Valero Energy turns crude oil into fuel. Every day, its 15 refineries across the United States, Canada, and the United Kingdom process about 3.2 million barrels of crude oil into gasoline, diesel, and jet fuel. Those fuels get sold to wholesalers, distributors, and branded gas stations carrying names like Valero, Diamond Shamrock, and Texaco. The company also runs a renewable diesel business called Diamond Green Diesel, which can produce up to 1.2 billion gallons of low-carbon fuel per year from waste materials like used cooking oil and animal fat. On top of that, Valero operates 12 ethanol plants that can make about 1.7 billion gallons of corn-based ethanol per year. All three businesses, refining, renewable diesel, and ethanol, feed into the same core idea: make liquid fuels at large scale and sell them into a world that still depends on them every single day. The diagram below traces where the money goes.
Five years of financial data tell a story of a boom, a gradual retreat, and a company trying to hold its ground. Revenue peaked at $176.4 billion in 2022, a year when fuel prices surged and refinery margins were unusually high. Since then, revenue has fallen in each successive year, reaching $122.7 billion in 2025. That is still a very large number, but the direction matters.
Gross margin tells an even sharper story. In 2021, Valero kept less than 3 cents of gross profit for every dollar of revenue. In 2022, that rose to nearly 10 cents as the gap between what refineries paid for crude oil and what they charged for fuel widened dramatically. By 2024 and 2025, that margin had shrunk back toward 4 cents per dollar. The refining business is structurally thin. It makes money on the spread between input costs and output prices, and that spread moves constantly based on forces Valero cannot control.
Despite the revenue decline, Valero has continued to generate meaningful cash from its operations. Operating cash flow was $5.8 billion in 2025. Free cash flow, the money left over after capital spending, came in at $5.0 billion. The company used that cash to pay dividends, repurchase shares, and repay $440 million of debt that matured during the year. Net debt has also fallen steadily, from $9.7 billion in 2021 to $5.8 billion in 2024, though it ticked up slightly to $5.9 billion in 2025.
The renewable diesel segment, which Valero has spent $6.0 billion building since 2011, ran into serious trouble in 2025. The segment swung from $507 million in operating income in 2024 to a $156 million operating loss in 2025. Two things hit at once. New tariffs on foreign renewable feedstocks raised the cost of the raw materials Diamond Green Diesel uses to make its fuel. And a change in U.S. tax law replaced the old blender's tax credit of $1.00 per gallon with a new credit tied to the carbon intensity of each fuel, which resulted in fewer gallons qualifying and lower credit values overall. The renewable diesel business went from a meaningful profit center to a drag on results in a single year.
California added another layer of pressure. In March 2025, Valero approved a plan to idle its Benicia Refinery, located northeast of San Francisco, by the end of April 2026. The state's strict climate rules, including its Low Carbon Fuel Standard and caps on diesel credits, have made operating California refineries increasingly costly. Valero recorded an asset impairment loss of $1.1 billion tied to its California operations in 2025. That charge did not affect cash directly, but it signals a formal recognition that those assets are worth less than previously assumed.
Beyond California, several other risks are live and documented. The EPA proposed new rules in June 2025 that would require refineries to blend more biomass-based diesel while also reducing the credits generated by renewable diesel production. Valero's own filings describe those proposed rules as potentially making compliance infeasible. Separately, tariffs on imported renewable feedstocks have already cut into Diamond Green Diesel margins, and foreign markets have placed tariffs on American renewable diesel exports, squeezing the business from both sides. In Texas, where Valero runs several of its largest refineries, rising electricity costs and grid reliability concerns create the risk of sudden shutdowns and lost production.
The ethanol segment has been quieter but steady. It generated $374 million in operating income in 2025, up from $288 million in 2024, as higher ethanol prices and slightly higher production volumes more than offset rising corn costs. Valero is also evaluating carbon capture projects at several ethanol plants, which could lower the carbon intensity scores of the ethanol produced there and unlock additional tax credits under federal law. Whether those projects move forward depends on economics and permitting, neither of which is settled.
The core question for anyone studying Valero is whether the renewable diesel and ethanol businesses can grow into something that genuinely offsets the slow, structural decline in traditional refining margins, or whether they remain subscale relative to the size of the company and the cash it takes to keep the refineries running. The refining segment still generates the overwhelming majority of revenue and profit. Everything else is an experiment, an expensive one, running alongside it.