By Rye Druzin
San Antonio Express-News
San Antonio-based Valero Energy Corp. reported a 5.3 percent rise in fourth quarter profits that beat Wall Street expectations even as ethanol fuel blending costs continued to bite into the company’s bottom line.
The largest U.S. refiner earned $416 million, or 81 cents a share, compared with $395 million, or 62 cents a share, during the fourth quarter of 2015. Analysts polled by Bloomberg expected the company to make 78 cents a share.
The company generated $20.7 billion in revenue, beating estimates of fourth quarter revenues of $17.3 billion. Revenues in the fourth quarter of 2015 topped $18.7 billion.
“Domestic refined product demand remained strong and we exported 359,000 barrels per day of gasoline and diesel combined during the fourth quarter,” Valero CEO Joe Gorder said in a news release announcing the company’s results for the three months ended Dec. 31. “Looking ahead, we expect an improving economy and relatively low crude oil and refined product prices to support consumer demand growth.”
Fuel blending costs — mostly derived from Renewable Identification Number’s or RINs — were over $217 million in the fourth quarter, making the overall fuel blending cost in 2016 $749 million. The overall cost was $309 million higher than in 2015, and Valero has unsuccessfully lobbied to shift the burden for blending ethanol into gasoline away from refiners.