{"schemaVersion":1,"research":true,"symbol":"vlo","name":"Valero Energy Corp/Tx","topic":"moat","path":"/stock/vlo/moat","status":"published","version":8,"updatedAt":"2026-10-24T00:30:10.695Z","locked":false,"publicFairValue":false,"fairValue":null,"moat":{"verdict":"none","summary":"From the supplied filings, Valero operates in highly competitive, commodity-linked markets with market-related feedstock pricing and predominantly spot sales, providing little evidence of durable pricing power or customer lock-in. Realized regulatory costs and the idling of the Benicia refinery underscore erosion risks and limited resilience despite scale and broad distribution access. Management describes operational execution and capital returns, but these do not establish a structural moat under the documented market terms and risk exposures.","advantages":[],"evidence":[{"id":"e1","sourceId":"filing-1","location":"operations/sourcing/contracts","excerpt":"Our term supply contracts are at market-related prices, and feedstocks are purchased directly or indirectly from various national oil companies, as well as international and U.S."},{"id":"e2","sourceId":"filing-1","location":"operations/sourcing/contracts","excerpt":"The majority of the crude oil purchased under our term contracts is purchased at the producer’s official stated price (i.e., the “market” price established by the seller for all purchasers) and not at a negotiated price specific to us."},{"id":"e3","sourceId":"filing-4","location":"revenue/contracts/customer terms","excerpt":"We do not disclose remaining performance obligations for contracts that have terms of one year or less."},{"id":"e4","sourceId":"filing-4","location":"operations/plant status","excerpt":"During the first quarter of 2026, we began idling the processing units through a phased approach and ceased operation of the fuel production units at our Benicia Refinery."},{"id":"e5","sourceId":"filing-4","location":"operations/plant status","excerpt":"In accordance with our plan, full idling of all processing units was completed in April 2026."},{"id":"e6","sourceId":"filing-4","location":"financials/impairment","excerpt":"FINANCIAL STATEMENTS\nVALERO ENERGY CORPORATION\nCONSOLIDATED BALANCE SHEETS\n(millions of dollars, except par value)\nJune 30,\n2026\nDecember 31,\n2025\n(unaudited)\nASSETS\nCurrent assets:\nCash and cash equivalents\n$\n7,874 \n$\n4,688 \nReceivables, net\n13,928 \n9,877 \nInventories\n7,625 \n7,591 \nPrepaid expenses and other\n1,243 \n1,054 \nTotal current assets\n30,670 \n23,210 \nProperty, plant, and equipment, at cost\n50,094 \n50,091 \nAccumulated depreciation\n(23,249)\n(22,474)\nProperty, plant, and equipment, net\n26,845 \n27,617 \nDeferred charges and other assets, net\n7,148 \n7,161 \nTotal assets\n$\n64,663 \n$\n57,988 \nLIABILITIES AND EQUITY\nAsset impairment loss\n— \n— \n— \n1,131 \nOther operating expenses\n26 \n4 \n50 \n8 \nGeneral and administrative expenses (excluding depreciation and"},{"id":"e7","sourceId":"filing-1","location":"risk/regulatory costs","excerpt":"Our business is heavily regulated, and our costs for compliance with government regulations are significant and can be material, especially costs associated with the Renewable and Low-Carbon Fuel Programs disclosed in Notes 19 and 20 of Notes to Consolidated Financial Statements, which are incorporated by reference into this item."},{"id":"e8","sourceId":"filing-4","location":"risk/regulatory obligations","excerpt":"•Blending program obligations represent our liability for the purchase of compliance credits needed to satisfy our blending obligations under various government and regulatory blending programs, such as the U.S."},{"id":"e9","sourceId":"filing-1","location":"operations/marketing and distribution","excerpt":"Most of our refineries have access to marine facilities, and they interconnect with common-carrier pipeline systems, allowing us to sell products in the U.S., Canada, the U.K., Ireland, Latin America, and other parts of the world."},{"id":"e10","sourceId":"filing-1","location":"operations/marketing","excerpt":"Wholesale Rack Sales\nWe sell our products on a wholesale basis through an extensive rack marketing network."},{"id":"e11","sourceId":"filing-5","location":"revenue/contracts/customer terms","excerpt":"We do not disclose remaining performance obligations for contracts that have terms of one year or less."},{"id":"e12","sourceId":"filing-2","location":"operations/sourcing/contracts","excerpt":"Our term supply contracts are at market-related prices and feedstocks are purchased directly or indirectly from various national oil companies as well as international and U.S."},{"id":"e13","sourceId":"filing-4","location":"capital allocation/share repurchases","excerpt":"Our Board authorized us to purchase shares of our outstanding common stock under various programs with no expiration dates as follows (in millions):\nProgram Name\nAuthorization\nDate\nTotal Cost\nAuthorized\nCompletion of\nAuthorized Share\nPurchases\nRemaining\nAvailable for\nPurchase as of\nJune 30, 2026\nSeptember 2024 Program\nSeptember 19, 2024\n$\n2,500 \nSecond quarter of 2026\n$\n— \nFebruary 2026 Program\nFebruary 25, 2026\n2,500 \nn/a\n1,422 \nOn July 16, 2026, our Board authorized us to purchase shares of our outstanding common stock for a total cost of up to $5.0 billion with no expiration date, which is in addition to the amount remaining under the February 2026 Program."},{"id":"e14","sourceId":"filing-1","location":"capital allocation/share repurchases","excerpt":"On February 25, 2026, our Board authorized us to purchase shares of our outstanding common stock for a total cost of up to $2.5 billion with no expiration date, which is in addition to the amount remaining under the September 2024 Program."},{"id":"e15","sourceId":"filing-6","location":"compensation/incentives","excerpt":"If Valero ranks in the first or second overall position among the peers, 200 percent of the target shares are earned; if Valero ranks in the last or second-to-last overall position among the peers, no shares are earned."},{"id":"e16","sourceId":"filing-6","location":"compensation/incentives","excerpt":"Ratable Vesting. We utilize a three-year ratable vesting schedule for performance shares in order to align our NEOs’ realized pay as delivered through performance shares with the most appropriate representation of company performance over the entire three-year performance period when compared to members in the Performance Peer Group (and as measured through relative TSR)."},{"id":"e17","sourceId":"filing-6","location":"operations/execution","excerpt":"•Executed a heavy turnaround workload with successful completion and start-up of FCC units at five refineries"},{"id":"e18","sourceId":"filing-5","location":"operations/incidents and capacity","excerpt":"•On March 23, 2026, our Port Arthur Refinery experienced a fire in one of the refinery’s distillate hydrotreater units, which is more fully discussed in Note 5 of Condensed Notes to Consolidated Financial Statements."},{"id":"e19","sourceId":"filing-6","location":"governance/codes and policies","excerpt":"Our Code of Ethics for Senior Financial Officers applies to our principal executive officer, principal financial officer, and controller and charges these officers with responsibilities regarding honest and ethical conduct, the preparation and quality of the disclosures in documents and reports we file with the SEC, and compliance with applicable laws, rules, and regulations."}],"changes":["No change to prior verdict; updated with current-period evidence of continued spot-based sales, market-priced feedstocks, and realized idling/impairment, which maintain the assessment of no demonstrated moat."],"limitations":["Competitors are not named in the provided passages; comparisons are therefore limited to market-structure disclosures rather than peer benchmarking.","Several advantages are asserted by management (e.g., low-cost supplier, leading low‑carbon fuels producer) without corroborating independent evidence in the excerpts.","Evidence on sustained premium pricing, long-term customer commitments, or unique regulatory privileges is absent.","Distribution reach and operational achievements are documented but do not, by themselves, establish durable economic barriers."],"qualityAssessments":[{"category":"moat","checks":[{"criterion":"structural_advantage","grade":1,"rationale":"Broad distribution access and rack marketing exist, but feedstocks are procured at market-related or official posted prices, limiting any proven structural cost edge versus peers.","evidenceIds":["e9","e10","e1","e2"]},{"criterion":"durability","grade":1,"rationale":"The completed idling of the Benicia refinery and a recorded asset impairment indicate susceptibility to adverse economics and regulation, reducing durability.","evidenceIds":["e4","e5","e6"]},{"criterion":"customer_dependency","grade":1,"rationale":"The majority of sales are spot with no remaining performance obligations, indicating low switching costs and limited customer lock‑in.","evidenceIds":["e3","e11"]},{"criterion":"erosion_resilience","grade":1,"rationale":"Significant ongoing obligations and costs under renewable and low‑carbon fuel programs, combined with impairment/idling, show limited protection from erosion.","evidenceIds":["e7","e8","e6"]}]},{"category":"pricing_power","checks":[{"criterion":"realized_pricing","grade":1,"rationale":"Both feedstock procurement and many sales occur at market-related or posted prices, with predominantly spot arrangements, limiting discretion over pricing.","evidenceIds":["e1","e2","e3","e12"]},{"criterion":"retention","grade":1,"rationale":"Predominantly spot contracts and minimal disclosed remaining performance obligations provide weak evidence of durable customer retention.","evidenceIds":["e3","e11"]},{"criterion":"margin_resilience","grade":1,"rationale":"Refining margins remain exposed to commodity and regulatory swings; the Benicia idling and impairment highlight fragile margin resilience.","evidenceIds":["e6","e7","e8"]},{"criterion":"contractual_freedom","grade":2,"rationale":"Spot sales allow frequent repricing and term contracts can be amended or terminated at renewal, but market competition constrains the ability to impose premiums.","evidenceIds":["e3","e12"]}]},{"category":"strong_management","checks":[{"criterion":"capital_discipline","grade":2,"rationale":"Documented share repurchases and additional board authorizations indicate active capital returns, though impairment and idling temper the assessment.","evidenceIds":["e13","e14","e6"]},{"criterion":"incentive_alignment","grade":2,"rationale":"Performance shares tied to relative TSR with capped payouts and multi‑year ratable vesting support alignment, without demonstrating exceptional rigor.","evidenceIds":["e15","e16"]},{"criterion":"execution","grade":2,"rationale":"Management reports successful completion of major turnarounds, offset by a fire and reduced capacity at Port Arthur in 2026.","evidenceIds":["e17","e18"]},{"criterion":"governance","grade":2,"rationale":"Formal codes and governance policies are disclosed; 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