Valero 2015 Annual Report Download - page 39
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Table of Contents
gallon in 2015 compared to $2.37 per gallon in 2014. We estimate that the decrease in the price of ethanol per gallon during 2015
had an unfavorable impact to our ethanol margin of approximately $800 million.
• Lower corn prices - Corn prices were lower in 2015 compared to 2014 due to a higher domestic corn yield realized during the 2014
fall harvest (most of which is processed in the following year). For example, the Chicago Board of Trade (CBOT) corn price was
$3.77 per bushel in 2015 compared to $4.16 per bushel in 2014. We estimate that the decrease in the price of corn that we
processed during 2015 had a favorable impact to our ethanol margin of approximately $160 million.
• Lower co-product prices - The decrease in corn prices in 2015 compared to 2014 had a negative effect on the prices we received
for corn-related ethanol co-products, such as distillers grains and corn oil. We estimate that the decrease in co-product prices had an
unfavorable impact to our ethanol margin of approximately $40 million.
• Increased production volumes - Ethanol margin was favorably impacted by increased production volumes of 405,000 gallons per
day in 2015. Production volumes in 2014 were negatively impacted by weather-related rail disruptions. In addition, production
volumes in 2015 were positively impacted by production volumes from our Mount Vernon plant, which began operations in
August 2014. We estimate that the increase in production volumes had a favorable impact to our ethanol margin of approximately
$50 million.
The $39 million decrease in operating expenses was primarily due to a $40 million decrease in energy costs related to lower natural gas
prices ($2.58 per MMBtu in 2015 compared to $4.36 per MMBtu in 2014).
“Interest and debt expense, net of capitalized interest” increased by $36 million in 2015. This increase was primarily due to the impact
from $1.25 billion of debt issued by Valero and $200 million borrowed by VLP under the VLP Revolver in 2015.
Income tax expense increased $93 million in 2015. This increase was lower than expected given the increase in income from
continuing operations of $419 million and was due primarily to earnings from our international operations that are taxed at statutory tax
rates that are lower than in the U.S. In addition, in 2015, the U.K. statutory rate was lowered and we favorably settled various U.S.
income tax audits.
The loss from discontinued operations in 2014 includes expenses of $64 million primarily related to an asset retirement obligation
associated with our decision in May 2014 to abandon the Aruba Refinery, as further described in Note 2 of Notes to Consolidated
Financial Statements.
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