero rewards those that volunteer. The Annual Volunteer of the Year Award has coworkers recognize a peer at their sites who has showed large amounts of service. The recipients receive a special plaque, a designer watch, and are recognized at a luncheon.
Klesse (CEO of Valero) presenting Lamar University with a one million dollar scholarship
Valero also wants to give to future leaders through scholarships. This August Valero gave a one million dollar scholarship to Lamar University to pay for promising engineers. The award is the largest corporate gift that the university has ever received.
The company has received several awards in the varying areas of service and dedication to the community along with awards for wellness and safety to their employees.
VALERO ENERGY CP
(NYSE: VLO)
0.06 (0.32%) 7:29pm EThelp| Last Trade: | 18.70 |
|---|---|
| Trade Time: | Oct 28 |
| Change: |  0.69 (3.56%) |
| Prev Close: | 19.39 |
| Open: | 19.69 |
| Bid: | N/A |
| Ask: | N/A |
| 1y Target Est: | 19.17 |
| Day’s Range: | 18.61 – 19.88 |
|---|---|
| 52wk Range: | 13.94 – 36.22 |
| Volume: | 14,532,885 |
| Avg Vol (3m): | 12,078,700 |
| Market Cap: | 10.52B |
| P/E (ttm): | N/A |
| EPS (ttm): | -3.99 |
| Div & Yield: | 0.60 (3.00%) |
The information for this post was found at:
www.valero.com
http://www.greatplacetowork.com/education/innovate/honoree-2004-valero.php
http://www.tradingmarkets.com/.site/news/Stock%20News/2504628/
http://findarticles.com/p/articles/mi_m3495/is_6_51/ai_n26909337/pg_5/?tag=content;col1
http://www.afpnet.org/content.cfm?ItemNumber=2898
http://findarticles.com/p/articles/mi_m3495/is_6_51/ai_n26909337/pg_2/?tag=content;col1
Layoffs and the Economy
Recently as most if not all Americans know the economy has been quite frankly in the gutter. In the past year millions have been laid off from work and each day more and more are becoming unemployed. Because of tight budgets that Americans are more readily adopting the oil refineries have also been hit by the bad economy. People across the nation have been trying to conserve energy in hopes of lowering their bills. This has resulted in shutdowns and layoffs of many of Valero’s refineries.
Here is a chart of the past year, Valero started the year off decent and has since then steadily decreased.
Valero has laid off over seven-hundred workers in the Aruba factory in order to conserve money. Valero has shut down the 235,000 barrels per day refinery for an indefinite amount of time. One of the reasons it was shut down was due to the fact that it is a heavy crude upgrading facility and there has been a shrinking distance between prices for light sweet crude and heavy sour crude oils. Heavy crude also costs more to refine, which with a poor economy and lower rates of the product purchase does not favor the Aruba refinery. Not only was the refinery becoming obsolete it also had tax problems in the past which included controversy over taxed revenue and expiration in December. CEO Chairman of Valero, Bill Klesse, stated, “These moves, while difficult, are necessary to improve the profitability of Valero’s refining system.” The company has said that the closing of the Aruba branch will noticeably lower cut the operating expenses of the company.
Because of the economy the demand for fuel is not as great this has created a slump on the refinery business. Not only is Valero shutting down their Aruba plant they are also planning on laying off workers from its New Jersey. The New Jersey plant is planning on eliminating one-hundred jobs. Valero said for those who are laid off, at least from the New Jersey plant, they will look into voluntary retirement from workers and the union. According to Valero the only reason they are doing this is to fix the coker unit and gasifier complex to create a better production rate.
Valero also has plans to decrease its size Delaware. The amount laid off for the Delaware factory is somewhere around one-hundred and fifty employees and one-hundred contact workers. “You end up paying more to process it than you get for the product you make and that’s why this refinery has been losing money to the tune of millions of dollars a month so far in 2009,” states Bill Day, a spokesman for Valero Energy Corporation.
Also, in June of 2009, Valero shut down the coker at their 315,000 barrels per day refinery in Christi Corpus Texas. Reports have said that Valero has started shutting down cokers in other parts of its other refineries. The coker unit in a refinery is a unit that converts residual oil into hydrocarbon gases. These gases generally have a low molecular weight.
Chart for crude oil imports in the past three years
This past week Valero obtained a downgrade to sell from buy at Soleil Securities. This was do to the weakening margins for refineries. Jacques Rousseau, an analyst, had “concerns that the company will announce a major asset write-down when its third-quarter earnings are reported on Oct. 27.” The analyst has cut his target price for the stock from twenty-five dollars a share to only seventeen. In the past year Valero has had its stock drop by 46 percent, this is compared to only a 18 percent loss by other oil refineries.
Valero is supposed to deliver “special charges” that are linked to these choices by the end of the third quarter (late October). The expected throughput volume for the Northeast is expected to average between 480,000 and 490,000 barrels a day, where the region for the Gulf Coast will stay pretty much the same with an output of 1.2 to 1.25 million barrels a day.
VALERO ENERGY CP
(NYSE: VLO)
| Last Trade: | 18.81 |
|---|---|
| Trade Time: | Oct 14 |
| Change: | 0.37 (1.93%) |
| Prev Close: | 19.18 |
| Open: | 18.96 |
| Bid: | N/A |
| Ask: | N/A |
| 1y Target Est: | 19.14 |
| Day’s Range: | 18.53 – 19.14 |
|---|---|
| 52wk Range: | 13.94 – 26.20 |
| Volume: | 15,385,313 |
| Avg Vol (3m): | 11,246,100 |
| Market Cap: | 10.59B |
| P/E (ttm): | N/A |
| EPS (ttm): | -3.99 |
| Div & Yield: | 0.60 (3.10%) |
All of the information for this page was found at:
http://www.forbes.com/2009/10/07/sunoco-conocophillips-gas-business-energy-refining.html?partner=yahootix
http://www.marketwatch.com/story/valero-downgraded-to-sell-at-soleil-securities-2009-10-14?siteid=yhoof2
http://www.reuters.com/article/rbssEnergyNews/idUSN0829460220090908
http://www.valero.com/NewsRoom/Pages/PR_20090908_0.aspx
http://www.chron.com/disp/story.mpl/ap/tx/6660060.html
http://www.ogj.com/index/article-display.articles.oil-gas-journal.processing-2.refining.operations.2009.09.valero-shuts_delaware.QP129867.dcmp=rss.page=1.html
http://www.msnbc.msn.com/id/32709382/ns/business-oil_and_energy/
http://www.marketwatch.com/story/valero-cuts-refinery-operations-jobs-2009-09-08
Cap and Trade
At the beginning of April 2009 a six-hundred page document was released as the first draft that would create a mandatory carbon trading in America. Other countries have already enacted cap and trade laws such as Australia and the European Union. The creator of the document, Henry Waxman a democratic House of Representatives member, says that many of the big name industries like Valero are only looking at the temporary loses they might incur from this law. They fail to see the economic benefits that greener industries will create in the future.
If passed, the bill states that it will not be effective until the year 2020. It says the government will give out approximately 85% of the permits for free, with the remaining 15% to be auctioned off. Valero and other big name oil refineries like Tesoro and ConocoPhillips will only be allotted 2% forcing them to purchase the rest of the permits they need on their own. The minimum permits is estimated to be twenty-five dollars per ton of emissions. This law benefits other consumer industries such as paper-making, steel, cement, and electric companies who will get a large portion of the free permits.
Per year, Valero has been estimated to produce about 36 million metric tons of carbon dioxide at its refineries. In order to have enough permits for this amount of carbon emissions Valero estimated that the cost will be around six billion dollars. That is more than the company makes in a cost-effective year.
The news of a possible cap and trade law existing in America has made Bill Klesse, the Valero chairman and CEO, angry and willing to fight back. “Obviously, we think this is a bad idea” Klesse was reported saying in a conference call with analysts April 28, 2009. Klesse claims that the regulations will be stricter and more rigorously enforced in the United States than any other countries that have already implicated cap and trade laws. He believes that this will create an unfair global competition with Valero and other US refineries. Both Asian and European countries would be able to produce cheaper gasoline if this law is enacted. Klesse went on to call the cap and trade laws a “hidden tax” that would inevitably raise the price of the gasoline for the consumers. He also claimed that this law would result in several people in high-paying jobs being fired.
Recently Valero has taken the cap and trade bill into its own hands by posting signs at each one of its gas stations and convenience stores. They warn against the passing of the cap and trade agreement with a picture of Uncle Sam pointing and saying “If Congress passes Cap-and-Trade Legislation, you will pay the price. Cap-and-Trade will cost you 77 cents or more a gallon.” The signs give an email address www.voicesforenergy.com and asks customers to contact their congressional representatives in an effort to stop the bill. Valero’s company spokesman, Bill Day, said that this is something they have never done before, but this issue is important and the public deserves to know. Day says that Congress is holding oil refineries completely responsible for this and not taking into account the millions of people who make the decision to get in their cars and drive every day.
Environmentalists see Valero’s feud with the cap and trade policy in a different light. They believe that one of the reasons Valero is so upset is because the law will cause Valero to raise their prices which in turn will make their customers migrate towards less expensive, more earth friendly forms of fuel. They see the cap and trade law as something to be passed so that it will improve environment and help move Americans into a greener lifestyle.
VALERO ENERGY CP
(NYSE: VLO)
| Last Trade: | 19.39 |
|---|---|
| Trade Time: | Sep 30 |
| Change: | 0.07 (0.36%) |
| Prev Close: | 19.46 |
| Open: | 19.63 |
| Bid: | N/A |
| Ask: | N/A |
| 1y Target Est: | 19.23 |
| Day’s Range: | 18.90 – 19.79 |
|---|---|
| 52wk Range: | 13.94 – 30.36 |
| Volume: | 16,449,946 |
| Avg Vol (3m): | 11,912,900 |
| Market Cap: | 10.91B |
| P/E (ttm): | N/A |
| EPS (ttm): | -3.99 |
| Div & Yield: | 0.60 (3.00%) |
Sources:
http://www.fool.com/investing/general/2009/07/29/valero-would-like-to-cap-and-trade-its-losses.aspx
http://www.marketwatch.com/story/valero-ceo-blasts-c02-measure-as-bad-idea
http://www.zacks.com/stock/news/21086/Refiners+Lose+Out+in+Cap+&%3B+Trade
http://www.csnews.com/csn/news/article_display.jsp?vnu_content_id=1004016602
http://finance.yahoo.com/q?s=VLO
Competition Past and Present
With any type of company there is generally competition. Because Valero is such a big corporation competition is inevitable. There has been much controversy over Valero in the past over its purchases of other refineries.
SHOULD IT BE STOPPED?
One such case was in May 2005 when Valero wanted to purchase Premcor Inc., an eight million dollar deal. This prompted Big Oil critics to exclaim, “If anything smells worse than an oil refinery, it’s a big merger of oil refiners at a time when gasoline prices are at all-time highs.” At the time critics were worried about the already high prices of oil, with the combination of two large oil companies the competition that kept prices relatively low would completely evaporate. The fear at the time was that this coming together of two companies would allow Valero to manipulate oil prices further raising the price of oil. Although there were several critics, others believed that the deal would not be that bad, perhaps even beneficial. Supporters of Valero’s purchase believed that Valero generally improved the refineries it bought making them more environmentally friendly. The companies finally completed the purchase and in September Valero owned four more refineries. The merge turned out to be successful for Valero and in recent years has proved to generate more revenue for the company.
Valero has been critiqued for some of the recent spikes in oil prices. According to the GAO 2007 study the excess of oil refining has shrunk in the past couple of years. This does not allow for new refineries to open and makes old ones produce oil that remains closer to production value. Another critic of Valero is Mark Cooper from the Consumer Union. He claims that the mergers that have taken place have created a more concentrated market for oil production which has halted new refineries from being built. The old refineries are expected to keep up with the growing demand for oil and cannot. This increases prices even further in the market. Cooper claims, “A major cause of this immense increase in consumer cost is the failure of Federal antitrust authorities to prevent the abuse of market power by oil companies and the failure of the Administration and Congress to enact policies that will fix the failures that plague the gasoline market.” This statement refers to Premcor which Valero successfully merged with along with Ultramar Diamond Shamrock Corporation. Valero was prohibited from going through with its entire deal with Ultramar by the United States Government due to fears of Valero owning too much monopolizing the refinery business.
CURRENT COMPETITORS
click here for a link to a daily chart of Valero and its top three competitors.
Above is the Delaware oil refinery that Valero decided to close down parts of in order to save money.
According to hoovers.com Valero’s three main competitors are currently BP, Chevron, and Exxon. In the past (2007) Valero came out on top of its competitors. With Valero’s ability to turn crude oil and owning the most oil refineries in the US it produced 3.3 million barrels of oil a day, with its stock rolling over 400% in five year. However, recently due to the failing economy Valero is not always beating its competitors. It seems to be a daily race among VLO, BP, CVX, and XOM.
With Valero losing its spot for the top it has recently decided to close down part of the Delaware city Refinery. This will end with over two-hundred and fifty people out of jobs. However, it will benefit Valero because it will allow for costs to be reduced, and allow the refinery to run a higher crude slate and it will make the company more productive as a whole.
Click here for a link to Valero’s predicted competition with other gas companies.
All the information on this site was from:
http://www.businessweek.com/magazine/content/05_19/b3932059_mz011.htm
http://www.crocodyl.org/wiki/valero_energy
http://online.barrons.com/article/SB117457065685545448.html
http://morewhat.com/wordpress/wp-content/uploads/2009/02/ValeroDelawareCityRefineryGOV.jpg
VALERO ENERGY CP
(NYSE: VLO)
| Last Trade: | 20.35 |
|---|---|
| Trade Time: | 4:01pm ET |
| Change: | 0.21 (1.04%) |
| Prev Close: | 20.14 |
| Open: | 20.49 |
| Bid: | N/A |
| Ask: | N/A |
| 1y Target Est: | 19.23 |
| Day’s Range: | 20.14 – 20.82 |
|---|---|
| 52wk Range: | 13.94 – 36.16 |
| Volume: | 12,499,183 |
| Avg Vol (3m): | 12,092,300 |
| Market Cap: | 11.45B |
| P/E (ttm): | N/A |
| EPS (ttm): | -3.99 |
| Div & Yield: | 0.60 (3.00%) |
VALERO ENERGY CORPORATION
Cars, trains, planes, and boats what do all these have in common? Besides the fact that Americans use them every day to get to where their busy lives take them, they also require gasoline to run. No matter how long this recession lasts there is always a necessity for oil. That is why I have chosen Valero Energy Corporation as the company I want to follow throughout the semester. Before I divulge into more specific topics about the company (to be posted in later blogs) I want to share a few facts about what exactly the company is, the history of how they came to be, and what makes them successful.
Valero Energy Corporation is the biggest independent oil refinery in America. It has a total of 7 ethanol plants and 16 refineries located throughout the US, Canada, and Aruba; its base is located in San Antonio Texas. It currently is ranked number 10 on the Fortune 500 list and has revenue of 119 billion dollars a year. Valero has made its output capacity at 300 million barrels a day making it the most diverse energy company geographically, the largest, and one of the most complex refineries in America.
Click here for a link to a map of all the refineries Valero owns.
Valero prides itself on its employees. The company tries to give back by participating in humanitarian and volunteer work throughout several communities. Because of its commitment to its employees Valero has earned its place on the 100 best companies to work for in Fortune Magazine. It has held this spot for the past nine years and plans to continue with its excellence. It has also been ranked as number one in Platts Top 250 Global Energy Company Awards under the world’s refining and marketing companies.
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Valero did not become a big corporation over night. It began in 1980 when Valero was formed as a sequel to Costal State’s Gas Corporation in San Antonio, Texas. It began as a gas gathering pipeline. Valero then moved into refining after it acquired a stock in Saber Energy, Inc. A year later Valero began expansion on the Saber Energy, Inc. facility in Corpus Christi, Texas, which took three years to complete. It then became its own company and in 1994 was able to buy the rest of its stock (51%). From 1997 to 2005 Valero continued to buy refineries throughout the US, Canada, and the Caribbean. Now it is one of the largest refineries in the US.
Valero has been able to be successful because of its many innovations and forward thinking. It is able to transport its fuel efficiently because of its well placed pipelines throughout the US. Valero supports several industries that vary from beauty and plastic to transportation and health care. A factor that differentiates Valero from its other competitors is the fact that it can create cleaner fuel out of cheaper and heavier crude.
Going into this project I had no idea what stocks were good or bad and how to even judge the difference. After doing some research and reading up on the stock market I decided to choose a company that always seems to be a necessity in this recession: oil. After, looking into different types of oil and gas companies I decided on Valero for two reasons. I really like how they are passionate about giving back to the community as well as how they strive to make their products friendlier to the environment.
The information posted in this post was found at: http://eresearch.fidelity.com/eresearch/goto/evaluate/snapshot.jhtml?symbols=VLO , http://www.valero.com/OurBusiness/Pages/Home.aspx, and http://www.youtube.com/watch?v=xh3-MzXT00g
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Kirsten Stone's Blog 
