10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

R QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2013

OR

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from _______________ to _______________

Commission File Number 1-13175

VALERO ENERGY CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	74-1828067
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

One Valero Way

San Antonio, Texas

(Address of principal executive offices)

78249

(Zip Code)

(210) 345-2000

(Registrant’s telephone number, including area code) 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes R No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes R No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer R Accelerated filer o Non-accelerated filer o Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No R

The number of shares of the registrant’s only class of common stock, $0.01 par value, outstanding as of July 31, 2013 was 542,142,749.

VALERO ENERGY CORPORATION AND SUBSIDIARIES

TABLE OF CONTENTS

	Page
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 2013 and December 31, 2012	1
Consolidated Statements of Income for the Three and Six Months Ended June 30, 2013 and 2012	2
Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2013 and 2012	3
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2013 and 2012	4
Condensed Notes to Consolidated Financial Statements	5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	35
Item 3. Quantitative and Qualitative Disclosures About Market Risk	58
Item 4. Controls and Procedures	60
PART II – OTHER INFORMATION
Item 1. Legal Proceedings	60
Item 1A. Risk Factors	61
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	61
Item 6. Exhibits	61
SIGNATURE	62

i

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

VALERO ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Millions of Dollars, Except Par Value)

	June 30, 2013			December 31, 2012
	(Unaudited)
ASSETS
Current assets:
Cash and temporary cash investments	$	2,398		$	1,723
Receivables, net	7,486			8,167
Inventories	6,446			5,973
Income taxes receivable	56			169
Deferred income taxes	246			274
Prepaid expenses and other	136			154
Total current assets	16,768			16,460
Property, plant and equipment, at cost	33,087			34,132
Accumulated depreciation	(7,701		)	(7,832		)
Property, plant and equipment, net	25,386			26,300
Intangible assets, net	159			213
Deferred charges and other assets, net	1,864			1,504
Total assets	$	44,177		$	44,477
LIABILITIES AND EQUITY
Current liabilities:
Current portion of debt and capital lease obligations	$	303		$	586
Accounts payable	9,507			9,348
Accrued expenses	504			590
Taxes other than income taxes	1,239			1,026
Income taxes payable	85			1
Deferred income taxes	397			378
Total current liabilities	12,035			11,929
Debt and capital lease obligations, less current portion	6,261			6,463
Deferred income taxes	6,159			5,860
Other long-term liabilities	1,697			2,130
Commitments and contingencies
Equity:
Valero Energy Corporation stockholders’ equity:
Common stock, $0.01 par value; 1,200,000,000 shares authorized; 673,501,593 and 673,501,593 shares issued	7			7
Additional paid-in capital	7,237			7,322
Treasury stock, at cost; 131,412,237 and 121,406,520 common shares	(6,818		)	(6,437		)
Retained earnings	17,593			17,032
Accumulated other comprehensive income (loss)	(99		)	108
Total Valero Energy Corporation stockholders’ equity	17,920			18,032
Noncontrolling interests	105			63
Total equity	18,025			18,095
Total liabilities and equity	$	44,177		$	44,477

See Condensed Notes to Consolidated Financial Statements.

1

VALERO ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Millions of Dollars, Except Per Share Amounts)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Operating revenues	$	34,034		$	34,662		$	67,508		$	69,829
Costs and expenses:
Cost of sales	31,523			31,621			62,208			64,656
Operating expenses:
Refining	906			868			1,782			1,832
Retail	57			170			226			336
Ethanol	102			85			179			172
General and administrative expenses	233			171			409			335
Depreciation and amortization expense	405			386			835			770
Asset impairment losses	—			—			—			611
Total costs and expenses	33,226			33,301			65,639			68,712
Operating income	808			1,361			1,869			1,117
Other income (expense), net	11			(5		)	25			1
Interest and debt expense, net of capitalized interest	(78		)	(74		)	(161		)	(173		)
Income before income tax expense	741			1,282			1,733			945
Income tax expense	276			452			616			547
Net income	465			830			1,117			398
Less: Net loss attributable to noncontrolling interests	(1		)	(1		)	(3		)	(1		)
Net income attributable to Valero Energy Corporation stockholders	$	466		$	831		$	1,120		$	399
Earnings per common share	$	0.86		$	1.50		$	2.04		$	0.72
Weighted-average common shares outstanding (in millions)	543			550			546			550
Earnings per common share – assuming dilution	$	0.85		$	1.50		$	2.03		$	0.72
Weighted-average common shares outstanding – assuming dilution (in millions)	548			555			552			556
Dividends per common share	$	0.20		$	0.15		$	0.40		$	0.30

See Condensed Notes to Consolidated Financial Statements.

2

VALERO ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Millions of Dollars)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Net income	$	465		$	830		$	1,117		$	398
Other comprehensive income (loss):
Foreign currency translation adjustment	(64		)	(91		)	(268		)	32
Pension and other postretirement benefits:
Gain arising during the period related to remeasurement due to plan amendments	—			—			328			—
(Gain) loss reclassified into income related to:
Net actuarial loss	15			9			29			17
Prior service credit	(9		)	(6		)	(15		)	(10		)
Net gain on pension and other postretirement benefits	6			3			342			7
Derivative instruments designated and qualifying as cash flow hedges:
Net gain (loss) arising during the period	(10		)	(31		)	(9		)	16
Net (gain) loss reclassified into income	8			12			5			(36		)
Net loss on cash flow hedges	(2		)	(19		)	(4		)	(20		)
Other comprehensive income (loss), before income tax expense (benefit)	(60		)	(107		)	70			19
Income tax expense (benefit) related to items of other comprehensive income (loss)	1			(5		)	118			(4		)
Other comprehensive income (loss)	(61		)	(102		)	(48		)	23
Comprehensive income	404			728			1,069			421
Less: Comprehensive loss attributable to noncontrolling interests	(1		)	(1		)	(3		)	(1		)
Comprehensive income attributable to Valero Energy Corporation stockholders	$	405		$	729		$	1,072		$	422

See Condensed Notes to Consolidated Financial Statements.

3

VALERO ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Millions of Dollars)

(Unaudited)

	Six Months Ended June 30,
	2013			2012
Cash flows from operating activities:
Net income	$	1,117		$	398
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	835			770
Asset impairment losses	—			611
Noncash interest expense and other income, net	1			11
Stock-based compensation expense	25			20
Deferred income tax expense	341			480
Changes in current assets and current liabilities	444			565
Changes in deferred charges and credits and other operating activities, net	51			(21		)
Net cash provided by operating activities	2,814			2,834
Cash flows from investing activities:
Capital expenditures	(1,211		)	(1,420		)
Deferred turnaround and catalyst costs	(449		)	(264		)
Proceeds from the sale of the Paulsboro Refinery	—			160
Minor acquisitions	—			(66		)
Other investing activities, net	(23		)	9
Net cash used in investing activities	(1,683		)	(1,581		)
Cash flows from financing activities:
Non-bank debt:
Borrowings	—			300
Repayments	(480		)	(862		)
Bank credit agreements:
Borrowings	—			1,100
Repayments	—			(1,100		)
Accounts receivable sales program:
Proceeds from the sale of receivables	—			1,300
Repayments	—			(1,450		)
Purchase of common stock for treasury	(560		)	(147		)
Proceeds from the exercise of stock options	43			11
Common stock dividends	(220		)	(166		)
Contributions from noncontrolling interests	45			25
Separation of retail business:
Proceeds from short-term debt	550			—
Cash distributed to Valero by CST Brands, Inc.	500			—
Cash held and retained by CST Brands, Inc. upon separation	(315		)	—
Other financing activities, net	24			(2		)
Net cash used in financing activities	(413		)	(991		)
Effect of foreign exchange rate changes on cash	(43		)	9
Net increase in cash and temporary cash investments	675			271
Cash and temporary cash investments at beginning of period	1,723			1,024
Cash and temporary cash investments at end of period	$	2,398		$	1,295

See Condensed Notes to Consolidated Financial Statements.

4

VALERO ENERGY CORPORATION AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

As used in this report, the terms “Valero,” “we,” “us,” or “our” may refer to Valero Energy Corporation, one or more of its consolidated subsidiaries, or all of them taken as a whole.

These unaudited financial statements have been prepared in accordance with United States (U.S.) generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Act of 1934. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal recurring nature unless disclosed otherwise. Financial information for the three and six months ended June 30, 2013 and 2012 included in these Condensed Notes to Consolidated Financial Statements is derived from our unaudited financial statements. Operating results for the three and six months ended June 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.

The balance sheet as of December 31, 2012 has been derived from our audited financial statements as of that date. For further information, refer to our financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2012.

Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. On an ongoing basis, we review our estimates based on currently available information. Changes in facts and circumstances may result in revised estimates.

Comprehensive Income

In February 2013, the provisions of Accounting Standards Codification (ASC) Topic 220, “Comprehensive Income,” were amended to require an entity to disclose information about the amounts reclassified out of accumulated other comprehensive income and into net income. An entity is required to present information on the face of the statement of income or in the notes to the financial statements about the effects on net income from significant amounts reclassified out of accumulated other comprehensive income if those amounts were required to be reclassified into net income in their entirety in the same reporting period they were initially charged to other comprehensive income. For other significant amounts that were not required to be reclassified into net income in their entirety in the same reporting period they were initially charged to other comprehensive income, a cross-reference is required in the notes to the financial statements to the disclosures that provide additional details about those amounts. These provisions were effective for interim and annual reporting periods beginning after December 15, 2012. The adoption of this guidance effective January 1, 2013 did not affect our financial position or results of operations, but resulted in additional disclosures, which are included in Note 7.

5

VALERO ENERGY CORPORATION AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Balance Sheet Offsetting Arrangements

In December 2011, the provisions of ASC Topic 210, “Balance Sheet,” were amended to require an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of these arrangements on its financial position. In January 2013, the provisions of ASC Topic 210 were further amended to clarify that the scope of the previous amendment only applies to derivative instruments, including bifurcated derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either eligible for offset in the balance sheet or are subject to an agreement similar to a master netting agreement. The guidance requires entities to disclose both gross information and net information about assets and liabilities within the scope of the amendment. These provisions were effective for interim and annual reporting periods beginning on or after January 1, 2013. The adoption of this guidance effective January 1, 2013 did not affect our financial position or results of operations, but resulted in additional disclosures, which are included in Note 12.

Other

The statement of cash flows for the six months ended June 30, 2012, which was included in our Form 10‑Q for the quarterly period ended June 30, 2012, reflected an incorrect classification of $160 million in proceeds on a note receivable related to the sale of our Paulsboro Refinery in December 2010. We previously reflected such proceeds as a component of cash flows from operating activities rather than as a component of cash flows from investing activities. The statement of cash flows for the six months ended June 30, 2012 included in this Form 10-Q for the quarterly period ended June 30, 2013 has been corrected to properly reflect the classification of those proceeds.

New Accounting Pronouncements

In July 2013, the provisions of ASC Topic 740, “Income Taxes,” were amended to provide specific guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date. The amendment requires entities to present an unrecognized tax benefit as a reduction to the deferred tax asset generated by the net operating loss carryforward, similar tax loss, or tax credit carryforward, if such items are available to be used to offset the unrecognized tax benefit. These provisions are effective for interim and annual reporting periods beginning after December 15, 2013 and should be applied prospectively to all unrecognized tax benefits that exist at the effective date, with retrospective application permitted. The adoption of this guidance effective January 1, 2014 will not affect our financial position or results of operations, nor will it require any additional disclosures, but may result in a change in presentation to our consolidated balance sheets.

6

VALERO ENERGY CORPORATION AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. SEPARATION OF RETAIL BUSINESS

On May 1, 2013, we completed the separation of our retail business by creating an independent public company named CST Brands, Inc. (CST) and distributing 80 percent of the outstanding shares of CST common stock to our stockholders on May 1, 2013. Each Valero stockholder received one share of CST common stock for every nine shares of Valero common stock held at the close of business on the record date of April 19, 2013. Fractional shares of CST common stock were not distributed, but instead were aggregated and sold in the open market at prevailing rates with net cash proceeds then distributed pro rata to each Valero stockholder who was entitled to receive fractional shares.

In connection with the separation, we received an aggregate of $1.05 billion in cash, consisting of $550 million from the issuance of short-term debt to a third-party financial institution on April 16, 2013 and $500 million distributed to us by CST on May 1, 2013. The cash distributed to us by CST was borrowed by CST on May 1, 2013 under its senior secured credit facility. See Note 5 for further discussion of that credit facility. Also on May 1, 2013, CST issued $550 million of its senior unsecured bonds to us, and we exchanged those bonds with the third-party financial institution in satisfaction of our short-term debt. Immediately prior to May 1, 2013, subsidiaries of CST held $315 million of cash, and CST retained that cash following the distribution on May 1, 2013. Also in connection with the separation, we incurred a tax liability of approximately $189 million primarily related to the manner in which the transaction is treated for tax purposes in Canada, and most of these taxes will not be paid until the first half of 2014. Therefore, the cash we received as a result of the separation, net of our tax liability, was $546 million. We also incurred $30 million in costs during the three months ended June 30, 2013 to effect the separation, which are included in general and administrative expenses. We expect to liquidate the remaining 20 percent of the outstanding shares of CST common stock that we own within 18 months of the date of separation.

We also entered into long-term motor fuel supply agreements with CST in the U.S. and Canada. The nature and significance of our agreements to supply motor fuel to CST through 2028 represents a continuation of activities with CST for accounting purposes. As such, the historical results of operations of our retail business have not been reported as discontinued operations in our statements of income.

Selected historical results of operations of our retail business prior to the separation are disclosed in Note 10. Subsequent to May 1, 2013, our share of CST’s results of operations associated with our retained 20 percent equity interest in CST is reflected in “other income (expense), net” and our equity investment in CST, which is accounted for under the equity method, is included in “deferred charges and other assets, net.” Our share of income taxes incurred directly by CST is reported in the equity in earnings from CST, and as such is not included in income taxes in our statements of income.

7

VALERO ENERGY CORPORATION AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table presents the carrying values of the major categories of assets and liabilities of our retail business, immediately preceding its separation on May 1, 2013, which are excluded from our consolidated balance sheet as of June 30, 2013 (in millions):

Assets
Cash and temporary cash investments	$	315
Credit card receivables from Valero	44
Other receivables, net	109
Inventories	170
Deferred income taxes	14
Prepaid expenses and other	13
Total current assets	665
Property, plant and equipment, at cost	1,891
Accumulated depreciation	(611		)
Property, plant and equipment, net	1,280
Intangible assets, net	38
Deferred charges and other assets, net	205
Total assets	$	2,188
Liabilities
Current portion of capital lease obligations	$	2
Trade payable to Valero	242
Other accounts payable	96
Accrued expenses	31
Taxes other than income taxes	20
Total current liabilities	391
Debt and capital lease obligations, less current portion	1,053
Deferred income taxes	83
Other long-term liabilities	112
Total liabilities	$	1,639

We retained certain environmental and other liabilities related to our former retail business and we have indemnified CST for certain self-insurance liabilities related to its employees and property.

8

VALERO ENERGY CORPORATION AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. IMPAIRMENTS

Aruba Refinery

In March 2012, we suspended the operations of the Aruba Refinery because of its inability to generate positive cash flows on a sustained basis subsequent to its restart in January 2011 and the sensitivity of its profitability to sour crude oil differentials, which had narrowed significantly in the fourth quarter of 2011. Shortly thereafter, we received a non-binding offer to purchase the refinery for $350 million, plus working capital as of the closing date. Because of our decision to suspend the operations and the possibility of selling the refinery, we evaluated the refinery for potential impairment as of March 31, 2012 and concluded that it was impaired. We recognized an asset impairment loss of $595 million in March 2012. We did not, however, classify the Aruba Refinery as “held for sale” in our balance sheet because all of the accounting criteria required for that classification had not been met.

In September 2012, we decided to reorganize the Aruba Refinery into a crude oil and refined products terminal in response to the withdrawal of the non-binding offer to purchase the refinery. We bifurcated the idled crude oil processing units and related infrastructure (refining assets) from the terminal assets and evaluated the refining assets for potential impairment as of September 30, 2012. We concluded that the refining assets were impaired and recognized an asset impairment loss of $308 million in September 2012. We also recognized an asset impairment loss of $25 million related to materials and supplies inventories that supported the refining operations, resulting in a total asset impairment loss of $333 million that was recognized in September 2012 related to the Aruba Refinery. The terminal assets were not impaired.

We have continued to maintain the refining assets to allow them to be restarted and do not consider them to be abandoned. Therefore, we have not reflected the Aruba Refinery as a discontinued operation in our financial statements. It is possible, however, that we may abandon these assets in the future. Should we ultimately decide to abandon these assets, we may be required under our land lease agreement with the Government of Aruba to dismantle and remove the abandoned assets, which would require us to recognize an asset retirement obligation, that would be immediately charged to expense. We do not expect these amounts to be material to our financial position or results of operations.

The variation in the customary relationship between income tax expense and income before income tax expense for the six months ended June 30, 2012 was primarily due to not recognizing a tax benefit associated with the asset impairment loss of $595 million related to the Aruba Refinery as we do not expect to realize this tax benefit.

Cancelled Capital Project

In March 2012, we wrote down the carrying value of equipment associated with a permanently cancelled capital project at one of our refineries, resulting in an asset impairment loss of $16 million.

9

VALERO ENERGY CORPORATION AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4. INVENTORIES

Inventories consisted of the following (in millions):

	June 30, 2013		December 31, 2012
Refinery feedstocks	$	2,641	$	2,458
Refined products and blendstocks	3,446		2,995
Ethanol feedstocks and products	139		191
Convenience store merchandise	—		112
Materials and supplies	220		217
Inventories	$	6,446	$	5,973

As of June 30, 2013 and December 31, 2012, the replacement cost (market value) of last in, first out (LIFO) inventories exceeded their LIFO carrying amounts by approximately $6.3 billion and $6.7 billion, respectively.

5. DEBT

Bank Debt and Credit Facilities

We have a $3 billion revolving credit facility (the Revolver) that has a maturity date of December 2016. The Revolver has certain restrictive covenants, including a maximum debt-to-capitalization ratio of 60 percent. As of June 30, 2013 and December 31, 2012, our debt-to-capitalization ratios, calculated in accordance with the terms of the Revolver, were 19 percent and 23 percent, respectively. We believe that we will remain in compliance with this covenant. In addition to the Revolver, one of our Canadian subsidiaries has a committed revolving credit facility under which it may borrow and obtain letters of credit up to C$50 million.

During the six months ended June 30, 2013, we had no borrowings or repayments under our Revolver. During the six months ended June 30, 2012, we borrowed and repaid $1.1 billion under our Revolver. We had no borrowings or repayments under the Canadian revolving credit facility during the six months ended June 30, 2013 and 2012. As of June 30, 2013 and December 31, 2012, we had no borrowings outstanding under the Revolver or the Canadian revolving credit facility.

On March 20, 2013, in anticipation of the separation of our retail business as described in Note 2, CST entered into a credit agreement providing for $800 million of senior secured credit facilities (consisting of a $500 million term loan facility and a revolving credit facility with an aggregate principal amount of up to $300 million). Borrowings under the term loan and revolving credit facilities bear interest at the London Interbank Offered Rate (LIBOR) plus a margin or an alternate base rate, as defined in the agreement, plus a margin. The credit agreement matures on May 1, 2018 and has certain restrictive covenants. This credit agreement and related credit facilities were retained by CST after the separation from us. Therefore, we have no rights to obtain credit under nor any liabilities in connection with this credit agreement and related credit facilities.

10

VALERO ENERGY CORPORATION AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

On April 16, 2013, also in anticipation of the separation of our retail business, we borrowed $550 million under a short-term debt agreement with a third-party financial institution. On May 1, 2013, CST issued $550 million of its senior unsecured bonds to us, and we exchanged those bonds with the third-party financial institution in satisfaction of our short-term debt.

We had outstanding letters of credit under our committed lines of credit as follows (in millions):

				Amounts Outstanding
	Borrowing Capacity		Expiration	June 30, 2013		December 31, 2012
Letter of credit facilities	$	550	June 2014	$	250	$	418
Revolver	$	3,000	December 2016	$	59	$	59
Canadian revolving credit facility	C$	50	November 2013	C$	9	C$	10

As of June 30, 2013 and December 31, 2012, we had $87 million and $275 million, respectively, of letters of credit outstanding under our uncommitted short-term bank credit facilities.

Non-Bank Debt

During the six months ended June 30, 2013, the following activity occurred:

• in June 2013, we made a scheduled debt repayment of $300 million related to our 4.75% notes; and

• in January 2013, we made a scheduled debt repayment of $180 million related to our 6.7% senior notes.

During the six months ended June 30, 2012, the following activity occurred:

• in June 2012, we remarketed and received proceeds of $300 million related to the 4.0% Gulf Opportunity Zone Revenue Bonds Series 2010 issued by the Parish of St. Charles, State of Louisiana, which are due December 1, 2040, but are subject to mandatory tender on June 1, 2022;

• in April 2012, we made scheduled debt repayments of $4 million related to our Series 1997A 5.45% industrial revenue bonds and $750 million related to our 6.875% notes; and

• in March 2012, we exercised the call provisions on our Series 1997 5.6%, Series 1998 5.6%, Series 1999 5.7%, Series 2001 6.65%, and Series 1997A 5.45% industrial revenue bonds, which were redeemed on May 3, 2012 for $108 million, or 100 percent of their outstanding stated values.

Accounts Receivable Sales Facility

We have an accounts receivable sales facility with a group of third-party entities and financial institutions to sell up to $1.5 billion of eligible trade receivables on a revolving basis. In July 2013, we amended this facility to extend the maturity date to July 2014. Proceeds from the sale of receivables under this facility are reflected as debt. Under this program, one of our marketing subsidiaries (Valero Marketing) sells eligible receivables, without recourse, to another of our subsidiaries (Valero Capital), whereupon the receivables are no longer owned by Valero Marketing. Valero Capital, in turn, sells an undivided percentage ownership interest in the eligible receivables, without recourse, to the third-party entities and financial institutions. To the extent that Valero Capital retains an ownership interest in the receivables it has purchased from Valero Marketing, such interest is included in our financial statements solely as a result of the consolidation of the financial statements of Valero Capital with those of Valero Energy Corporation; the receivables are not available to satisfy the claims of the creditors of Valero Marketing or Valero Energy Corporation.

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VALERO ENERGY CORPORATION AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Changes in the amounts outstanding under our accounts receivable sales facility were as follows (in millions):

	Six Months Ended June 30,
	2013		2012
Balance as of beginning of period	$	100	$	250
Proceeds from the sale of receivables	—		1,300
Repayments	—		(1,450		)
Balance as of end of period	$	100	$	100

Capitalized Interest

Capitalized interest was $45 million and $53 million for the three months ended June 30, 2013 and 2012, respectively, and $85 million and $105 million for the six months ended June 30, 2013 and 2012, respectively.

6. COMMITMENTS AND CONTINGENCIES

Environmental Matter

We are involved, together with several other companies, in an environmental cleanup in the Village of Hartford, Illinois (the Village) and the adjacent shutdown refinery site, which we acquired as part of a prior acquisition. In cooperation with some of the other companies, we have been conducting initial mitigation and cleanup response pursuant to an administrative order issued by the U.S. Environmental Protection Agency (EPA). The EPA is seeking further cleanup obligations from us and other potentially responsible parties for the Village. In parallel with the Village cleanup, we are also in litigation with the State of Illinois Environmental Protection Agency and other potentially responsible parties relating to the remediation of the shutdown refinery site. In each of these matters, we have various defenses and rights for contribution from the other potentially responsible parties. We have accrued for our own expected contribution obligations. However, because of the unpredictable nature of these cleanups and the methodology for allocation of liabilities, it is reasonably possible that we could incur a loss in a range of$0 to $200 million in excess of the amount of our accrual to ultimately resolve these matters. Factors underlying this estimated range are expected to change from time to time, and actual results may vary significantly from this estimate.

Litigation Matters

We are party to claims and legal proceedings arising in the ordinary course of business. We have not recorded a loss contingency liability with respect to some of these matters because we have determined that it is remote that a loss has been incurred. For other matters, we have recorded a loss contingency liability where we have determined that it is probable that a loss has been incurred and that the loss is reasonably estimable. These loss contingency liabilities are not material to our financial position. We re-evaluate and update our loss contingency liabilities as matters progress over time, and we believe that any changes to the recorded liabilities will not be material to our financial position or results of operations.

One-Time Severance Benefits

As described in Note 3, we decided to reorganize the Aruba Refinery into a crude oil and refined products terminal in September 2012 resulting in a decrease in required personnel for our operations in Aruba. We notified 495 employees in September 2012 of the termination of their employment effective November 15,

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2012. Benefits to each terminated employee consisted primarily of a cash payment based on a formula that considers the employee’s current compensation and years of service, among other factors. We recognized a severance liability of $41 million in September 2012, which approximated fair value. We paid $31 million of these benefits in the fourth quarter of 2012 and we paid the remaining termination benefits of $10 million during the first quarter of 2013.

7. EQUITY

Reconciliation of Balances

The following is a reconciliation of the beginning and ending balances of equity attributable to our stockholders, equity attributable to the noncontrolling interests, and total equity for the six months ended June 30, 2013 and 2012 (in millions):

	2013									2012
	Valero Stockholders’ Equity			Non- controlling Interests			Total Equity			Valero Stockholders’ Equity			Non- controlling Interest			Total Equity
Balance as of beginning of period	$	18,032		$	63		$	18,095		$	16,423		$	22		$	16,445
Net income (loss)	1,120			(3		)	1,117			399			(1		)	398
Dividends	(220		)	—			(220		)	(166		)	—			(166		)
Stock-based compensation expense	25			—			25			20			—			20
Tax deduction in excess of stock-based compensation expense	27			—			27			3			—			3
Transactions in connection with stock-based compensation plans:
Stock issuances	43			—			43			11			—			11
Stock repurchases	(196		)	—			(196		)	(136		)	—			(136		)
Stock repurchases under buyback program	(364		)	—			(364		)	—			—			—
Separation of retail business	(499		)	—			(499		)	—			—			—
Contributions from noncontrolling interests	—			45			45			—			25			25
Other comprehensive income (loss)	(48		)	—			(48		)	23			—			23
Balance as of end of period	$	17,920		$	105		$	18,025		$	16,577		$	46		$	16,623

The noncontrolling interests relate to third-party ownership interests in two joint venture companies, whose financial statements we consolidate due to our controlling interests.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Share Activity

Activity in the number of shares of common stock and treasury stock was as follows for the six months ended June 30, 2013 and 2012 (in millions):

	2013			2012
	Common Stock	Treasury Stock		Common Stock	Treasury Stock
Balance as of beginning of period	673	(121	)	673	(117	)
Transactions in connection with stock-based compensation plans:
Stock issuances	—	3		—	1
Stock purchases	—	(5	)	—	(6	)
Stock repurchases under buyback program	—	(8	)	—	—
Balance as of end of period	673	(131	)	673	(122	)

Common Stock Dividends

On July 25, 2013, our board of directors declared a quarterly cash dividend of $0.225 per common share payable on September 11, 2013 to holders of record at the close of business on August 14, 2013.

Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss) by component, net of tax, were as follows for the six months ended June 30, 2013 (in millions):

	Foreign Currency Translation Adjustment			Defined Benefit Pension Items			Gains and (Losses) on Cash Flow Hedges			Total
Balance as of December 31, 2012	$	665		$	(558	)	$	1		$	108
Other comprehensive income (loss) before reclassifications	(268		)	214			(6		)	(60		)
Amounts reclassified from accumulated other comprehensive income (loss)	—			9			3			12
Net other comprehensive income (loss)	(268		)	223			(3		)	(48		)
Separation of retail business	(159		)	—			—			(159		)
Balance as of June 30, 2013	$	238		$	(335	)	$	(2	)	$	(99	)

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Gains (losses) reclassified out of accumulated other comprehensive income (loss) and into net income were as follows (in millions):

Details about Accumulated Other Comprehensive Income  (Loss) Components	Three Months Ended June 30, 2013			Six Months Ended June 30, 2013			Affected Line Item in the Statement of Income
Amortization of items related to defined benefit pension plans:
Net actuarial loss	$	(15	)	$	(29	)	(a)
Prior service credit	9			15			(a)
	(6		)	(14		)	Total before tax
	2			5			Tax benefit
	$	(4	)	$	(9	)	Net of tax
Losses on cash flow hedges:
Commodity contracts	$	(8	)	$	(5	)	Cost of sales
	(8		)	(5		)	Total before tax
	3			2			Tax benefit
	$	(5	)	$	(3	)	Net of tax
Total reclassifications for the period	$	(9	)	$	(12	)	Net of tax

_________________________

(a) These accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit cost, as further discussed in Note 8. Net periodic benefit cost is reflected in operating expenses and general and administrative expenses.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. EMPLOYEE BENEFIT PLANS

The components of net periodic benefit cost related to our defined benefit plans were as follows (in millions) :

	Pension Plans						Other Postretirement Benefit Plans
	2013			2012			2013			2012
Three months ended June 30:
Service cost	$	35		$	35		$	3		$	3
Interest cost	22			23			5			6
Expected return on plan assets	(34		)	(31		)	—			—
Amortization of:
Net actuarial loss	15			9			—			—
Prior service credit	(6		)	—			(3		)	(6		)
Net periodic benefit cost	$	32		$	36		$	5		$	3
Six months ended June 30:
Service cost	$	71		$	70		$	6		$	6
Interest cost	44			46			9			11
Expected return on plan assets	(66		)	(62		)	—			—
Amortization of:
Net actuarial loss	29			17			—			—
Prior service cost (credit)	(9		)	1			(6		)	(11		)
Net periodic benefit cost	$	69		$	72		$	9		$	6

On February 15, 2013, we announced changes to certain of our U.S. qualified pension plans that cover the majority of our U.S. employees who work in our refining segment and corporate operations. Benefits under our primary pension plan will change from a final average pay formula to a cash balance formula with staged effective dates that commence either on July 1, 2013 or January 1, 2015 depending on the age and service of the affected employees. All final average pay benefits will be frozen as of December 31, 2014, with all future benefits to be earned under the new cash balance formula. These plan amendments resulted in a $328 million decrease to pension liabilities and a related increase to other comprehensive income during the six months ended June 30, 2013. The benefit of this remeasurement will be amortized into income through 2025.

As a result of these plan amendments, management reduced its discretionary contributions to our pension plans by $100 million, resulting in expected contributions to our pension plans of $45 million for 2013. During the six months ended June 30, 2013 and 2012, we contributed $18 million and $16 million, respectively, to our pension plans and $8 million and $10 million, respectively, to our other postretirement benefit plans.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9. EARNINGS PER COMMON SHARE

Earnings per common share were computed as follows (dollars and shares in millions, except per share amounts):

	Three Months Ended June 30,
	2013				2012
	Restricted Stock		Common Stock		Restricted Stock		Common Stock
Earnings per common share:
Net income attributable to Valero stockholders			$	466			$	831
Less dividends paid:
Common stock			109				82
Nonvested restricted stock			—				1
Undistributed earnings			$	357			$	748
Weighted-average common shares outstanding	3		543		3		550
Earnings per common share:
Distributed earnings	$	0.20	$	0.20	$	0.15	$	0.15
Undistributed earnings	0.66		0.66		1.35		1.35
Total earnings per common share	$	0.86	$	0.86	$	1.50	$	1.50
Earnings per common share – assuming dilution:
Net income attributable to Valero stockholders			$	466			$	831
Weighted-average common shares outstanding			543				550
Common equivalent shares:
Stock options			3				3
Performance awards and nonvested restricted stock			2				2
Weighted-average common shares outstanding – assuming dilution			548				555
Earnings per common share – assuming dilution			$	0.85			$	1.50

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

	Six Months Ended June 30,
	2013				2012
	Restricted Stock		Common Stock		Restricted Stock		Common Stock
Earnings per common share:
Net income attributable to Valero stockholders			$	1,120			$	399
Less dividends paid:
Common stock			219				165
Nonvested restricted stock			1				1
Undistributed earnings			$	900			$	233
Weighted-average common shares outstanding	3		546		3		550
Earnings per common share:
Distributed earnings	$	0.40	$	0.40	$	0.30	$	0.30
Undistributed earnings	1.64		1.64		0.42		0.42
Total earnings per common share	$	2.04	$	2.04	$	0.72	$	0.72
Earnings per common share – assuming dilution:
Net income attributable to Valero stockholders			$	1,120			$	399
Weighted-average common shares outstanding			546				550
Common equivalent shares:
Stock options			4				4
Performance awards and nonvested restricted stock			2				2
Weighted-average common shares outstanding – assuming dilution			552				556
Earnings per common share – assuming dilution			$	2.03			$	0.72

The following table reflects potentially dilutive securities (in millions) that were excluded from the calculation of “earnings per common share – assuming dilution” as the effect of including such securities would have been antidilutive. Stock options were excluded from weighted-average common shares outstanding – assuming dilution because the exercise price of the stock option was greater than the average market price of our common shares during each reporting period.

	Three Months Ended June 30,		Six Months Ended June 30,
	2013	2012	2013	2012
Stock options	3	6	3	6

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10. SEGMENT INFORMATION

As discussed in Note 2, we completed the separation of our retail business on May 1, 2013. Segment activity related to our retail business prior to the separation is reflected in the retail segment results below. Motor fuel sales to CST (our former retail business), which were eliminated in consolidation prior to the separation, are reported as refining segment operating revenues from external customers after May 1, 2013.

The following table reflects activity related to our reportable segments (in millions):

	Refining		Retail		Ethanol		Corporate			Total
Three months ended June 30, 2013:
Operating revenues from external customers	$	31,564	$	979	$	1,491	$	—		$	34,034
Intersegment revenues	671		—		15		—			686
Operating income (loss)	921		39		95		(247		)	808
Three months ended June 30, 2012:
Operating revenues from external customers	30,488		3,062		1,112		—			34,662
Intersegment revenues	2,203		—		46		—			2,249
Operating income (loss)	1,364		172		5		(180		)	1,361
Six months ended June 30, 2013:
Operating revenues from external customers	61,117		3,896		2,495		—			67,508
Intersegment revenues	2,876		—		70		—			2,946
Operating income (loss)	2,133		81		109		(454		)	1,869
Six months ended June 30, 2012:
Operating revenues from external customers	61,638		5,997		2,194		—			69,829
Intersegment revenues	4,458		—		60		—			4,518
Operating income (loss)	1,245		212		14		(354		)	1,117

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Total assets by reportable segment were as follows (in millions):

	June 30, 2013		December 31, 2012
Refining	$	40,527	$	39,490
Retail	—		2,043
Ethanol	867		929
Corporate	2,783		2,015
Total assets	$	44,177	$	44,477

11. SUPPLEMENTAL CASH FLOW INFORMATION

In order to determine net cash provided by operating activities, net income is adjusted by, among other things, changes in current assets and current liabilities as follows (in millions):

	Six Months Ended June 30,
	2013			2012
Decrease (increase) in current assets:
Receivables, net	$	412		$	1,927
Inventories	(824		)	198
Income taxes receivable	31			(79		)
Prepaid expenses and other	2			(15		)
Increase (decrease) in current liabilities:
Accounts payable	625			(1,413		)
Accrued expenses	(44		)	(60		)
Taxes other than income taxes	268			67
Income taxes payable	(26		)	(60		)
Changes in current assets and current liabilities	$	444		$	565

The above changes in current assets and current liabilities differ from changes between amounts reflected in the applicable balance sheets for the respective periods for the following reasons:

• the amounts shown above exclude changes in cash and temporary cash investments, deferred income taxes, and current portion of debt and capital lease obligations, as well as the effect of certain noncash investing and financing activities discussed below;

• the amounts shown above for the six months ended June 30, 2013 exclude the change in current assets and current liabilities resulting from the separation of our retail business as described in Note 2;

• amounts accrued for capital expenditures and deferred turnaround and catalyst costs are reflected in investing activities when such amounts are paid;

• amounts accrued for common stock purchases in the open market that are not settled as of the balance sheet date are reflected in financing activities when the purchases are settled and paid; and

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

• certain differences between balance sheet changes and the changes reflected above result from translating foreign currency denominated balances at the applicable exchange rates as of each balance sheet date.

There were no significant noncash investing activities for the six months ended June 30, 2013. Noncash financing activities for the six months ended June 30, 2013 included the exchange of CST’s senior unsecured bonds with the third-party financial institution in satisfaction of our short-term debt as described in Note 2.

There were no significant noncash investing or financing activities for the six months ended June 30, 2012.

Cash flows related to interest and income taxes were as follows (in millions):

	Six Months Ended June 30,
	2013		2012
Interest paid in excess of amount capitalized	$	160	$	164
Income taxes paid, net	243		204

12. FAIR VALUE MEASUREMENTS

General

GAAP requires that certain assets and liabilities be measured at fair value on a recurring or nonrecurring basis in our balance sheets, which are presented below under “Recurring Fair Value Measurements” and “Nonrecurring Fair Value Measurements.” Recurring fair value measurements of assets or liabilities are those that GAAP requires or permits in the balance sheet at the end of each reporting period, such as derivative financial instruments. Nonrecurring fair value measurements of assets or liabilities are those that GAAP requires or permits in the balance sheet in particular circumstances, such as the impairment of property, plant and equipment.

GAAP also requires the disclosure of the fair values of financial instruments when an option to elect fair value accounting has been provided, but such election has not been made. A debt obligation is an example of such a financial instrument. The disclosure of the fair values of financial instruments not recognized at fair value in our balance sheet is presented below under “Other Financial Instruments.”

GAAP provides a framework for measuring fair value and establishes a three-level fair value hierarchy that prioritizes inputs to valuation techniques based on the degree to which objective prices in external active markets are available to measure fair value. Following is a description of each of the levels of the fair value hierarchy.

• Level 1 - Observable inputs, such as unadjusted quoted prices in active markets for identical assets or liabilities.

• Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

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• Level 3 - Unobservable inputs for the asset or liability. Unobservable inputs reflect our own assumptions about what market participants would use to price the asset or liability. The inputs are developed based on the best information available in the circumstances, which might include occasional market quotes or sales of similar instruments or our own financial data such as internally developed pricing models, discounted cash flow methodologies, as well as instruments for which the fair value determination requires significant judgment.

Recurring Fair Value Measurements

The tables below present information (in millions) about our assets and liabilities recognized at their fair values in our balance sheets categorized according to the fair value hierarchy of the inputs utilized by us to determine the fair values as of June 30, 2013 and December 31, 2012.

We have elected to offset the fair value amounts recognized for multiple similar derivative contracts executed with the same counterparty, including any related cash collateral assets or obligations as shown below; however, fair value amounts by hierarchy level are presented on a gross basis in the tables below. We have no derivative contracts that are subject to master netting arrangements that are reflected gross on the balance sheet.

	June 30, 2013
							Total Gross Fair Value		Effect of Counter- party Netting			Effect of Cash Collateral Netting			Net Carrying Value on Balance Sheet		Cash Collateral Paid or Received Not Offset
	Fair Value Hierarchy
	Level 1		Level 2		Level 3
Assets:
Commodity derivative contracts	$	1,015	$	28	$	—	$	1,043	$	(997	)	$	(3	)	$	43	$	—
Physical purchase contracts	—		5		—		5		N/A			N/A			5		N/A
Foreign currency contracts	10		—		—		10		N/A			N/A			10		N/A
Investments of certain benefit plans	92		—		11		103		N/A			N/A			103		N/A
Total	$	1,117	$	33	$	11	$	1,161	$	(997	)	$	(3	)	$	161
Liabilities:
Commodity derivative contracts	$	997	$	28	$	—	$	1,025	$	(997	)	$	(23	)	$	5	$	(109	)
Physical purchase contracts	—		11		—		11		N/A			N/A			11		N/A
RINs fixed-price contracts	—		22		—		22		N/A			N/A			22		N/A
Total	$	997	$	61	$	—	$	1,058	$	(997	)	$	(23	)	$	38

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

	December 31, 2012
							Total Gross Fair Value		Effect of Counter- party Netting			Effect of Cash Collateral Netting			Net Carrying Value on Balance Sheet		Cash Collateral Paid or Received Not Offset
	Fair Value Hierarchy
	Level 1		Level 2		Level 3
Assets:
Commodity derivative contracts	$	1,143	$	60	$	—	$	1,203	$	(1,189	)	$	—		$	14	$	—
Physical purchase contracts	—		11		—		11		N/A			N/A			11		N/A
Foreign currency contracts	1		—		—		1		N/A			N/A			1		N/A
Investments of certain benefit plans	87		—		11		98		N/A			N/A			98		N/A
Total	$	1,231	$	71	$	11	$	1,313	$	(1,189	)	$	—		$	124
Liabilities:
Commodity derivative contracts	$	1,138	$	70	$	—	$	1,208	$	(1,189	)	$	(13	)	$	6	$	(114	)
Biofuels blending obligation	—		10		—		10		N/A			N/A			10		N/A
Foreign currency contracts	1		—		—		1		N/A			N/A			1		N/A
Total	$	1,139	$	80	$	—	$	1,219	$	(1,189	)	$	(13	)	$	17

A description of our assets and liabilities recognized at fair value along with the valuation methods and inputs we used to develop their fair value measurements are as follows:

• Commodity derivative contracts consist primarily of exchange-traded futures and swaps, and as disclosed in Note 13, some of these contracts are designated as hedging instruments. These contracts are measured at fair value using the market approach. Exchange-traded futures are valued based on quoted prices from the exchange and are categorized in Level 1 of the fair value hierarchy. Swaps are priced using third-party broker quotes, industry pricing services, and exchange-traded curves, with appropriate consideration of counterparty credit risk, but because they have contractual terms that are not identical to exchange-traded futures instruments with a comparable market price, these financial instruments are categorized in Level 2 of the fair value hierarchy.

• Physical purchase contracts represent the fair value of firm commitments to purchase crude oil feedstocks and the fair value of fixed-price corn purchase contracts, and as disclosed in Note 13, some of these contracts are designated as hedging instruments. The fair values of these firm commitments and purchase contracts are measured using a market approach based on quoted prices from the commodity exchange or an independent pricing service and are categorized in Level 2 of the fair value hierarchy.

• Renewable Identification Numbers (RINs) fixed-price contracts represent the fair value of fixed-price purchase and sale contracts of RINs entered into for trading purposes. The fair values of these contracts are measured using a market approach based on quoted prices from an independent pricing service and are categorized in Level 2 of the fair value hierarchy.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

• Investments of certain benefit plans consist of investment securities held by trusts for the purpose of satisfying a portion of our obligations under certain U.S. nonqualified benefit plans. The assets categorized in Level 1 of the fair value hierarchy are measured at fair value using a market approach based on quoted prices from national securities exchanges. The assets categorized in Level 3 of the fair value hierarchy represent insurance contracts, the fair value of which is provided by the insurer.

• Foreign currency contracts consist of foreign currency exchange and purchase contracts entered into by our international operations to manage our exposure to exchange rate fluctuations on transactions denominated in currencies other than the local (functional) currencies of those operations. These contracts are valued based on quoted prices from the exchange and are categorized in Level 1 of the fair value hierarchy.

• Our biofuels blending obligation represents a liability for the purchase of biofuel credits (primarily RINs in the U.S.) needed to satisfy our obligation to blend biofuels into the products we produce. To the degree we are unable to blend at percentages required under various governmental and regulatory programs, we must purchase biofuel credits to comply with these programs. These programs are further described in Note 13 under “Compliance Program Risk.” This liability is based on our deficit in biofuel credits as of the balance sheet date, if any, after considering any biofuel credits acquired or under contract, and is equal to the product of the biofuel credits deficit and the market price of these credits as of the balance sheet date. This liability is categorized in Level 2 of the fair value hierarchy and is measured at fair value using the market approach based on quoted prices from an independent pricing service.

There were no transfers between Level 1 and Level 2 for assets and liabilities held as of June 30, 2013 and December 31, 2012 that were measured at fair value on a recurring basis.

There was no activity during the three and six months ended June 30, 2013 and 2012 related to the fair value amounts categorized in Level 3 as of June 30, 2013 and December 31, 2012.

Nonrecurring Fair Value Measurements

There were no assets or liabilities that were measured at fair value on a nonrecurring basis as of June 30, 2013.

The table below presents the fair value of certain assets that were measured at fair value on a nonrecurring basis as of December 31, 2012 (in millions).

							Total Fair Value as of December 31, 2012
	Fair Value Hierarchy
	Level 1		Level 2		Level 3
Cancelled capital project	$	—	$	—	$	2	$	2
Property, plant and equipment of convenience stores	—		—		8		8

There were no liabilities that were measured at fair value on a nonrecurring basis as of December 31, 2012.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

During the six months ended June 30, 2012, we recognized asset impairment losses of $595 million and $16 million related to our Aruba Refinery and certain equipment associated with a permanently cancelled capital project at one of our refineries, respectively. These impairment losses resulted from the fair value measurement of those assets on a nonrecurring basis as of March 31, 2012. As discussed in Note 3, we concluded that the Aruba Refinery was impaired as of March 31, 2012. As a result, we were required to determine the fair value of the Aruba Refinery and to write down its carrying value to that amount. We determined that the best measure of the refinery’s fair value at that time was the $350 million offer received and accepted. The fair value of the Aruba Refinery was measured using the market approach and was categorized in Level 3 within the fair value hierarchy. The carrying value of the Aruba Refinery’s long-lived assets as of March 31, 2012 was $945 million; therefore, we recognized an asset impairment loss of $595 million in March 2012.

Other Financial Instruments

Financial instruments that we recognize in our balance sheets at their carrying amounts are shown in the table below (in millions):

	June 30, 2013				December 31, 2012
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Cash and temporary cash investments	$	2,398	$	2,398	$	1,723	$	1,723
Equity investment in CST	114		465		—		—
Financial liabilities:
Debt (excluding capital leases)	6,522		7,736		7,000		8,621

The methods and significant assumptions used to estimate the fair value of these financial instruments are as follows:

• The fair value of cash and temporary cash investments approximates the carrying value due to the low level of credit risk of these assets combined with their short maturities and market interest rates (Level 1).

• The fair value of our equity investment in CST is determined using the market approach based on the quoted price of CST stock from a national securities exchange (Level 1).

• The fair value of debt is determined primarily using the market approach based on quoted prices provided by third-party brokers and vendor pricing services (Level 2).

25

VALERO ENERGY CORPORATION AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. PRICE RISK MANAGEMENT ACTIVITIES

General

We are exposed to market risks related to the volatility in the price of commodities, interest rates, and foreign currency exchange rates. We enter into derivative instruments to manage some of these risks, including derivative instruments related to the various commodities we purchase or produce, interest rate swaps, and foreign currency exchange and purchase contracts, as described below under “Risk Management Activities by Type of Risk.” These derivative instruments are recorded as either assets or liabilities measured at their fair values (see Note 12), as summarized below under “Fair Values of Derivative Instruments.” In addition, the effect of these derivative instruments on our income is summarized below under “Effect of Derivative Instruments on Income and Other Comprehensive Income.”

When we enter into a derivative instrument, it is designated as a fair value hedge, a cash flow hedge, an economic hedge, or a trading derivative. The gain or loss on a derivative instrument designated and qualifying as a fair value hedge, as well as the offsetting loss or gain on the hedged item attributable to the hedged risk, is recognized currently in income in the same period. The effective portion of the gain or loss on a derivative instrument designated and qualifying as a cash flow hedge is initially reported as a component of other comprehensive income and is then recorded into income in the period or periods during which the hedged forecasted transaction affects income. The ineffective portion of the gain or loss on the cash flow derivative instrument, if any, is recognized in income as incurred. For our economic hedges (derivative instruments not designated as fair value or cash flow hedges) and for derivative instruments entered into by us for trading purposes, the derivative instrument is recorded at fair value and changes in the fair value of the derivative instrument are recognized currently in income. The cash flow effects of all of our derivative instruments are reflected in operating activities in our statements of cash flows for all periods presented.

We are also exposed to market risk related to the volatility in the price of credits needed to comply with various governmental and regulatory programs. To manage this risk, we enter into contracts to purchase these credits when prices are deemed favorable. Some of these contracts are derivative instruments; however, we elect the normal purchase and sale exception and do not record these contracts at their fair values.

Risk Management Activities by Type of Risk

Commodity Price Risk

We are exposed to market risks related to the volatility in the price of crude oil, refined products (primarily gasoline and distillate), grain (primarily corn), soybean oil, and natural gas used in our operations. To reduce the impact of price volatility on our results of operations and cash flows, we use commodity derivative instruments, including futures, swaps, and options. We use the futures markets for the available liquidity, which provides greater flexibility in transacting our hedging and trading operations. We use swaps primarily to manage our price exposure. Our positions in commodity derivative instruments are monitored and managed on a daily basis by a risk control group to ensure compliance with our stated risk management policy that has been approved by our board of directors.

For risk management purposes, we use fair value hedges, cash flow hedges, and economic hedges. In addition to the use of derivative instruments to manage commodity price risk, we also enter into certain commodity derivative instruments for trading purposes. Our objective for entering into each type of hedge or trading derivative is described below.

26

VALERO ENERGY CORPORATION AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

• Fair Value Hedges – Fair value hedges are used to hedge price volatility in certain refining inventories and firm commitments to purchase inventories. The level of activity for our fair value hedges is based on the level of our operating inventories, and generally represents the amount by which our inventories differ from our previous year-end LIFO inventory levels.

As of June 30, 2013, we had the following outstanding commodity derivative instruments that were entered into to hedge crude oil and refined product inventories and commodity derivative instruments related to the physical purchase of crude oil and refined products at a fixed price. The information presents the notional volume of outstanding contracts by type of instrument and year of maturity (volumes in thousands of barrels).

	Notional Contract Volumes by Year of Maturity
Derivative Instrument	2013
Crude oil and refined products:
Futures – long	8,062
Futures – short	10,954
Physical contracts - long	2,892

• Cash Flow Hedges – Cash flow hedges are used to hedge price volatility in certain forecasted feedstock and refined product purchases, refined product sales, and natural gas purchases. The objective of our cash flow hedges is to lock in the price of forecasted feedstock, refined product, or natural gas purchases or refined product sales at existing market prices that we deem favorable.

As of June 30, 2013, we had the following outstanding commodity derivative instruments that were entered into to hedge forecasted purchases or sales of crude oil and refined products. The information presents the notional volume of outstanding contracts by type of instrument and year of maturity (volumes in thousands of barrels).

	Notional Contract Volumes by Year of Maturity
Derivative Instrument	2013
Crude oil and refined products:
Futures – long	7,938
Futures – short	5,527
Physical contracts – short	2,411

• Economic Hedges – Economic hedges represent commodity derivative instruments that are not designated as fair value or cash flow hedges and are used to manage price volatility in certain (i) refinery

27

VALERO ENERGY CORPORATION AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

feedstock, refined product, and corn inventories, (ii) forecasted refinery feedstock, refined product, and corn purchases, and refined product sales, and (iii) fixed-price corn purchase contracts. Our objective for entering into economic hedges is consistent with the objectives discussed above for fair value hedges and cash flow hedges. However, the economic hedges are not designated as a fair value hedge or a cash flow hedge for accounting purposes, usually due to the difficulty of establishing the required documentation at the date that the derivative instrument is entered into that would allow us to achieve “hedge deferral accounting.”

As of June 30, 2013, we had the following outstanding commodity derivative instruments that were used as economic hedges and commodity derivative instruments related to the physical purchase of corn at a fixed price. The information presents the notional volume of outstanding contracts by type of instrument and year of maturity (volumes in thousands of barrels, except those identified as natural gas contracts that are presented in billions of British thermal units, corn contracts that are presented in thousands of bushels, and soybean oil contracts that are presented in thousands of pounds).

	Notional Contract Volumes by Year of Maturity
Derivative Instrument	2013	2014
Crude oil and refined products:
Swaps – long	3,510	—
Swaps – short	2,585	—
Futures – long	39,316	58
Futures – short	53,514	—
Natural gas:
Options – long	10,750	—
Corn:
Futures – long	28,405	5
Futures – short	49,030	1,180
Physical contracts – long	21,678	1,215
Soybean oil:
Futures – long	5,220	—
Futures – short	27,900	—

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VALERO ENERGY CORPORATION AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

• Trading Derivatives – Our objective for entering into commodity and other derivative instruments for trading purposes is to take advantage of existing market conditions related to future results of operations and cash flows.

As of June 30, 2013, we had the following outstanding commodity and other derivative instruments that were entered into for trading purposes. The information presents the notional volume of outstanding contracts by type of instrument and year of maturity (volumes represent thousands of barrels, except those identified as natural gas contracts that are presented in billions of British thermal units, corn contracts that are presented in thousands of bushels, and RINs contracts that are presented in thousands of gallons).

	Notional Contract Volumes by Year of Maturity
Derivative Instrument	2013	2014
Crude oil and refined products:
Swaps – long	26,255	21,135
Swaps – short	26,255	21,135
Futures – long	99,886	37,527
Futures – short	99,311	37,927
Options – long	26,321	—
Options – short	25,256	—
Natural gas:
Futures – long	1,700	—
Futures – short	750	—
Options – long	1,700	—
Corn:
Swaps – long	145	—
Swaps – short	145	—
Futures – long	5,620	—
Futures – short	5,620	—
Other:
RINs fixed-price contracts – short	25,000	—

Interest Rate Risk

Our primary market risk exposure for changes in interest rates relates to our debt obligations. We manage our exposure to changing interest rates through the use of a combination of fixed-rate and floating-rate debt. In addition, at times we have used interest rate swap agreements to manage our fixed to floating interest rate position by converting certain fixed-rate debt to floating-rate debt. We had no interest rate derivative instruments outstanding as of June 30, 2013 or December 31, 2012, or during the three and six months ended June 30, 2013 and 2012.

29

VALERO ENERGY CORPORATION AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Foreign Currency Risk

We are exposed to exchange rate fluctuations on transactions entered into by our international operations that are denominated in currencies other than the local (functional) currencies of those operations. To manage our exposure to these exchange rate fluctuations, we use foreign currency exchange and purchase contracts. These contracts are not designated as hedging instruments for accounting purposes, and therefore they are classified as economic hedges. As of June 30, 2013, we had commitments to purchase $581 million of U.S. dollars. These commitments matured on or before July 31, 2013, resulting in an immaterial loss in the third quarter of 2013.

Compliance Program Price Risk

We are exposed to market risk related to the volatility in the price of credits needed to comply with various governmental and regulatory programs. The most significant programs impacting our operations are those that require us to blend biofuels into the products we produce, and we are subject to such programs in most of the countries in which we operate. These countries set annual quotas for the percentage of biofuels that must be blended into the motor fuels consumed in these countries. As a producer of motor fuels from petroleum, we are obligated to blend biofuels into the products we produce at a rate that is at least equal to the applicable quota. To the degree we are unable to blend at the applicable rate, we must purchase biofuel credits (primarily RINs in the U.S.). We are exposed to the volatility in the market price of these credits, and we manage that risk by purchasing biofuel credits when prices are deemed favorable. Due to rising RINs prices in the U.S. during the six months ended June 30, 2013, we purchased a portion of our expected RINs obligation for 2013. The cost of meeting our obligations under these compliance programs was $137 million and $59 million for the three months ended June 30, 2013 and 2012, respectively, and $267 million and $126 million for the six months ended June 30, 2013 and 2012, respectively. These amounts are reflected in cost of sales.

30

VALERO ENERGY CORPORATION AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Fair Values of Derivative Instruments

The following tables provide information about the fair values of our derivative instruments as of June 30, 2013 and December 31, 2012 (in millions) and the line items in the balance sheets in which the fair values are reflected. See Note 12 for additional information related to the fair values of our derivative instruments.

As indicated in Note 12, we net fair value amounts recognized for multiple similar derivative contracts executed with the same counterparty under master netting arrangements, including cash collateral assets and obligations. The tables below, however, are presented on a gross asset and gross liability basis, which results in the reflection of certain assets in liability accounts and certain liabilities in asset accounts.

	Balance Sheet Location	June 30, 2013
		Asset Derivatives		Liability Derivatives
Derivatives designated as hedging instruments
Commodity contracts:
Futures	Receivables, net	$	49	$	53
Derivatives not designated as hedging instruments
Commodity contracts:
Futures	Receivables, net	$	966	$	942
Swaps	Receivables, net	16		11
Swaps	Prepaid expenses and other	2		1
Swaps	Accrued expenses	5		11
Options	Receivables, net	4		6
Options	Prepaid expenses and other	1		—
Options	Accrued expenses	—		1
Physical purchase contracts	Inventories	5		11
RINs fixed-price contracts	Prepaid expenses and other	—		22
Foreign currency contracts	Receivables, net	10		—
Total		$	1,009	$	1,005
Total derivatives		$	1,058	$	1,058

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VALERO ENERGY CORPORATION AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

	Balance Sheet Location	December 31, 2012
		Asset Derivatives		Liability Derivatives
Derivatives designated as hedging instruments
Commodity contracts:
Futures	Receivables, net	$	77	$	64
Swaps	Receivables, net	15		13
Swaps	Prepaid expenses and other	2		2
Total		$	94	$	79
Derivatives not designated as hedging instruments
Commodity contracts:
Futures	Receivables, net	$	1,066	$	1,073
Swaps	Receivables, net	9		6
Swaps	Accrued expenses	32		46
Options	Receivables, net	1		4
Options	Accrued expenses	1		—
Physical purchase contracts	Inventories	11		—
Foreign currency contracts	Receivables, net	1		—
Foreign currency contracts	Accrued expenses	—		1
Total		$	1,121	$	1,130
Total derivatives		$	1,215	$	1,209

Market and Counterparty Risk

Our price risk management activities involve the receipt or payment of fixed price commitments into the future. These transactions give rise to market risk, which is the risk that future changes in market conditions may make an instrument less valuable. We closely monitor and manage our exposure to market risk on a daily basis in accordance with policies approved by our board of directors. Market risks are monitored by a risk control group to ensure compliance with our stated risk management policy. Concentrations of customers in the refining industry may impact our overall exposure to counterparty risk because these customers may be similarly affected by changes in economic or other conditions. In addition, financial services companies are the counterparties in certain of our price risk management activities, and such financial services companies may be adversely affected by periods of uncertainty and illiquidity in the credit and capital markets.

There were no material amounts due from counterparties in the refining or financial services industry as of June 30, 2013orDecember 31, 2012. We do not require any collateral or other security to support derivative instruments into which we enter. We also do not have any derivative instruments that require us to maintain a minimum investment-grade credit rating.

32

VALERO ENERGY CORPORATION AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Effect of Derivative Instruments on Income and Other Comprehensive Income

The following tables provide information about the gain or loss recognized in income and other comprehensive income on our derivative instruments and the line items in the financial statements in which such gains and losses are reflected (in millions).

Derivatives in Fair Value Hedging Relationships	Location of Gain (Loss) Recognized in Income on Derivatives	Three Months Ended June 30,						Six Months Ended June 30,
		2013			2012			2013			2012
Commodity contracts:
Gain (loss) recognized in income on derivatives	Cost of sales	$	(20	)	$	87		$	(21	)	$	(180	)
Gain (loss) recognized in income on hedged item	Cost of sales	22			(91		)	22			137
Gain (loss) recognized in income on derivatives (ineffective portion)	Cost of sales	2			(4		)	1			(43		)

For fair value hedges, no component of the derivative instruments’ gains or losses was excluded from the assessment of hedge effectiveness for the three and six months ended June 30, 2013 and 2012. There were no amounts recognized in income for hedged firm commitments that no longer qualified as fair value hedges during the three or six months ended June 30, 2013. We recognized a gain of $28 million in income for hedged firm commitments that no longer qualified as fair value hedges during the three and six months ended June 30, 2012.

Derivatives in Cash Flow Hedging Relationships	Location of Gain (Loss) Recognized in Income on Derivatives	Three Months Ended June 30,						Six Months Ended June 30,
		2013			2012			2013			2012
Commodity contracts:
Gain (loss) recognized in OCI on derivatives (effective portion)		$	(10	)	$	(31	)	$	(9	)	$	16
Gain (loss) reclassified from accumulated OCI into income (effective portion)	Cost of sales	(8		)	(12		)	(5		)	36
Gain (loss) recognized in income on derivatives (ineffective portion)	Cost of sales	(2		)	31			(3		)	26

33

VALERO ENERGY CORPORATION AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For cash flow hedges, no component of the derivative instruments’ gains or losses was excluded from the assessment of hedge effectiveness for the three and six months ended June 30, 2013 and 2012. For the three and six months ended June 30, 2013, cash flow hedges primarily related to forward sales of gasoline and distillates, and associated forward purchases of crude oil, with $2 million of cumulative after-tax losses on cash flow hedges remaining in accumulated other comprehensive income. We estimate that $3 million of the deferred loss as of June 30, 2013 will be reclassified into cost of sales over the next 12 months as a result of hedged transactions that are forecasted to occur. For the three and six months ended June 30, 2013 and 2012, there were no amounts reclassified from accumulated other comprehensive income into income as a result of the discontinuance of cash flow hedge accounting.

Derivatives Designated as Economic Hedges and Other Derivative Instruments	Location of Gain (Loss) Recognized in Income on Derivatives	Three Months Ended June 30,				Six Months Ended June 30,
		2013		2012		2013		2012
Commodity contracts	Cost of sales	$	246	$	574	$	281	$	423
Foreign currency contracts	Cost of sales	11		1		36		(22		)
Total		$	257	$	575	$	317	$	401

Trading Derivatives	Location of Gain (Loss) Recognized in Income on Derivatives	Three Months Ended June 30,					Six Months Ended June 30,
		2013			2012		2013			2012
Commodity contracts	Cost of sales	$	3		$	8	$	5		$	4
RINs fixed-price contracts	Cost of sales	(7		)	—		(20		)	—
Total		$	(4	)	$	8	$	(15	)	$	4

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

CAUTIONARY STATEMENT FOR THE PURPOSE OF SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This Form 10-Q, including without limitation our discussion below under the heading “OVERVIEW AND OUTLOOK,” includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. You can identify our forward-looking statements by the words “anticipate,” “believe,” “expect,” “plan,” “intend,” “estimate,” “project,” “projection,” “predict,” “budget,” “forecast,” “goal,” “guidance,” “target,” “could,” “should,” “may,” and similar expressions.

These forward-looking statements include, among other things, statements regarding:

• future refining margins, including gasoline and distillate margins;

• future ethanol margins;

• expectations regarding feedstock costs, including crude oil differentials, and operating expenses;

• anticipated levels of crude oil and refined product inventories;

• our anticipated level of capital investments, including deferred refinery turnaround and catalyst costs and capital expenditures for environmental and other purposes, and the effect of those capital investments on our results of operations;

• anticipated trends in the supply of and demand for crude oil and other feedstocks and refined products globally and in the regions where we operate;

• expectations regarding environmental, tax, and other regulatory initiatives; and

• the effect of general economic and other conditions on refining and ethanol industry fundamentals.

We based our forward-looking statements on our current expectations, estimates, and projections about ourselves and our industry. We caution that these statements are not guarantees of future performance and involve risks, uncertainties, and assumptions that we cannot predict. In addition, we based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. Accordingly, our actual results may differ materially from the future performance that we have expressed or forecast in the forward-looking statements. Differences between actual results and any future performance suggested in these forward-looking statements could result from a variety of factors, including the following:

• acts of terrorism aimed at either our facilities or other facilities that could impair our ability to produce or transport refined products or receive feedstocks;

• political and economic conditions in nations that produce crude oil or consume refined products;

• demand for, and supplies of, refined products such as gasoline, diesel fuel, jet fuel, petrochemicals, and ethanol;

• demand for, and supplies of, crude oil and other feedstocks;

• the ability of the members of the Organization of Petroleum Exporting Countries (OPEC) to agree on and to maintain crude oil price and production controls;

• the level of consumer demand, including seasonal fluctuations;

• refinery overcapacity or undercapacity;

• our ability to successfully integrate any acquired businesses into our operations;

• the actions taken by competitors, including both pricing and adjustments to refining capacity in response to market conditions;

• the level of competitors’ imports into markets that we supply;

• accidents, unscheduled shutdowns, or other catastrophes affecting our refineries, machinery, pipelines, equipment, and information systems, or those of our suppliers or customers;

35

• changes in the cost or availability of transportation for feedstocks and refined products;

• the price, availability, and acceptance of alternative fuels and alternative-fuel vehicles;

• the levels of government subsidies for ethanol and other alternative fuels;

• delay of, cancellation of, or failure to implement planned capital projects and realize the various assumptions and benefits projected for such projects or cost overruns in constructing such planned capital projects;

• earthquakes, hurricanes, tornadoes, and irregular weather, which can unforeseeably affect the price or availability of natural gas, crude oil, grain and other feedstocks, and refined products and ethanol;

• rulings, judgments, or settlements in litigation or other legal or regulatory matters, including unexpected environmental remediation costs, in excess of any reserves or insurance coverage;

• legislative or regulatory action, including the introduction or enactment of legislation or rulemakings by governmental authorities, including tax and environmental regulations, such as those to be implemented under the California Global Warming Solutions Act (also known as AB 32) and the United States (U.S.) Environmental Protection Agency’s (EPA) regulation of greenhouse gases, which may adversely affect our business or operations;

• changes in the credit ratings assigned to our debt securities and trade credit;

• changes in currency exchange rates, including the value of the Canadian dollar, the pound sterling, and the euro relative to the U.S. dollar; and

• overall economic conditions, including the stability and liquidity of financial markets.

Any one of these factors, or a combination of these factors, could materially affect our future results of operations and whether any forward-looking statements ultimately prove to be accurate. Our forward-looking statements are not guarantees of future performance, and actual results and future performance may differ materially from those suggested in any forward-looking statements. We do not intend to update these statements unless we are required by the securities laws to do so.

All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing. We undertake no obligation to publicly release any revisions to any such forward-looking statements that may be made to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events.

36

OVERVIEW AND OUTLOOK

Overview

For the second quarter of 2013, we reported net income attributable to Valero stockholders of $466 million, or $0.85 per share (assuming dilution), compared to $831 million, or $1.50 per share (assuming dilution), for the second quarter of 2012.

The decrease in net income attributable to Valero stockholders of $365 million was primarily due to the decrease of $553 million in our operating income as outlined by business segment in the following table (in millions):

	Three Months Ended June 30,
	2013			2012			Change
Operating income (loss) by business segment:
Refining	$	921		$	1,364		$	(443	)
Retail	39			172			(133		)
Ethanol	95			5			90
Corporate	(247		)	(180		)	(67		)
Total	$	808		$	1,361		$	(553	)

The $443 million decrease in refining segment operating income in the second quarter of 2013 compared to the second quarter of 2012 was primarily due to lower refining margins in each of our regions. The decrease in refining margins was the result of significantly lower discounts for sour crude oils, higher costs of biofuel credits (primarily Renewable Identification Numbers (RINs) needed to comply with the U.S. federal Renewable Fuel Standard (RFS)), and higher natural gas costs.

On May 1, 2013, we completed the separation of our retail business, creating an independent public company named CST Brands, Inc. (CST), and as a result, we no longer operate a retail business. Therefore, retail segment operating income for the second quarter of 2013 reflects the operations of our former retail business for only the month of April 2013, which is the primary reason for the $133 million decrease in retail segment operating income in the second quarter of 2013 compared to the second quarter of 2012. The separation of our retail business is more fully discussed in Note 2 of Condensed Notes to Consolidated Financial Statements.

Our ethanol segment operating income in the second quarter of 2013 increased $90 million compared to the second quarter of 2012 due to higher gross margins per gallon and higher production volumes. Ethanol prices increased quarter over quarter due to a decrease in the supply of ethanol resulting from lower industry production volumes throughout 2012 and the first quarter of 2013. Demand for ethanol, however, remained consistent and drove the increase in ethanol prices as supplies were decreasing. We increased our production of ethanol in the second quarter of 2013 to capture the improved economics of higher gross margins per gallon during the quarter.

For the first six months of 2013, we reported net income attributable to Valero stockholders of $1.1 billion, or $2.03 per share (assuming dilution), compared to $399 million, or $0.72 per share (assuming dilution), for the first six months of 2012.

37

The increase in net income attributable to Valero stockholders of $721 million was primarily due to the increase of $752 million in our operating income as outlined by business segment in the following table (in millions):

	Six Months Ended June 30,
	2013			2012			Change
Operating income (loss) by business segment:
Refining	$	2,133		$	1,245		$	888
Retail	81			212			(131		)
Ethanol	109			14			95
Corporate	(454		)	(354		)	(100		)
Total	$	1,869		$	1,117		$	752

The results for the first six months of 2012 were significantly impacted by asset impairment losses of $611 million primarily related to our Aruba Refinery, which are further discussed in Note 3 of Condensed Notes to Consolidated Financial Statements. Excluding these noncash asset impairment losses, total operating income for the first six months of 2012 would have been $1.7 billion and the increase in total operating income and refining segment operating income in the first six months of 2013 compared to the first six months of 2012 would have been $141 million and $277 million, respectively.

The $277 million increase in refining segment operating income in the first six months of 2013 compared to the first six months of 2012 was primarily due to higher refining margins in most of our regions, which resulted from improved gasoline and distillate margins. These improvements, however, were negatively impacted by higher costs of biofuel credits (primarily RINs in the U.S.), and higher natural gas costs during the second quarter of 2013. The $131 million decrease in retail segment operating income in the first six months of 2013 compared to the first six months of 2012 was primarily due to the separation of our retail business on May 1, 2013, as previously discussed, and the reasons for the $95 million increase in ethanol segment operating income between the six-month periods are also consistent with those previously discussed.

Outlook

During 2011, 2012 and the first quarter of 2013, our refining segment benefited from processing heavy sour crude oils (such as Maya crude oil) due to the favorable discounts between the price of this type of crude oil and the price of Brent crude oil. Because the market for refined products generally tracks the price of Brent crude oil, which is a benchmark sweet crude oil, we benefit when we process crude oils that are priced at a discount to Brent crude oil. During the second quarter of 2013, the discount in the price of heavy sour crude oils compared to the price of Brent crude oil narrowed significantly and negatively impacted our refining margins. For the remainder of 2013, we expect the discounts on heavy sour crude oils to improve as heavy Canadian crude oils are transported into the U.S. Gulf Coast region and increased offshore production in the U.S. Gulf Coast is anticipated. Energy markets and margins are volatile, and we expect them to continue to be volatile in the near to mid-term.

We are obligated to blend biofuels into the products we produce, and because we are unable to blend biofuels at the applicable rates, we must purchase biofuel credits (primarily RINs in the U.S.) in the open market and are therefore exposed to the volatility in the market price of these credits. During the first six months of 2013, the market price of RINs increased significantly, resulting in higher costs. As further discussed in Note 13 of Condensed Notes to Consolidated Financial Statements, the cost of meeting our obligations under various biofuel blending compliance programs was $267 million for the first six months of 2013. We estimate that the cost of meeting our obligation for the full year of 2013 will be between $600 million and $800 million based on recent prices for these biofuel credits and our estimate of the expected purchase requirement.

We continue to evaluate forming a master limited partnership for our portfolio of logistics assets.

38

RESULTS OF OPERATIONS

The following tables highlight our results of operations, our operating performance, and market prices that directly impact our operations. The narrative following these tables provides an analysis of our results of operations.

Financial Highlights (a)

(millions of dollars, except per share amounts)

	Three Months Ended June 30,
	2013			2012			Change
Operating revenues	$	34,034		$	34,662		$	(628	)
Costs and expenses:
Cost of sales	31,523			31,621			(98		)
Operating expenses:
Refining	906			868			38
Retail	57			170			(113		)
Ethanol	102			85			17
General and administrative expenses	233			171			62
Depreciation and amortization expense:
Refining	369			338			31
Retail	11			29			(18		)
Ethanol	11			10			1
Corporate	14			9			5
Total costs and expenses	33,226			33,301			(75		)
Operating income	808			1,361			(553		)
Other income (expense), net	11			(5		)	16
Interest and debt expense, net of capitalized interest	(78		)	(74		)	(4		)
Income before income tax expense	741			1,282			(541		)
Income tax expense	276			452			(176		)
Net income	465			830			(365		)
Less: Net loss attributable to noncontrolling interests	(1		)	(1		)	—
Net income attributable to Valero stockholders	$	466		$	831		$	(365	)
Earnings per common share – assuming dilution	$	0.85		$	1.50		$	(0.65	)

________________

See note references on page 43.

39

Refining Operating Highlights

(millions of dollars, except per barrel amounts)

	Three Months Ended June 30,
	2013		2012		Change
Refining:
Operating income	$	921	$	1,364	$	(443	)
Throughput margin per barrel (b)	$	9.26	$	10.63	$	(1.37	)
Operating costs per barrel:
Operating expenses	3.82		3.59		0.23
Depreciation and amortization expense	1.56		1.40		0.16
Total operating costs per barrel	5.38		4.99		0.39
Operating income per barrel	$	3.88	$	5.64	$	(1.76	)
Throughput volumes (thousand barrels per day):
Feedstocks:
Heavy sour crude	488		390		98
Medium/light sour crude	463		609		(146		)
Sweet crude	896		1,022		(126		)
Residuals	315		215		100
Other feedstocks	120		122		(2		)
Total feedstocks	2,282		2,358		(76		)
Blendstocks and other	324		300		24
Total throughput volumes	2,606		2,658		(52		)
Yields (thousand barrels per day):
Gasolines and blendstocks	1,281		1,294		(13		)
Distillates	910		918		(8		)
Other products (c)	441		469		(28		)
Total yields	2,632		2,681		(49		)

_______________

See note references on page 43.

40

Refining Operating Highlights by Region (d)

(millions of dollars, except per barrel amounts)

	Three Months Ended June 30,
	2013		2012		Change
U.S. Gulf Coast:
Operating income	$	414	$	637	$	(223	)
Throughput volumes (thousand barrels per day)	1,530		1,491		39
Throughput margin per barrel (b)	$	8.12	$	9.50	$	(1.38	)
Operating costs per barrel:
Operating expenses	3.63		3.40		0.23
Depreciation and amortization expense	1.51		1.41		0.10
Total operating costs per barrel	5.14		4.81		0.33
Operating income per barrel	$	2.98	$	4.69	$	(1.71	)
U.S. Mid-Continent:
Operating income	$	343	$	444	$	(101	)
Throughput volumes (thousand barrels per day)	422		404		18
Throughput margin per barrel (b)	$	14.20	$	17.61	$	(3.41	)
Operating costs per barrel:
Operating expenses	3.69		3.97		(0.28		)
Depreciation and amortization expense	1.59		1.55		0.04
Total operating costs per barrel	5.28		5.52		(0.24		)
Operating income per barrel	$	8.92	$	12.09	$	(3.17	)
North Atlantic:
Operating income	$	70	$	172	$	(102	)
Throughput volumes (thousand barrels per day)	370		473		(103		)
Throughput margin per barrel (b)	$	7.18	$	8.01	$	(0.83	)
Operating costs per barrel:
Operating expenses	3.90		3.22		0.68
Depreciation and amortization expense	1.20		0.80		0.40
Total operating costs per barrel	5.10		4.02		1.08
Operating income per barrel	$	2.08	$	3.99	$	(1.91	)
U.S. West Coast:
Operating income	$	94	$	111	$	(17	)
Throughput volumes (thousand barrels per day)	284		290		(6		)
Throughput margin per barrel (b)	$	10.81	$	10.95	$	(0.14	)
Operating costs per barrel:
Operating expenses	4.93		4.62		0.31
Depreciation and amortization expense	2.22		2.11		0.11
Total operating costs per barrel	7.15		6.73		0.42
Operating income per barrel	$	3.66	$	4.22	$	(0.56	)
Total refining operating income	$	921	$	1,364	$	(443	)

_______________

See note references on page 43.

41

Average Market Reference Prices and Differentials

(dollars per barrel, except as noted)

	Three Months Ended June 30,
	2013			2012			Change
Feedstocks:
Brent crude oil	$	103.36		$	108.95		$	(5.59	)
Brent less WTI crude oil	9.17			15.51			(6.34		)
Brent less Alaska North Slope (ANS) crude oil	(0.91		)	(0.65		)	(0.26		)
Brent less Louisiana Light Sweet (LLS) crude oil	(1.78		)	0.02			(1.80		)
Brent less Mars crude oil	3.53			4.22			(0.69		)
Brent less Maya crude oil	5.46			9.86			(4.40		)
LLS crude oil	105.14			108.93			(3.79		)
LLS less Mars crude oil	5.31			4.20			1.11
LLS less Maya crude oil	7.24			9.84			(2.60		)
WTI crude oil	94.19			93.44			0.75
Natural gas (dollars per million British thermal units)	4.00			2.24			1.76
Products:
U.S. Gulf Coast:
Conventional 87 gasoline less Brent	9.73			8.32			1.41
Ultra-low-sulfur diesel less Brent	16.79			14.65			2.14
Propylene less Brent	(6.76		)	(10.39		)	3.63
Conventional 87 gasoline less LLS	7.95			8.34			(0.39		)
Ultra-low-sulfur diesel less LLS	15.01			14.67			0.34
Propylene less LLS	(8.54		)	(10.37		)	1.83
U.S. Mid-Continent:
Conventional 87 gasoline less WTI	26.11			27.33			(1.22		)
Ultra-low-sulfur diesel less WTI	29.30			30.32			(1.02		)
North Atlantic:
Conventional 87 gasoline less Brent	11.34			12.43			(1.09		)
Ultra-low-sulfur diesel less Brent	18.17			16.11			2.06
U.S. West Coast:
CARBOB 87 gasoline less ANS	21.18			18.20			2.98
CARB diesel less ANS	17.09			15.09			2.00
CARBOB 87 gasoline less WTI	31.26			34.36			(3.10		)
CARB diesel less WTI	27.17			31.25			(4.08		)
New York Harbor corn crush (dollars per gallon)	0.28			(0.06		)	0.34

_______________

See note references on page 43.

42

Retail and Ethanol Operating Highlights

(millions of dollars, except per gallon amounts)

	Three Months Ended June 30,
	2013		2012		Change
Retail:
Operating income	$	39	$	172	$	(133	)
Ethanol:
Operating income	$	95	$	5	$	90
Production (thousand gallons per day)	3,508		3,352		156
Gross margin per gallon of production (b)	$	0.65	$	0.32	$	0.33
Operating costs per gallon of production:
Operating expenses	0.32		0.28		0.04
Depreciation and amortization expense	0.03		0.03		—
Total operating costs per gallon of production	0.35		0.31		0.04
Operating income per gallon of production	$	0.30	$	0.01	$	0.29

_______________

See note references below.

The following notes relate to references on pages 39 through 43.

(a) On May 1, 2013, we completed the separation of our retail business to CST. This transaction is more fully discussed in Note 2 of Condensed Notes to Consolidated Financial Statements. As a result and effective May 1, 2013, our results of operations no longer include those of CST, except for our share of CST’s results of operations associated with the equity interest in CST retained by us, which is reflected in “other income (expense), net” in the three months ended June 30, 2013. The nature and significance of our post-separation participation in the supply of motor fuel to CST represents a continuation of activities with CST for accounting purposes. As such, the historical results of operations related to CST have not been reported as discontinued operations in the statements of income.

(b) Throughput margin per barrel represents operating revenues less cost of sales of our refining segment divided by throughput volumes. Gross margin per gallon of production represents operating revenues less cost of sales of our ethanol segment divided by production volumes.

(c) Other products primarily include petrochemicals, gas oils, No. 6 fuel oil, petroleum coke, sulfur, and asphalt.

(d) The regions reflected herein contain the following refineries: the U.S. Gulf Coast region includes the Aruba, Corpus Christi East, Corpus Christi West, Houston, Meraux, Port Arthur, St. Charles, Texas City, and Three Rivers Refineries; the U.S. Mid-Continent region includes the Ardmore, McKee, and Memphis Refineries; the North Atlantic region includes the Pembroke and Quebec City Refineries; and the U.S.West Coast region includes the Benicia and Wilmington Refineries.

General

Operating revenues decreased $628 million (or 2 percent) in the second quarter of 2013 compared to the second quarter of 2012 primarily as a result of lower average refined product prices between the two periods related to our refining segment operations. Operating income decreased $553 million in the second quarter of 2013 compared to the second quarter of 2012 primarily due to a $443 million decrease in refining segment operating income, a $133 million decrease in retail segment operating income, and a $62 million increase in general and administrative expenses. These decreases in operating income, however, were partially offset by a $90 million increase in ethanol segment operating income. The reasons for these changes in the operating results of our segments and general and administrative expenses, as well as other items that affected our income, are discussed below.

43

Refining

Refining segment operating income decreased $443 million from $1.4 billion in the second quarter of 2012 to $921 million in the second quarter of 2013 due to a $374 million decrease in refining margin, a $38 million increase in operating expenses, and a $31 million increase in depreciation and amortization expense.

Refining margin decreased $374 million (a $1.37 per barrel decrease) for the second quarter of 2013 compared to the second quarter of 2012 primarily due to the following:

• Lower discounts on heavy sour crude oils - Because the market for refined products generally tracks the price of Brent crude oil, which is a benchmark sweet crude oil, we benefit when we process crude oils that are priced at a discount to Brent crude oil. During the second quarter of 2013, the discount in the price of heavy sour crude oils compared to the price of Brent crude oil narrowed significantly. For example, Maya crude oil, which is a sour crude oil, sold at a discount of $5.46 per barrel to Brent crude oil during the second quarter of 2013 compared to a discount of $9.86 per barrel during the second quarter of 2012, representing an unfavorable decrease of $4.40 per barrel. Therefore, the lower discount on the sour crude oils we processed negatively impacted our refining margin. We estimate that the decrease in the discounts for heavy sour crude oils that we processed had a negative impact to our refining margin of approximately $195 million, quarter versus quarter.

• Higher costsof biofuel credits - As more fully described in Note 13 of Condensed Notes to Consolidated Financial Statements, we must purchase biofuel credits in order to meet our biofuel blending obligations under various government and regulatory compliance programs, and the cost of these credits (primarily RINs in the U.S.) increased by $78 million from $59 million in the second quarter of 2012 to $137 million in the second quarter of 2013. This increase was due to an increase in the market price of RINs caused by an ongoing expectation in the market of a shortage in available RINs by early next year when the RFS requires increased volumes of biofuel to be blended into refined products and a resulting increase in demand for RINs.

• Higher natural gas prices - During the second quarter of 2013, natural gas prices increased to an average market price of $4.00 per mmBtu from $2.24 per mmBtu in the second quarter of 2012, resulting in an increase in natural gas costs and a corresponding decrease in our refining margin of approximately $57 million. Natural gas prices increased in 2013 due to a reduced supply of natural gas combined with the expected increase in demand from power generation plants as they switch from coal to natural gas. We use natural gas as a feedstock to produce hydrogen that is used in the refining process; therefore, the cost of natural gas impacts our refining margin as well as our operating expenses, which are discussed below.

The increase of $38 million in operating expenses was primarily due to a $50 million increase in energy costs related to higher natural gas costs and an $18 million increase in maintenance expenses due to higher maintenance activities in the second quarter of 2013 related to outages at our Meraux and Port Arthur Refineries. These increases were partially offset by a $23 million decrease in operating expenses incurred by our Aruba Refinery, whose operations were suspended in March 2012.

The increase of $31 million in depreciation and amortization expense was due to additional depreciation expense associated with new capital projects that began operating subsequent to the second quarter of 2012, consisting primarily of the new hydrocracker at our Port Arthur Refinery that began operating in late 2012.

44

Retail

Retail segment operating income was $39 million for the second quarter of 2013 compared to $172 million for the second quarter of 2012. The $133 million decrease was primarily due to the separation of our retail business on May 1, 2013, which is more fully described in Note 2 of Notes to Consolidated Financial Statements. As a result of the separation, retail segment operating income for the second quarter of 2013 reflects the operations of our former retail business for only the month of April 2013.

Ethanol

Ethanol segment operating income was $95 million in the second quarter of 2013 compared to $5 million in the second quarter of 2012. The $90 million increase in operating income was primarily due to a $108 million increase in gross margin (a $0.33 per gallon increase), partially offset by a $17 million increase in operating expenses.

Gross margin increased primarily due to higher ethanol prices combined with increased ethanol production volumes between the second quarter of 2012 and the second quarter of 2013. Ethanol prices increased quarter over quarter due to a decrease in the supply of ethanol in the market. The decrease in supply resulted from reduced production in 2012 and early 2013 as the industry responded to a narrowing of gross margins, which were due to higher corn prices primarily caused by the drought in the corn-producing regions of the U.S. Mid-Continent that began in the second quarter of 2012. By the first quarter of 2013, ethanol inventory levels in the U.S. had declined to their lowest level in over three years and as a result, prices increased significantly beginning late in the first quarter of 2013. These price increases and increased demand resulted in higher production volumes, and our production volumes increased by 156,000 gallons per day between the comparable periods.

The $17 million increase in operating expenses during the second quarter of 2013 was due to a $17 million increase in energy costs primarily resulting from higher natural gas prices during the second quarter of 2013.

Corporate Expenses and Other

General and administrative expenses increased $62 million from the second quarter of 2012 to the second quarter of 2013 primarily due to $52 million of environmental and legal reserves that were recorded in the second quarter of 2013 and $30 million for transaction costs related to the separation of our retail business on May 1, 2013. These increases were partially offset by decreases in various other miscellaneous expenses.

“Interest and debt expense, net of capitalized interest” for the second quarter of 2013 increased $4 million from the second quarter of 2012. This increase was primarily due to an $8 million decrease in capitalized interest due to a corresponding decrease in capital expenditures, partially offset by a $13 million favorable impact from the decrease in average borrowings between the quarters.

Income tax expense decreased $176 million from the second quarter of 2012 to the second quarter of 2013 mainly as a result of lower income before income tax expense. Income tax expense for the three months ended June 30, 2013 also included $9 million incurred as a result of the separation of our retail business on May 1, 2013.

45

Financial Highlights (a)

(millions of dollars, except per share amounts)

	Six Months Ended June 30,
	2013			2012			Change
Operating revenues	$	67,508		$	69,829		$	(2,321	)
Costs and expenses:
Cost of sales	62,208			64,656			(2,448		)
Operating expenses:
Refining	1,782			1,832			(50		)
Retail	226			336			(110		)
Ethanol	179			172			7
General and administrative expenses	409			335			74
Depreciation and amortization expense:
Refining	727			675			52
Retail	41			56			(15		)
Ethanol	22			20			2
Corporate	45			19			26
Asset impairment losses (b)	—			611			(611		)
Total costs and expenses	65,639			68,712			(3,073		)
Operating income	1,869			1,117			752
Other income, net	25			1			24
Interest and debt expense, net of capitalized interest	(161		)	(173		)	12
Income before income tax expense	1,733			945			788
Income tax expense	616			547			69
Net income	1,117			398			719
Less: Net loss attributable to noncontrolling interests	(3		)	(1		)	(2		)
Net income attributable to Valero stockholders	$	1,120		$	399		$	721
Earnings per common share – assuming dilution	$	2.03		$	0.72		$	1.31

_______________

See note references on page 50.

46

Refining Operating Highlights

(millions of dollars, except per barrel amounts)

	Six Months Ended June 30,
	2013		2012		Change
Refining:
Operating income	$	2,133	$	1,245	$	888
Throughput margin per barrel (c)	$	9.92	$	9.20	$	0.72
Operating costs per barrel:
Operating expenses (b)	3.81		3.86		(0.05		)
Depreciation and amortization expense	1.55		1.43		0.12
Total operating costs per barrel	5.36		5.29		0.07
Operating income per barrel	$	4.56	$	3.91	$	0.65
Throughput volumes (thousand barrels per day):
Feedstocks:
Heavy sour crude	491		420		71
Medium/light sour crude	441		582		(141		)
Sweet crude	992		989		3
Residuals	270		192		78
Other feedstocks	101		133		(32		)
Total feedstocks	2,295		2,316		(21		)
Blendstocks and other	291		290		1
Total throughput volumes	2,586		2,606		(20		)
Yields (thousand barrels per day):
Gasolines and blendstocks	1,239		1,243		(4		)
Distillates	910		915		(5		)
Other products (d)	461		468		(7		)
Total yields	2,610		2,626		(16		)

_______________

See note references on page 50.

47

Refining Operating Highlights by Region (e)

(millions of dollars, except per barrel amounts)

	Six Months Ended June 30,
	2013		2012			Change
U.S. Gulf Coast (b):
Operating income	$	1,005	$	872		$	133
Throughput volumes (thousand barrels per day)	1,476		1,483			(7		)
Throughput margin per barrel (c)	$	9.02	$	8.21		$	0.81
Operating costs per barrel:
Operating expenses	3.70		3.53			0.17
Depreciation and amortization expense	1.56		1.45			0.11
Total operating costs per barrel	5.26		4.98			0.28
Operating income per barrel	$	3.76	$	3.23		$	0.53
U.S. Mid-Continent:
Operating income	$	820	$	698		$	122
Throughput volumes (thousand barrels per day)	423		401			22
Throughput margin per barrel (c)	$	15.80	$	15.72		$	0.08
Operating costs per barrel:
Operating expenses	3.53		4.64			(1.11		)
Depreciation and amortization expense	1.57		1.52			0.05
Total operating costs per barrel	5.10		6.16			(1.06		)
Operating income per barrel	$	10.70	$	9.56		$	1.14
North Atlantic:
Operating income	$	256	$	233		$	23
Throughput volumes (thousand barrels per day)	427		467			(40		)
Throughput margin per barrel (c)	$	7.89	$	6.84		$	1.05
Operating costs per barrel:
Operating expenses	3.57		3.37			0.20
Depreciation and amortization expense	1.01		0.73			0.28
Total operating costs per barrel	4.58		4.10			0.48
Operating income per barrel	$	3.31	$	2.74		$	0.57
U.S. West Coast:
Operating income	$	52	$	53		$	(1	)
Throughput volumes (thousand barrels per day)	260		255			5
Throughput margin per barrel (c)	$	8.76	$	8.96		$	(0.20	)
Operating costs per barrel:
Operating expenses	5.27		5.46			(0.19		)
Depreciation and amortization expense	2.38		2.35			0.03
Total operating costs per barrel	7.65		7.81			(0.16		)
Operating income per barrel	$	1.11	$	1.15		$	(0.04	)
Operating income for regions above	$	2,133	$	1,856		$	277
Asset impairment losses (b)	—		(611		)	611
Total refining operating income	$	2,133	$	1,245		$	888

_______________

See note references on page 50.

48

Average Market Reference Prices and Differentials

(dollars per barrel, except as noted)

	Six Months Ended June 30,
	2013			2012			Change
Feedstocks:
Brent crude oil	$	108.00		$	113.64		$	(5.64	)
Brent less WTI crude oil	13.75			15.48			(1.73		)
Brent less ANS crude oil	0.70			(0.01		)	0.71
Brent less LLS crude oil	(2.13		)	(0.91		)	(1.22		)
Brent less Mars crude oil	2.93			3.30			(0.37		)
Brent less Maya crude oil	7.57			9.59			(2.02		)
LLS crude oil	110.13			114.55			(4.42		)
LLS less Mars crude oil	5.06			4.21			0.85
LLS less Maya crude oil	9.70			10.50			(0.80		)
WTI crude oil	94.25			98.16			(3.91		)
Natural gas (dollars per million British thermal units)	3.72			2.32			1.40
Products:
U.S. Gulf Coast:
Conventional 87 gasoline less Brent	8.14			7.72			0.42
Ultra-low-sulfur diesel less Brent	16.88			14.44			2.44
Propylene less Brent	(0.14		)	(11.44		)	11.30
Conventional 87 gasoline less LLS	6.01			6.81			(0.80		)
Ultra-low-sulfur diesel less LLS	14.75			13.53			1.22
Propylene less LLS	(2.27		)	(12.35		)	10.08
U.S. Mid-Continent:
Conventional 87 gasoline less WTI	24.97			22.80			2.17
Ultra-low-sulfur diesel less WTI	32.39			29.03			3.36
North Atlantic:
Conventional 87 gasoline less Brent	11.15			10.08			1.07
Ultra-low-sulfur diesel less Brent	18.44			15.99			2.45
U.S. West Coast:
CARBOB 87 gasoline less ANS	17.64			16.22			1.42
CARB diesel less ANS	19.23			16.69			2.54
CARBOB 87 gasoline less WTI	30.69			31.71			(1.02		)
CARB diesel less WTI	32.28			32.18			0.10
New York Harbor corn crush (dollars per gallon)	0.10			(0.05		)	0.15

_______________

See note references on page 50.

49

Retail and Ethanol Operating Highlights

(millions of dollars, except per gallon amounts)

	Six Months Ended June 30,
	2013		2012		Change
Retail:
Operating income	$	81	$	212	$	(131	)
Ethanol:
Operating income	$	109	$	14	$	95
Production (thousand gallons per day)	3,112		3,415		(303		)
Gross margin per gallon of production (c)	$	0.55	$	0.33	$	0.22
Operating costs per gallon of production:
Operating expenses	0.32		0.28		0.04
Depreciation and amortization expense	0.04		0.03		0.01
Total operating costs per gallon of production	0.36		0.31		0.05
Operating income per gallon of production	$	0.19	$	0.02	$	0.17

_______________

See note references below.

The following notes relate to references on pages 46 through 50.

(a) On May 1, 2013, we completed the separation of our retail business to CST. This transaction is more fully discussed in Note 2 of Condensed Notes to Consolidated Financial Statements. As a result and effective May 1, 2013, our results of operations no longer include those of CST, except for our share of CST’s results of operations associated with the equity interest in CST retained by us, which is reflected in “other income (expense), net” in the six months ended June 30, 2013. The nature and significance of our post-separation participation in the supply of motor fuel to CST represents a continuation of activities with CST for accounting purposes. As such, the historical results of operations related to CST have not been reported as discontinued operations in the statements of income.

(b) Asset impairment losses for the six months ended June 30, 2012 include a $595 million loss on the write down of the Aruba Refinery and a $16 million loss related to equipment associated with a permanently cancelled capital project at another refinery. The asset impairment loss related to the Aruba Refinery resulted from our decision in March 2012 to suspend refining operations at the refinery. Subsequently, in September 2012, we suspended refining operations indefinitely and reorganized the refinery into a crude oil and refined products terminal; however, we continue to maintain the refining assets to allow them to be restarted and do not consider them abandoned. The total asset impairment loss of $611 million ($605 million after taxes) is reflected in refining segment operating income for the six months ended June 30, 2012, but it is excluded from operating costs per barrel and operating income per barrel for the refining segment and U.S. Gulf Coast region.

(c) Throughput margin per barrel represents operating revenues less cost of sales of our refining segment divided by throughput volumes. Gross margin per gallon of production represents operating revenues less cost of sales of our ethanol segment divided by production volumes.

(d) Other products primarily include petrochemicals, gas oils, No. 6 fuel oil, petroleum coke, and asphalt.

(e) The regions reflected herein contain the following refineries: the U.S. Gulf Coast region includes the Corpus Christi East, Corpus Christi West, Texas City, Houston, Three Rivers, St. Charles, Aruba, Port Arthur, and Meraux Refineries; the U.S. Mid-Continent region includes the McKee, Ardmore, and Memphis Refineries; the North Atlantic region includes the Pembroke and Quebec City Refineries; and the U.S. West Coast region includes the Benicia and Wilmington Refineries.

50

General

Operating revenues decreased $2.3 billion (or 3 percent) in the first six months of 2013 compared to the first six months of 2012 primarily as a result of lower average refined product prices between the two periods related to our refining segment operations. However, operating income increased $752 million in the first six months of 2013 compared to the first six months of 2012 primarily due to an $888 million increase in refining segment operating income and a $95 million increase in ethanol segment operating income, partially offset by a $131 million decrease in retail segment operating income and a $74 million increase in general and administrative expenses. The reasons for these changes in the operating results of our segments and general and administrative expenses, as well as other items that affected our income, are discussed below.

Refining

Refining segment operating income increased $888 million from $1.2 billion in the first six months of 2012 to $2.1 billion in the first six months of 2013. This increase, however, was largely the result of $611 million in asset impairment losses in the first six months of 2012 primarily related to our Aruba Refinery, which is more fully described in Note 3 of Condensed Notes to Consolidated Financial Statements. Excluding the prior year asset impairment losses, refining segment operating income increased $277 million due to a $279 million increase in refining margin and a $50 million decrease in operating expenses, partially offset by a $52 million increase in depreciation and amortization expense.

Refining margin increased $279 million (a $0.72 per barrel increase) in the first six months of 2013 compared to the first six months of 2012, primarily due to the following:

• Increase in gasoline and distillate margins - We experienced improved gasoline and distillate margins throughout all our regions for the first six months of 2013 compared to the first six months of 2012. For example, the WTI-based benchmark reference margin for U.S. Mid-Continent conventional 87 gasoline was $24.97 per barrel for the first six months of 2013 compared to $22.80 per barrel for the first six months of 2012, representing a favorable increase of $2.17 per barrel. In addition the WTI-based benchmark reference margin for U.S. Mid-Continent ultra-low-sulfur diesel (a type of distillate) was $32.39 per barrel for the first six months of 2013 as compared to $29.03 per barrel for the first six months of 2012, representing a favorable increase of $3.36 per barrel. We estimate that the increases in gasoline and distillate margins per barrel in the first six months of 2013 compared to the first six months of 2012 had a positive impact to our refining margin of approximately $130 million and $400 million, respectively, for all refining regions.

• Higher costs of biofuel credits - As more fully described in Note 13 of Condensed Notes to Consolidated Financial Statements, we must purchase biofuel credits in order to meet our biofuel blending obligation under various government and regulatory compliance programs, and the cost of these credits (primarily RINs in the U.S.) increased by $141 million from $126 million for the first six months of 2012 to $267 million in the first six months of 2013. This increase was due to an increase in the market price of RINs caused by an ongoing expectation in the market of a shortage in available RINs by early next year when the RFS requires increased volumes of biofuel to be blended into refined products and a resulting increase in demand for RINs.

• Higher natural gas prices - During the first six months of 2013, natural gas prices increased to an average market price of $3.72 per mmBtu from $2.32 per mmBtu in the first six months of 2012, resulting in an increase in natural gas costs and a corresponding decrease in our refining margin of approximately $83 million. Natural gas prices increased in 2013 due to a reduced supply of natural gas combined with the expected increase in demand from power generation plants as they switch from coal to natural gas. We use natural gas as a feedstock to produce hydrogen that is used in the refining process; therefore, the

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cost of natural gas impacts our refining margin as well as our operating expenses, which are discussed below.

The decrease of $50 million in operating expenses was primarily due to a $65 million decrease in operating expenses incurred by the Aruba Refinery, whose operations were suspended in March 2012, a $41 million decrease in maintenance expenses due to higher maintenance activities in the first quarter of 2012, and a $43 million decrease in insurance and other expense primarily due to a $32 million decrease in insurance reserves related to the favorable settlement of a lawsuit. These decreases were partially offset by a $111 million increase in energy costs related to higher natural gas costs.

The increase of $52 million in depreciation and amortization expense was due to additional depreciation expense associated with new capital projects that began operating subsequent to the second quarter of 2012, consisting primarily of the new hydrocracker at our Port Arthur Refinery that began operating in late 2012.

Retail

Retail segment operating income was $81 million for the first six months of 2013 compared to $212 million for the first six months of 2012. The $131 million decrease was primarily due to the separation of our retail business on May 1, 2013, which is more fully described in Note 2 of Notes to Consolidated Financial Statements. As a result of the separation, retail segment operating income for the first six months of 2013 reflects the operations of our former retail business for the first four months of 2013.

Ethanol

Ethanol segment operating income was $109 million in the first six months of 2013 compared to $14 million in the first six months of 2012. The $95 million increase in operating income was primarily due to a $104 million increase in gross margin (a $0.22 per gallon increase), partially offset by a $7 million increase in operating expenses.

Gross margin increased primarily due to higher ethanol prices between the first six months of 2012 and the first six months of 2013. Gross margin per gallon was $0.55 per gallon for the first six months of 2013 compared to $0.33 per gallon for the first six months of 2012. Ethanol prices increased period over period due to a decrease in the supply of ethanol in the market. The decrease in supply resulted from reduced production in 2012 and early 2013 as the industry responded to a narrowing of gross margins, which were due to higher corn prices primarily caused by the drought in the corn-producing regions of the U.S. Mid-Continent that began in the second quarter of 2012. By the first quarter of 2013, ethanol inventory levels in the U.S. had declined to their lowest level in over three years and as a result, prices increased significantly beginning late in the first quarter of 2013. These price increases and increased demand resulted in higher industry production volumes. Despite the increase in production that occurred during the second quarter of 2013, our ethanol production decreased 303,000 gallons per day in the first six months of 2013 compared to the first six months of 2012 because three plants that were idled during the last half of 2012 did not restart production until late in the first quarter of 2013.

The $7 million increase in operating expenses during the first six months of 2013 compared to the first six months of 2012 was primarily due to an increase in energy costs compared to the first six months of 2012 resulting from the higher natural gas prices during the first six months of 2013.

Corporate Expenses and Other

General and administrative expenses increased $74 million from the first six months of 2012 to the first six months of 2013 primarily due to $52 million of environmental and legal reserves that were recorded in the second quarter of 2013 and $30 million for transaction costs related to the separation of our retail business

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on May 1, 2013. These increases were partially offset by decreases in various other miscellaneous expenses. The increase in corporate depreciation and amortization expense was primarily due to $20 million of losses incurred on the sale of certain corporate property.

“Interest and debt expense, net of capitalized interest” for the first six months of 2013 decreased $12 million from the first six months of 2012. This decrease was primarily due to a $26 million favorable impact from the decrease in average borrowings and a $12 million write-off of unamortized debt discounts related to the early redemption of certain industrial revenue bonds in the first quarter of 2012, partially offset by a $20 million decrease in capitalized interest due to a corresponding decrease in capital expenditures between the two periods.

Income tax expense increased $69 million from the first six months of 2012 to the first six months of 2013 mainly as a result of higher income before income tax expense. However, the variation in the customary relationship between income tax expense and income before income tax expense for the six months ended June 30, 2012 was primarily due to not recognizing the tax benefits associated with the asset impairment loss of $595 million related to the Aruba Refinery as we did not expect to realize a tax benefit from these losses. Income tax expense for the six months ended June 30, 2013 also included $9 million incurred as a result of the separation of our retail business on May 1, 2013.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows for the Six Months Ended June 30,2013 and 2012

Net cash provided by operating activities for the first six months of 2013 of $2.8 billion was generated primarily from operating income discussed above under “RESULTS OF OPERATIONS” combined with favorable changes in current assets and current liabilities. Net cash provided by operating activities for the first six months of 2012 was also $2.8 billion and was generated from operating income excluding the asset impairment losses combined with favorable changes in current assets and current liabilities. The changes in cash provided by or used in working capital during the first six months of 2013 and 2012 are shown in Note 11 of Condensed Notes to Consolidated Financial Statements.

The net cash provided by operating activities combined with $735 million of net cash received in connection with the separation of our retail business (consisting of $550 million of proceeds on short-term debt, a $500 million cash distribution from CST less $315 million of cash retained by CST) were used mainly to:

• fund $1.7 billion of capital expenditures and deferred turnaround and catalyst costs;

• make scheduled long-term note repayments of $480 million;

• purchase common stock for treasury of $560 million;

• pay common stock dividends of $220 million; and

• increase available cash on hand by $675 million.

The net cash provided by operating activities during the first six months of 2012 combined with $160 million of proceeds on a note receivable related to the sale of the Paulsboro Refinery, $300 million of proceeds from the remarketing of the 4.0% Gulf Opportunity Zone Revenue Bonds Series 2010, $1.1 billion in borrowings under our revolving credit facility, and $1.3 billion of proceeds from the sale of receivables under our accounts receivable sales facility were used mainly to:

• fund $1.7 billion of capital expenditures and deferred turnaround and catalyst costs;

• redeem our Series 1997 5.6%, Series 1998 5.6%, Series 1999 5.7%, Series 2001 6.65%, and Series 1997A 5.45% industrial revenue bonds for $108 million;

• make scheduled long-term note repayments of $754 million;

• repay borrowings under our revolving credit facility of $1.1 billion;

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• make a repayment under our accounts receivable sales facility of $1.5 billion;

• purchase common stock for treasury of $147 million;

• pay common stock dividends of $166 million; and

• increase available cash on hand by $271 million.

Capital Investments

Our operations, especially those of our refining segment, are highly capital intensive. Each of our refineries comprises a large base of property assets, consisting of a series of interconnected, highly integrated and interdependent crude oil processing facilities and supporting logistical infrastructure (Units), and these Units are improved continuously. The cost of improvements, which consist of the addition of new Units and betterments of existing Units, can be significant. We have historically acquired our refineries at amounts significantly below their replacement costs, whereas our improvements are made at full replacement value. As such, the costs for improving our refinery assets increase over time and are significant in relation to the amounts we paid to acquire our refineries. We plan for these improvements by developing a multi-year capital program that is updated and revised based on changing internal and external factors.

We make improvements to our refineries in order to maintain and enhance their operating reliability, to meet environmental obligations with respect to reducing emissions and removing prohibited elements from the products we produce, or to enhance their profitability. Reliability and environmental improvements generally do not increase the throughput capacities of our refineries. Improvements that enhance refinery profitability may increase throughput capacity, but many of these improvements allow our refineries to process different types of crude oil and refine crude oil into products with higher market values. Therefore, many of our improvements do not increase throughput capacity significantly.

During the six months ended June 30, 2013, we expended $1.2 billion for capital expenditures and $449 million for deferred turnaround and catalyst costs. Capital expenditures for the six months ended June 30, 2013 included $40 million of costs related to environmental projects.

For 2013, we expect to incur approximately $2.85 billion for capital investments of which approximately $100 million is for environmental projects and approximately $650 million is for deferred turnaround and catalyst costs. The capital expenditure estimate excludes expenditures related to strategic business acquisitions. We continuously evaluate our capital budget and make changes as conditions warrant.

Contractual Obligations

As of June 30, 2013, our contractual obligations included debt, capital lease obligations, operating leases, purchase obligations, and other long-term liabilities. There were no material changes outside the ordinary course of our business with respect to these contractual obligations during the six months ended June 30, 2013.

As of June 2013, we had an accounts receivable sales facility with a group of third-party entities and financial institutions to sell eligible trade receivables on a revolving basis up to $1.5 billion. In July 2013, we amended this facility to extend the maturity date to July 2014.

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Our debt and financing agreements do not have rating agency triggers that would automatically require us to post additional collateral. However, in the event of certain downgrades of our senior unsecured debt to below investment grade ratings by Moody’s Investors Service, Standard & Poor’s Ratings Services, and Fitch Ratings, the cost of borrowings under some of our bank credit facilities and other arrangements would increase. All of our ratings on our senior unsecured debt are at or above investment grade level as follows:

Rating Agency	Rating
Moody’s Investors Service	Baa2 (stable outlook)
Standard & Poor’s Ratings Services	BBB (negative outlook)
Fitch Ratings	BBB (stable outlook)

We cannot provide assurance that these ratings will remain in effect for any given period of time or that one or more of these ratings will not be lowered or withdrawn entirely by a rating agency. We note that these credit ratings are not recommendations to buy, sell, or hold our securities and may be revised or withdrawn at any time by the rating agency. Each rating should be evaluated independently of any other rating. Any future reduction below investment grade or withdrawal of one or more of our credit ratings could have a material adverse impact on our ability to obtain short- and long-term financing and the cost of such financings.

Other Commercial Commitments

As of June 30, 2013, we had outstanding letters of credit under our committed lines of credit as follows (in millions):

	Borrowing Capacity		Expiration	Outstanding Letters of Credit
Letter of credit facilities	$	550	June 2014	$	250
Revolving credit facility	$	3,000	December 2016	$	59
Canadian revolving credit facility	C$	50	November 2013	C$	9

As of June 30, 2013, we had no amounts borrowed under our revolving credit facilities. The letters of credit outstanding as of June 30, 2013 expire during 2013 and 2014.

Other Matters Impacting Liquidity and Capital Resources

Pension Plan Funded Status

In February 2013, we announced amendments to certain of our pension plans that reduced our benefit costs and obligations for 2013 and future years, as further discussed in Note 8 of Condensed Notes to Consolidated Financial Statements. As a result of these plan amendments, management reduced its discretionary contributions to our pension plans by $100 million, resulting in expected contributions to our pension plans of $45 million for 2013. In addition, we plan to contribute approximately $21 million to our other postretirement benefit plans during 2013.

Stock Purchase Programs

As of June 30, 2013, we have approvals under common stock purchase programs to purchase approximately $3.0 billion of our common stock.

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Environmental Matters

Our operations are subject to extensive environmental regulations by governmental authorities relating to the discharge of materials into the environment, waste management, pollution prevention measures, greenhouse gas emissions, and characteristics and composition of gasolines and distillates. Because environmental laws and regulations are becoming more complex and stringent and new environmental laws and regulations are continuously being enacted or proposed, the level of future expenditures required for environmental matters could increase in the future. In addition, any major upgrades in any of our operating facilities could require material additional expenditures to comply with environmental laws and regulations. See Note 6 of Condensed Notes to Consolidated Financial Statements for a further discussion of our environmental matters.

Tax Matters

As of June 30, 2013, the Internal Revenue Service (IRS) has ongoing tax audits related to our U.S. federal tax returns from 2002 through 2009. We have received Revenue Agent Reports in connection with all of these audits, and we are vigorously contesting certain tax positions and assertions from the IRS. We have made significant progress during the six months ended June 30, 2013 in resolving certain of these matters with the IRS and have agreed to settle the audit related to the 2004 and 2005 tax years for a group of our subsidiaries. We expect to finalize the settlement agreement within the next six months for an amount consistent with the recorded amount of unrecognized tax benefits associated with that audit. We are continuing to work with the IRS to resolve the remaining matters and we believe that they will also be resolved for amounts that do not exceed the recorded amounts of unrecognized tax benefits associated with these matters. As of June 30, 2013, the total amount of unrecognized tax benefits was $386 million, with $8 million reflected in “income taxes payable” and $378 million reflected in “other long-term liabilities”, and this total amount did not change significantly during the six months ended June 30, 2013. We do not believe that settlement agreements related to the remaining audits will be finalized and that cash will be paid to the IRS in connection with such settlements within the next 12 months, but the complexity of these matters makes it difficult to predict the timing of their resolution. Should we ultimately settle for amounts consistent with our estimates, we believe that we will have sufficient cash on hand at that time to make such payments.

Cash Held by Our International Subsidiaries

We operate in countries outside the U.S. through subsidiaries incorporated in these countries, and the earnings of these subsidiaries are taxed by the countries in which they are incorporated. We intend to reinvest these earnings indefinitely in our international operations even though we are not restricted from repatriating such earnings to the U.S. in the form of cash dividends. Should we decide to repatriate such earnings, we would incur and pay taxes on the amounts repatriated. In addition, such repatriation could cause us to record deferred tax expense that could significantly impact our results of operations. We believe, however, that a substantial portion of our international cash can be returned to the U.S. without significant tax consequences through means other than a repatriation of earnings. As of June 30, 2013, $995 million of our cash and temporary cash investments was held by our international subsidiaries.

Financial Regulatory Reform

In July 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act (Wall Street Reform Act). Key provisions of the Wall Street Reform Act create new statutory requirements that require most derivative instruments to be traded on exchanges and routed through clearinghouses, as well as impose new recordkeeping and reporting responsibilities on market participants. While certain final rules implementing the Wall Street Reform Act became effective in the fourth quarter of 2012, others continue to become effective in 2013 and 2014. Although we cannot predict the ultimate impact of these rules, which may result in higher clearing costs and more reporting requirements with respect to our derivative activities, we believe they will not have a material impact on our financial position, results of operations, or liquidity.

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Concentration of Customers

Our refining and marketing operations have a concentration of customers in the refining industry and customers who are refined product wholesalers and retailers. These concentrations of customers may impact our overall exposure to credit risk, either positively or negatively, in that these customers may be similarly affected by changes in economic or other conditions. However, we believe that our portfolio of accounts receivable is sufficiently diversified to the extent necessary to minimize potential credit risk. Historically, we have not had any significant problems collecting our accounts receivable.

Sources of Liquidity

We believe that we have sufficient funds from operations and, to the extent necessary, from borrowings under our credit facilities, to fund our ongoing operating requirements. We expect that, to the extent necessary, we can raise additional funds from time to time through equity or debt financings in the public and private capital markets or the arrangement of additional credit facilities. However, there can be no assurances regarding the availability of any future financings or additional credit facilities or whether such financings or additional credit facilities can be made available on terms that are acceptable to us.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires us to make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes. Actual results could differ from those estimates. Our critical accounting policies are disclosed in our annual report on Form 10-K for the year ended December 31, 2012.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

COMMODITY PRICE RISK

We are exposed to market risks related to the volatility in the price of crude oil, refined products (primarily gasoline and distillate), grain (primarily corn), and natural gas used in our operations. To reduce the impact of price volatility on our results of operations and cash flows, we use commodity derivative instruments, including swaps, futures, and options to hedge:

• inventories and firm commitments to purchase inventories generally for amounts by which our current year inventory levels (determined on a last-in, first-out (LIFO) basis) differ from our previous year-end LIFO inventory levels and

• forecasted feedstock and refined product purchases, refined product sales, natural gas purchases, and corn purchases to lock in the price of those forecasted transactions at existing market prices that we deem favorable.

We use the futures markets for the available liquidity, which provides greater flexibility in transacting our hedging and trading operations. We use swaps primarily to manage our price exposure. We also enter into certain commodity derivative instruments for trading purposes to take advantage of existing market conditions related to future results of operations and cash flows.

Our positions in commodity derivative instruments are monitored and managed on a daily basis by a risk control group to ensure compliance with our stated risk management policy that has been approved by our board of directors.

The following sensitivity analysis includes all positions at the end of the reporting period with which we have market risk (in millions):

	Derivative Instruments Held For
	Non-Trading Purposes			Trading Purposes
June 30, 2013:
Gain (loss) in fair value resulting from:
10% increase in underlying commodity prices	$	(157	)	$	(9	)
10% decrease in underlying commodity prices	154			(11		)
December 31, 2012:
Gain (loss) in fair value resulting from:
10% increase in underlying commodity prices	(131		)	(9		)
10% decrease in underlying commodity prices	135			(1		)

See Note 13 of Condensed Notes to Consolidated Financial Statements for notional volumes associated with these derivative contracts as of June 30, 2013.

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INTEREST RATE RISK

The following table provides information about our debt instruments, excluding capital lease obligations (dollars in millions), the fair values of which are sensitive to changes in interest rates. Principal cash flows and related weighted-average interest rates by expected maturity dates are presented. We had no interest rate derivative instruments outstanding as of June 30, 2013 or December 31, 2012.

	June 30, 2013
	Expected Maturity Dates
	2013			2014			2015			2016			2017			There- after			Total			Fair Value
Debt:
Fixed rate	$	—		$	200		$	475		$	—		$	950		$	4,824		$	6,449		$	7,636
Average interest rate	—		%	4.8		%	5.2		%	—		%	6.4		%	7.3		%	6.9		%
Floating rate	$	100		$	—		$	—		$	—		$	—		$	—		$	100		$	100
Average interest rate	0.9		%	—		%	—		%	—		%	—		%	—		%	0.9		%
	December 31, 2012
	Expected Maturity Dates
	2013			2014			2015			2016			2017			There- after			Total			Fair Value
Debt:
Fixed rate	$	480		$	200		$	475		$	—		$	950		$	4,824		$	6,929		$	8,521
Average interest rate	5.5		%	4.8		%	5.2		%	—		%	6.4		%	7.3		%	6.8		%
Floating rate	$	100		$	—		$	—		$	—		$	—		$	—		$	100		$	100
Average interest rate	0.9		%	—		%	—		%	—		%	—		%	—		%	0.9		%

FOREIGN CURRENCY RISK

As of June 30, 2013, we had commitments to purchase $581 million of U.S. dollars. Our market risk was minimal on these contracts, as they matured on or before July 31, 2013, resulting in an immaterial loss in the third quarter of 2013.

COMPLIANCE PROGRAM PRICE RISK

We are exposed to market risk related to the volatility in the price of credits needed to comply with various governmental and regulatory programs. We manage this risk by purchasing credits when prices are deemed favorable. See Note 13 of Condensed Notes to Consolidated Financial Statements for a discussion about these compliance programs.

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Item 4. Controls and Procedures

(a) Evaluation of disclosure controls and procedures.

Our management has evaluated, with the participation of our principal executive officer and principal financial officer, the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report, and has concluded that our disclosure controls and procedures were effective as of June 30, 2013.

(b) Changes in internal control over financial reporting.

There has been no change in our internal control over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

The information below describes new proceedings or material developments in proceedings that we previously reported in our annual report on Form 10-K for the year ended December 31, 2012, or our quarterly report on Form 10-Q for the quarter ended March 31, 2013.

Litigation

We hereby incorporate by reference into this Item our disclosures made in Part I, Item 1 of this Report included in Note 6 of Condensed Notes to Consolidated Financial Statements under the caption “Litigation Matters.”

Environmental Enforcement Matters

While it is impossible to predict the outcome of the following environmental proceedings, if any one or more of them were decided against us, we believe that there would be no material effect on our financial position or results of operations. We are reporting these proceedings to comply with SEC regulations, which require us to disclose certain information about proceedings arising under federal, state, or local provisions regulating the discharge of materials in the environment or protecting the environment if we reasonably believe that such proceedings will result in monetary sanctions of $100,000 or more.

EPA (McKee Refinery). In the second quarter of 2013, the EPA issued a proposed penalty demand of $112,000 based on alleged findings from its 2012 investigation at our McKee Refinery under the EPA’s Risk Management Program. We are working with the EPA to resolve this matter.

EPA (St. Charles Refinery). In the second quarter of 2013, the EPA issued to our St. Charles Refinery a draft Compliance Agreement and Final Order assessing a penalty of $440,000 for various alleged violations under the Clean Air Act’s Section 112(r) and the EPA’s Risk Management Program. We are working with the EPA to resolve this matter.

South Coast Air Quality Management District (SCAQMD) (Wilmington Refinery). In our annual report on Form 10-K for the year ended December 31, 2012, we disclosed that the SCAQMD had issued multiple notices of violation (NOVs) to our Wilmington Refinery for alleged reporting violations and excess emissions. In the second quarter of 2013, we resolved five of these NOVs. We continue to work with the SCAQMD to resolve the remaining outstanding NOVs issued in 2012 and 2013.

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Item 1A. Risk Factors

There have been no material changes from the risk factors disclosed in our annual report on Form 10-K for the year ended December 31, 2012.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Unregistered Sales of Equity Securities. Not applicable.

(b) Use of Proceeds. Not applicable.

(c) Issuer Purchases of Equity Securities. The following table discloses purchases of shares of our common stock made by us or on our behalf for the periods shown below.

Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Not Purchased as Part of Publicly Announced Plans or Programs (a)	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (b)
April 2013	2,873,547	$	41.84	2,873,547	—	$3.0 billion
May 2013	12,488	$	39.05	12,488	—	$3.0 billion
June 2013	3,596,933	$	37.42	1,631,750	1,965,183	$3.0 billion
Total	6,482,968	$	39.38	4,517,785	1,965,183	$3.0 billion

(a) The shares reported in this column represent purchases settled during the three months ended June 30, 2013 relating to (a) our purchases of shares in open-market transactions to meet our obligations under employee stock compensation plans, and (b) our purchases of shares from our employees and non-employee directors in connection with the exercise of stock options, the vesting of restricted stock, and other stock compensation transactions in accordance with the terms of our incentive compensation plans.

(b) On April 26, 2007, we publicly announced an increase in our common stock purchase program from $2 billion to $6 billion, as authorized by our board of directors on April 25, 2007. The $6 billion common stock purchase program has no expiration date. On February 28, 2008, we announced that our board of directors approved a $3 billion common stock purchase program. This program is in addition to the $6 billion program. This $3 billion program has no expiration date.

Item 6. Exhibits

Exhibit No.	Description
12.01	Statements of Computations of Ratios of Earnings to Fixed Charges.
31.01	Rule 13a-14(a) Certification (under Section 302 of the Sarbanes-Oxley Act of 2002) of principal executive officer.
31.02	Rule 13a-14(a) Certification (under Section 302 of the Sarbanes-Oxley Act of 2002) of principal financial officer.
32.01	Section 1350 Certifications (as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002).
101	Interactive Data Files

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	VALERO ENERGY CORPORATION (Registrant)
By:	/s/ Michael S. Ciskowski
	Michael S. Ciskowski
	Executive Vice President and
		Chief Financial Officer
	(Duly Authorized Officer and Principal
	Financial and Accounting Officer)

Date: August 7, 2013

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EX-12.01

Exhibit 12.01

VALERO ENERGY CORPORATION AND SUBSIDIARIES

STATEMENTS OF COMPUTATIONS OF RATIOS OF EARNINGS TO FIXED CHARGES

(Millions of Dollars)

	Six Months  Ended June 30, 2013
					Year Ended December 31,
					2012				2011				2010				2009			2008
Earnings:
Income (loss) from continuing operations   before income tax expense (benefit),   excluding income from equity investees	$	1,728			$	3,702			$	3,322			$	1,481			$	(334	)	$	268
Add:
Fixed charges	341				711				735				743				701			626
Amortization of capitalized interest	15				25				23				20				18			17
Distributions from equity investees	1				1				—				10				—			—
Less:
Interest capitalized	(85		)		(221		)		(152		)		(90		)		(105		)	(92		)
Total earnings	$	2,000			$	4,218			$	3,928			$	2,164			$	280		$	819
Fixed charges:
Interest expense, net	$	161			$	313			$	401			$	484			$	416		$	360
Interest capitalized	85				221				152				90				105			92
Rental expense interest factor (a)	95				177				182				169				180			174
Total fixed charges	$	341			$	711			$	735			$	743			$	701		$	626
Ratio of earnings to fixed charges	5.9			x	5.9			x	5.3			x	2.9			x	(b)			1.3			x

(a) The interest portion of rental expense represents one-third of rents, which is deemed representative of the interest portion of rental expense.

(b) For the year ended December 31, 2009, earnings were insufficient to cover fixed charges by $421 million. The deficiency included the effect of a $222 million pre-tax impairment loss resulting from the permanent cancellation of certain capital projects classified as “construction in progress” as a result of the unfavorable impact of the economic slowdown on refining industry fundamentals during the year. The deficiency was also partially attributable to a $120 million loss contingency accrual related to our dispute of a turnover tax on export sales in Aruba.

EX-31.01

Exhibit 31.01

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, William R. Klesse, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Valero Energy Corporation;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)    Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)    Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.    The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 7, 2013

/s/ William R. Klesse

William R. Klesse

Chief Executive Officer

EX-31.02

Exhibit 31.02

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Michael S. Ciskowski, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Valero Energy Corporation;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)    Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)    Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.    The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 7, 2013

/s/ Michael S. Ciskowski

Michael S. Ciskowski

Executive Vice President and Chief Financial Officer

EX-32.01

Exhibit 32.01

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Valero Energy Corporation (the Company) on Form 10-Q for the quarter ended June 30, 2013, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, William R. Klesse, Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ William R. Klesse 

William R. Klesse

Chief Executive Officer

August 7, 2013

A signed original of the written statement required by Section 906 has been provided to Valero Energy Corporation and will be retained by Valero Energy Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Valero Energy Corporation (the Company) on Form 10-Q for the quarter ended June 30, 2013, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Michael S. Ciskowski, Executive Vice President and Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Michael S. Ciskowski 

Michael S. Ciskowski

Executive Vice President and Chief Financial Officer

August 7, 2013

A signed original of the written statement required by Section 906 has been provided to Valero Energy Corporation and will be retained by Valero Energy Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

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Supplemental Cash Flow Information

6 Months Ended

Jun. 30, 2013

Supplemental Cash Flow Information [Abstract]

SUPPLEMENTAL CASH FLOW INFORMATION

11. SUPPLEMENTAL CASH FLOW INFORMATION

In order to determine net cash provided by operating activities, net income is adjusted by, among other things, changes in current assets and current liabilities as follows (in millions):

	Six Months Ended June 30,
	2013			2012
Decrease (increase) in current assets:
Receivables, net	$	412		$	1,927
Inventories	(824		)	198
Income taxes receivable	31			(79		)
Prepaid expenses and other	2			(15		)
Increase (decrease) in current liabilities:
Accounts payable	625			(1,413		)
Accrued expenses	(44		)	(60		)
Taxes other than income taxes	268			67
Income taxes payable	(26		)	(60		)
Changes in current assets and current liabilities	$	444		$	565

The above changes in current assets and current liabilities differ from changes between amounts reflected in the applicable balance sheets for the respective periods for the following reasons:

• the amounts shown above exclude changes in cash and temporary cash investments, deferred income taxes, and current portion of debt and capital lease obligations, as well as the effect of certain noncash investing and financing activities discussed below;

• the amounts shown above for the six months ended June 30, 2013 exclude the change in current assets and current liabilities resulting from the separation of our retail business as described in Note 2;

• amounts accrued for capital expenditures and deferred turnaround and catalyst costs are reflected in investing activities when such amounts are paid;

• amounts accrued for common stock purchases in the open market that are not settled as of the balance sheet date are reflected in financing activities when the purchases are settled and paid; and

• certain differences between balance sheet changes and the changes reflected above result from translating foreign currency denominated balances at the applicable exchange rates as of each balance sheet date.

There were no significant noncash investing activities for the six months ended June 30, 2013. Noncash financing activities for the six months ended June 30, 2013 included the exchange of CST’s senior unsecured bonds with the third-party financial institution in satisfaction of our short-term debt as described in Note 2.

There were no significant noncash investing or financing activities for the six months ended June 30, 2012.

Cash flows related to interest and income taxes were as follows (in millions):

	Six Months Ended June 30,
	2013		2012
Interest paid in excess of amount capitalized	$	160	$	164
Income taxes paid, net	243		204

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Consolidated Statements of Income (Unaudited) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Operating revenues	$ 34,034	$ 34,662	$ 67,508	$ 69,829
Costs and expenses:
Cost of sales	31,523	31,621	62,208	64,656
Operating expenses:
Refining	906	868	1,782	1,832
Retail	57	170	226	336
Ethanol	102	85	179	172
General and administrative expenses	233	171	409	335
Depreciation and amortization expense	405	386	835	770
Asset impairment losses	0	0	0	611
Total costs and expenses	33,226	33,301	65,639	68,712
Operating income	808	1,361	1,869	1,117
Other income (expense), net	11	(5)	25	1
Interest and debt expense, net of capitalized interest	(78)	(74)	(161)	(173)
Income before income tax expense	741	1,282	1,733	945
Income tax expense	276	452	616	547
Net income	465	830	1,117	398
Less: Net loss attributable to noncontrolling interests	(1)	(1)	(3)	(1)
Net income attributable to Valero Energy Corporation stockholders	$ 466	$ 831	$ 1,120	$ 399
Earnings per common share	$ 0.86	$ 1.50	$ 2.04	$ 0.72
Weighted-average common shares outstanding (in millions)	543	550	546	550
Earnings per common share – assuming dilution	$ 0.85	$ 1.50	$ 2.03	$ 0.72
Weighted-average common shares outstanding - assuming dilution (in millions)	548	555	552	556
Dividends per common share	$ 0.20	$ 0.15	$ 0.40	$ 0.30

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Inventories

6 Months Ended

Jun. 30, 2013

Inventory Disclosure [Abstract]

INVENTORIES

4. INVENTORIES

Inventories consisted of the following (in millions):

	June 30, 2013		December 31, 2012
Refinery feedstocks	$	2,641	$	2,458
Refined products and blendstocks	3,446		2,995
Ethanol feedstocks and products	139		191
Convenience store merchandise	—		112
Materials and supplies	220		217
Inventories	$	6,446	$	5,973

As of June 30, 2013 and December 31, 2012, the replacement cost (market value) of last in, first out (LIFO) inventories exceeded their LIFO carrying amounts by approximately $6.3 billion and $6.7 billion, respectively.

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Equity (Tables)

6 Months Ended

Jun. 30, 2013

Equity [Abstract]

Schedule of changes in equity

The following is a reconciliation of the beginning and ending balances of equity attributable to our stockholders, equity attributable to the noncontrolling interests, and total equity for the six months ended June 30, 2013 and 2012 (in millions):

	2013									2012
	Valero Stockholders’ Equity			Non- controlling Interests			Total Equity			Valero Stockholders’ Equity			Non- controlling Interest			Total Equity
Balance as of beginning of period	$	18,032		$	63		$	18,095		$	16,423		$	22		$	16,445
Net income (loss)	1,120			(3		)	1,117			399			(1		)	398
Dividends	(220		)	—			(220		)	(166		)	—			(166		)
Stock-based compensation expense	25			—			25			20			—			20
Tax deduction in excess of stock-based compensation expense	27			—			27			3			—			3
Transactions in connection with stock-based compensation plans:
Stock issuances	43			—			43			11			—			11
Stock repurchases	(196		)	—			(196		)	(136		)	—			(136		)
Stock repurchases under buyback program	(364		)	—			(364		)	—			—			—
Separation of retail business	(499		)	—			(499		)	—			—			—
Contributions from noncontrolling interests	—			45			45			—			25			25
Other comprehensive income (loss)	(48		)	—			(48		)	23			—			23
Balance as of end of period	$	17,920		$	105		$	18,025		$	16,577		$	46		$	16,623

Schedule of stock by class

Activity in the number of shares of common stock and treasury stock was as follows for the six months ended June 30, 2013 and 2012 (in millions):

	2013			2012
	Common Stock	Treasury Stock		Common Stock	Treasury Stock
Balance as of beginning of period	673	(121	)	673	(117	)
Transactions in connection with stock-based compensation plans:
Stock issuances	—	3		—	1
Stock purchases	—	(5	)	—	(6	)
Stock repurchases under buyback program	—	(8	)	—	—
Balance as of end of period	673	(131	)	673	(122	)

Schedule of accumulated other comprehensive income (loss)

Changes in accumulated other comprehensive income (loss) by component, net of tax, were as follows for the six months ended June 30, 2013 (in millions):

	Foreign Currency Translation Adjustment			Defined Benefit Pension Items			Gains and (Losses) on Cash Flow Hedges			Total
Balance as of December 31, 2012	$	665		$	(558	)	$	1		$	108
Other comprehensive income (loss) before reclassifications	(268		)	214			(6		)	(60		)
Amounts reclassified from accumulated other comprehensive income (loss)	—			9			3			12
Net other comprehensive income (loss)	(268		)	223			(3		)	(48		)
Separation of retail business	(159		)	—			—			(159		)
Balance as of June 30, 2013	$	238		$	(335	)	$	(2	)	$	(99	)

Reclassification out of accumulated other comprehensive income (loss)

Gains (losses) reclassified out of accumulated other comprehensive income (loss) and into net income were as follows (in millions):

Details about Accumulated Other Comprehensive Income  (Loss) Components	Three Months Ended June 30, 2013			Six Months Ended June 30, 2013			Affected Line Item in the Statement of Income
Amortization of items related to defined benefit pension plans:
Net actuarial loss	$	(15	)	$	(29	)	(a)
Prior service credit	9			15			(a)
	(6		)	(14		)	Total before tax
	2			5			Tax benefit
	$	(4	)	$	(9	)	Net of tax
Losses on cash flow hedges:
Commodity contracts	$	(8	)	$	(5	)	Cost of sales
	(8		)	(5		)	Total before tax
	3			2			Tax benefit
	$	(5	)	$	(3	)	Net of tax
Total reclassifications for the period	$	(9	)	$	(12	)	Net of tax

_________________________

(a) These accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit cost, as further discussed in Note 8. Net periodic benefit cost is reflected in operating expenses and general and administrative expenses.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

12. FAIR VALUE MEASUREMENTS

General

GAAP requires that certain assets and liabilities be measured at fair value on a recurring or nonrecurring basis in our balance sheets, which are presented below under “Recurring Fair Value Measurements” and “Nonrecurring Fair Value Measurements.” Recurring fair value measurements of assets or liabilities are those that GAAP requires or permits in the balance sheet at the end of each reporting period, such as derivative financial instruments. Nonrecurring fair value measurements of assets or liabilities are those that GAAP requires or permits in the balance sheet in particular circumstances, such as the impairment of property, plant and equipment.

GAAP also requires the disclosure of the fair values of financial instruments when an option to elect fair value accounting has been provided, but such election has not been made. A debt obligation is an example of such a financial instrument. The disclosure of the fair values of financial instruments not recognized at fair value in our balance sheet is presented below under “Other Financial Instruments.”

GAAP provides a framework for measuring fair value and establishes a three-level fair value hierarchy that prioritizes inputs to valuation techniques based on the degree to which objective prices in external active markets are available to measure fair value. Following is a description of each of the levels of the fair value hierarchy.

• Level 1 - Observable inputs, such as unadjusted quoted prices in active markets for identical assets or liabilities.

• Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

• Level 3 - Unobservable inputs for the asset or liability. Unobservable inputs reflect our own assumptions about what market participants would use to price the asset or liability. The inputs are developed based on the best information available in the circumstances, which might include occasional market quotes or sales of similar instruments or our own financial data such as internally developed pricing models, discounted cash flow methodologies, as well as instruments for which the fair value determination requires significant judgment.

Recurring Fair Value Measurements

The tables below present information (in millions) about our assets and liabilities recognized at their fair values in our balance sheets categorized according to the fair value hierarchy of the inputs utilized by us to determine the fair values as of June 30, 2013 and December 31, 2012.

We have elected to offset the fair value amounts recognized for multiple similar derivative contracts executed with the same counterparty, including any related cash collateral assets or obligations as shown below; however, fair value amounts by hierarchy level are presented on a gross basis in the tables below. We have no derivative contracts that are subject to master netting arrangements that are reflected gross on the balance sheet.

	June 30, 2013
							Total Gross Fair Value		Effect of Counter- party Netting			Effect of Cash Collateral Netting			Net Carrying Value on Balance Sheet		Cash Collateral Paid or Received Not Offset
	Fair Value Hierarchy
	Level 1		Level 2		Level 3
Assets:
Commodity derivative contracts	$	1,015	$	28	$	—	$	1,043	$	(997	)	$	(3	)	$	43	$	—
Physical purchase contracts	—		5		—		5		N/A			N/A			5		N/A
Foreign currency contracts	10		—		—		10		N/A			N/A			10		N/A
Investments of certain benefit plans	92		—		11		103		N/A			N/A			103		N/A
Total	$	1,117	$	33	$	11	$	1,161	$	(997	)	$	(3	)	$	161
Liabilities:
Commodity derivative contracts	$	997	$	28	$	—	$	1,025	$	(997	)	$	(23	)	$	5	$	(109	)
Physical purchase contracts	—		11		—		11		N/A			N/A			11		N/A
RINs fixed-price contracts	—		22		—		22		N/A			N/A			22		N/A
Total	$	997	$	61	$	—	$	1,058	$	(997	)	$	(23	)	$	38

	December 31, 2012
							Total Gross Fair Value		Effect of Counter- party Netting			Effect of Cash Collateral Netting			Net Carrying Value on Balance Sheet		Cash Collateral Paid or Received Not Offset
	Fair Value Hierarchy
	Level 1		Level 2		Level 3
Assets:
Commodity derivative contracts	$	1,143	$	60	$	—	$	1,203	$	(1,189	)	$	—		$	14	$	—
Physical purchase contracts	—		11		—		11		N/A			N/A			11		N/A
Foreign currency contracts	1		—		—		1		N/A			N/A			1		N/A
Investments of certain benefit plans	87		—		11		98		N/A			N/A			98		N/A
Total	$	1,231	$	71	$	11	$	1,313	$	(1,189	)	$	—		$	124
Liabilities:
Commodity derivative contracts	$	1,138	$	70	$	—	$	1,208	$	(1,189	)	$	(13	)	$	6	$	(114	)
Biofuels blending obligation	—		10		—		10		N/A			N/A			10		N/A
Foreign currency contracts	1		—		—		1		N/A			N/A			1		N/A
Total	$	1,139	$	80	$	—	$	1,219	$	(1,189	)	$	(13	)	$	17

A description of our assets and liabilities recognized at fair value along with the valuation methods and inputs we used to develop their fair value measurements are as follows:

• Commodity derivative contracts consist primarily of exchange-traded futures and swaps, and as disclosed in Note 13, some of these contracts are designated as hedging instruments. These contracts are measured at fair value using the market approach. Exchange-traded futures are valued based on quoted prices from the exchange and are categorized in Level 1 of the fair value hierarchy. Swaps are priced using third-party broker quotes, industry pricing services, and exchange-traded curves, with appropriate consideration of counterparty credit risk, but because they have contractual terms that are not identical to exchange-traded futures instruments with a comparable market price, these financial instruments are categorized in Level 2 of the fair value hierarchy.

• Physical purchase contracts represent the fair value of firm commitments to purchase crude oil feedstocks and the fair value of fixed-price corn purchase contracts, and as disclosed in Note 13, some of these contracts are designated as hedging instruments. The fair values of these firm commitments and purchase contracts are measured using a market approach based on quoted prices from the commodity exchange or an independent pricing service and are categorized in Level 2 of the fair value hierarchy.

• Renewable Identification Numbers (RINs) fixed-price contracts represent the fair value of fixed-price purchase and sale contracts of RINs entered into for trading purposes. The fair values of these contracts are measured using a market approach based on quoted prices from an independent pricing service and are categorized in Level 2 of the fair value hierarchy.

• Investments of certain benefit plans consist of investment securities held by trusts for the purpose of satisfying a portion of our obligations under certain U.S. nonqualified benefit plans. The assets categorized in Level 1 of the fair value hierarchy are measured at fair value using a market approach based on quoted prices from national securities exchanges. The assets categorized in Level 3 of the fair value hierarchy represent insurance contracts, the fair value of which is provided by the insurer.

• Foreign currency contracts consist of foreign currency exchange and purchase contracts entered into by our international operations to manage our exposure to exchange rate fluctuations on transactions denominated in currencies other than the local (functional) currencies of those operations. These contracts are valued based on quoted prices from the exchange and are categorized in Level 1 of the fair value hierarchy.

• Our biofuels blending obligation represents a liability for the purchase of biofuel credits (primarily RINs in the U.S.) needed to satisfy our obligation to blend biofuels into the products we produce. To the degree we are unable to blend at percentages required under various governmental and regulatory programs, we must purchase biofuel credits to comply with these programs. These programs are further described in Note 13 under “Compliance Program Risk.” This liability is based on our deficit in biofuel credits as of the balance sheet date, if any, after considering any biofuel credits acquired or under contract, and is equal to the product of the biofuel credits deficit and the market price of these credits as of the balance sheet date. This liability is categorized in Level 2 of the fair value hierarchy and is measured at fair value using the market approach based on quoted prices from an independent pricing service.

There were no transfers between Level 1 and Level 2 for assets and liabilities held as of June 30, 2013 and December 31, 2012 that were measured at fair value on a recurring basis.

There was no activity during the three and six months ended June 30, 2013 and 2012 related to the fair value amounts categorized in Level 3 as of June 30, 2013 and December 31, 2012.

Nonrecurring Fair Value Measurements

There were no assets or liabilities that were measured at fair value on a nonrecurring basis as of June 30, 2013.

The table below presents the fair value of certain assets that were measured at fair value on a nonrecurring basis as of December 31, 2012 (in millions).

							Total Fair Value as of December 31, 2012
	Fair Value Hierarchy
	Level 1		Level 2		Level 3
Cancelled capital project	$	—	$	—	$	2	$	2
Property, plant and equipment of convenience stores	—		—		8		8

There were no liabilities that were measured at fair value on a nonrecurring basis as of December 31, 2012.

During the six months ended June 30, 2012, we recognized asset impairment losses of $595 million and $16 million related to our Aruba Refinery and certain equipment associated with a permanently cancelled capital project at one of our refineries, respectively. These impairment losses resulted from the fair value measurement of those assets on a nonrecurring basis as of March 31, 2012. As discussed in Note 3, we concluded that the Aruba Refinery was impaired as of March 31, 2012. As a result, we were required to determine the fair value of the Aruba Refinery and to write down its carrying value to that amount. We determined that the best measure of the refinery’s fair value at that time was the $350 million offer received and accepted. The fair value of the Aruba Refinery was measured using the market approach and was categorized in Level 3 within the fair value hierarchy. The carrying value of the Aruba Refinery’s long-lived assets as of March 31, 2012 was $945 million; therefore, we recognized an asset impairment loss of $595 million in March 2012.

Other Financial Instruments

Financial instruments that we recognize in our balance sheets at their carrying amounts are shown in the table below (in millions):

	June 30, 2013				December 31, 2012
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Cash and temporary cash investments	$	2,398	$	2,398	$	1,723	$	1,723
Equity investment in CST	114		465		—		—
Financial liabilities:
Debt (excluding capital leases)	6,522		7,736		7,000		8,621

The methods and significant assumptions used to estimate the fair value of these financial instruments are as follows:

• The fair value of cash and temporary cash investments approximates the carrying value due to the low level of credit risk of these assets combined with their short maturities and market interest rates (Level 1).

• The fair value of our equity investment in CST is determined using the market approach based on the quoted price of CST stock from a national securities exchange (Level 1).

• The fair value of debt is determined primarily using the market approach based on quoted prices provided by third-party brokers and vendor pricing services (Level 2).

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Fair Value Measurements, Nonrecurring (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended			1 Months Ended		6 Months Ended	1 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012	Sep. 30, 2012 Aruba Refinery [Member]	Mar. 31, 2012 Aruba Refinery [Member]	Jun. 30, 2012 Aruba Refinery [Member]	Sep. 30, 2012 Refining Assets [Member]	Mar. 31, 2012 Construction in Progress [Member]	Jun. 30, 2012 Construction in Progress [Member]	Jun. 30, 2013 Fair Value, Measurements, Nonrecurring [Member]	Dec. 31, 2012 Fair Value, Measurements, Nonrecurring [Member]	Dec. 31, 2012 Fair Value, Measurements, Nonrecurring [Member] Construction in Progress [Member]	Dec. 31, 2012 Fair Value, Measurements, Nonrecurring [Member] Retail [Member]	Dec. 31, 2012 Fair Value, Measurements, Nonrecurring [Member] Fair Value, Inputs, Level 1 [Member] Construction in Progress [Member]	Dec. 31, 2012 Fair Value, Measurements, Nonrecurring [Member] Fair Value, Inputs, Level 1 [Member] Retail [Member]	Dec. 31, 2012 Fair Value, Measurements, Nonrecurring [Member] Fair Value, Inputs, Level 2 [Member] Construction in Progress [Member]	Dec. 31, 2012 Fair Value, Measurements, Nonrecurring [Member] Fair Value, Inputs, Level 2 [Member] Retail [Member]	Mar. 31, 2012 Fair Value, Measurements, Nonrecurring [Member] Fair Value, Inputs, Level 3 [Member] Aruba Refinery [Member]	Dec. 31, 2012 Fair Value, Measurements, Nonrecurring [Member] Fair Value, Inputs, Level 3 [Member] Construction in Progress [Member]	Dec. 31, 2012 Fair Value, Measurements, Nonrecurring [Member] Fair Value, Inputs, Level 3 [Member] Retail [Member]
Assets:
Long-lived assets, fair value														$ 2	$ 8	$ 0	$ 0	$ 0	$ 0	$ 350	$ 2	$ 8
Fair Value Measurements (Textual)
Assets measured at fair value, nonrecurring												0
Liabilities measured at fair value, nonrecurring												0	0
Asset impairment losses	0	0	0	611		333	595	595	308	16	16
Long-lived assets, carrying value	$ 25,386		$ 25,386		$ 26,300		$ 945

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Equity (Details) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended		0 Months Ended	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Jul. 25, 2013 Subsequent Event [Member] Dividend Declared [Member]	Jun. 30, 2013 Shares Purchased Related To Stock-Based Compensation Plans [Member]	Jun. 30, 2012 Shares Purchased Related To Stock-Based Compensation Plans [Member]	Jun. 30, 2013 Shares Purchased Under Programs [Member]	Jun. 30, 2012 Shares Purchased Under Programs [Member]	Jun. 30, 2013 Parent [Member]	Jun. 30, 2012 Parent [Member]	Jun. 30, 2013 Parent [Member] Shares Purchased Related To Stock-Based Compensation Plans [Member]	Jun. 30, 2012 Parent [Member] Shares Purchased Related To Stock-Based Compensation Plans [Member]	Jun. 30, 2013 Parent [Member] Shares Purchased Under Programs [Member]	Jun. 30, 2012 Parent [Member] Shares Purchased Under Programs [Member]	Jun. 30, 2013 Common Stock [Member]	Jun. 30, 2012 Common Stock [Member]	Jun. 30, 2013 Treasury Stock [Member]	Jun. 30, 2012 Treasury Stock [Member]	Jun. 30, 2013 Treasury Stock [Member] Shares Purchased Related To Stock-Based Compensation Plans [Member]	Jun. 30, 2012 Treasury Stock [Member] Shares Purchased Related To Stock-Based Compensation Plans [Member]	Jun. 30, 2013 Treasury Stock [Member] Shares Purchased Under Programs [Member]	Jun. 30, 2012 Treasury Stock [Member] Shares Purchased Under Programs [Member]	Jun. 30, 2013 Noncontrolling Interest [Member]	Jun. 30, 2012 Noncontrolling Interest [Member]	Jun. 30, 2013 Noncontrolling Interest [Member] Shares Purchased Related To Stock-Based Compensation Plans [Member]	Jun. 30, 2012 Noncontrolling Interest [Member] Shares Purchased Related To Stock-Based Compensation Plans [Member]	Jun. 30, 2013 Noncontrolling Interest [Member] Shares Purchased Under Programs [Member]	Jun. 30, 2012 Noncontrolling Interest [Member] Shares Purchased Under Programs [Member]
Reconciliation of the Beginning and Ending Balances of the Carrying Amounts of Equity
Balance as of beginning of period			$ 18,095	$ 16,445						$ 18,032	$ 16,423													$ 63	$ 22
Net income (loss)	465	830	1,117	398						1,120	399													(3)	(1)
Dividends			(220)	(166)						(220)	(166)													0	0
Stock-based compensation expense			25	20						25	20													0	0
Tax deduction in excess of stock-based compensation expense			27	3						27	3													0	0
Transactions in connection with stock-based compensation plans:
Stock issuances			43	11						43	11													0	0
Stock repurchases						(196)	(136)	(364)	0			(196)	(136)	(364)	0											0	0	0	0
Separation of retail business			(499)	0						(499)	0													0	0
Contributions from noncontrolling interests			45	25						0	0													45	25
Other comprehensive income (loss)	(61)	(102)	(48)	23						(48)	23													0	0
Balance as of end of period	$ 18,025	$ 16,623	$ 18,025	$ 16,623						$ 17,920	$ 16,577													$ 105	$ 46
Share Activity
Common stock, shares, beginning balance																673,000,000	673,000,000
Treasury stock, shares, beginning balance			(121,406,520)															(121,000,000)	(117,000,000)
Stock issuances, stock-based compensation																0	0	3,000,000	1,000,000
Stock purchases, stock-based compensation																				(5,000,000)	(6,000,000)	(8,000,000)	0
Common stock, shares, ending balance																673,000,000	673,000,000
Treasury Stock, shares, ending balance	(131,412,237)		(131,412,237)															(131,000,000)	(122,000,000)
Equity (Textual)
Dividends payable, date declared					Jul. 25, 2013
Dividends payable, amount per share					$ 0.225
Dividends payable, date to be paid					Sep. 11, 2013
Dividends payable, date of record					Aug. 14, 2013

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2013

Segment Reporting [Abstract]

Segment information for our reportable segments

The following table reflects activity related to our reportable segments (in millions):

	Refining		Retail		Ethanol		Corporate			Total
Three months ended June 30, 2013:
Operating revenues from external customers	$	31,564	$	979	$	1,491	$	—		$	34,034
Intersegment revenues	671		—		15		—			686
Operating income (loss)	921		39		95		(247		)	808
Three months ended June 30, 2012:
Operating revenues from external customers	30,488		3,062		1,112		—			34,662
Intersegment revenues	2,203		—		46		—			2,249
Operating income (loss)	1,364		172		5		(180		)	1,361
Six months ended June 30, 2013:
Operating revenues from external customers	61,117		3,896		2,495		—			67,508
Intersegment revenues	2,876		—		70		—			2,946
Operating income (loss)	2,133		81		109		(454		)	1,869
Six months ended June 30, 2012:
Operating revenues from external customers	61,638		5,997		2,194		—			69,829
Intersegment revenues	4,458		—		60		—			4,518
Operating income (loss)	1,245		212		14		(354		)	1,117

Total assets by reportable segment were as follows (in millions):

	June 30, 2013		December 31, 2012
Refining	$	40,527	$	39,490
Retail	—		2,043
Ethanol	867		929
Corporate	2,783		2,015
Total assets	$	44,177	$	44,477

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Earnings Per Common Share (Tables)

6 Months Ended

Jun. 30, 2013

Earnings Per Share [Abstract]

Schedule of earnings per common share, basic and diluted

Earnings per common share were computed as follows (dollars and shares in millions, except per share amounts):

	Three Months Ended June 30,
	2013				2012
	Restricted Stock		Common Stock		Restricted Stock		Common Stock
Earnings per common share:
Net income attributable to Valero stockholders			$	466			$	831
Less dividends paid:
Common stock			109				82
Nonvested restricted stock			—				1
Undistributed earnings			$	357			$	748
Weighted-average common shares outstanding	3		543		3		550
Earnings per common share:
Distributed earnings	$	0.20	$	0.20	$	0.15	$	0.15
Undistributed earnings	0.66		0.66		1.35		1.35
Total earnings per common share	$	0.86	$	0.86	$	1.50	$	1.50
Earnings per common share – assuming dilution:
Net income attributable to Valero stockholders			$	466			$	831
Weighted-average common shares outstanding			543				550
Common equivalent shares:
Stock options			3				3
Performance awards and nonvested restricted stock			2				2
Weighted-average common shares outstanding – assuming dilution			548				555
Earnings per common share – assuming dilution			$	0.85			$	1.50

	Six Months Ended June 30,
	2013				2012
	Restricted Stock		Common Stock		Restricted Stock		Common Stock
Earnings per common share:
Net income attributable to Valero stockholders			$	1,120			$	399
Less dividends paid:
Common stock			219				165
Nonvested restricted stock			1				1
Undistributed earnings			$	900			$	233
Weighted-average common shares outstanding	3		546		3		550
Earnings per common share:
Distributed earnings	$	0.40	$	0.40	$	0.30	$	0.30
Undistributed earnings	1.64		1.64		0.42		0.42
Total earnings per common share	$	2.04	$	2.04	$	0.72	$	0.72
Earnings per common share – assuming dilution:
Net income attributable to Valero stockholders			$	1,120			$	399
Weighted-average common shares outstanding			546				550
Common equivalent shares:
Stock options			4				4
Performance awards and nonvested restricted stock			2				2
Weighted-average common shares outstanding – assuming dilution			552				556
Earnings per common share – assuming dilution			$	2.03			$	0.72

Potentially dilutive securities excluded from calculation of earnings per common share - assuming dilution

The following table reflects potentially dilutive securities (in millions) that were excluded from the calculation of “earnings per common share – assuming dilution” as the effect of including such securities would have been antidilutive. Stock options were excluded from weighted-average common shares outstanding – assuming dilution because the exercise price of the stock option was greater than the average market price of our common shares during each reporting period.

	Three Months Ended June 30,		Six Months Ended June 30,
	2013	2012	2013	2012
Stock options	3	6	3	6

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Fair Value Measurements, Recurring (Details) (Fair Value, Measurements, Recurring [Member], USD $) In Millions, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Assets:
Commodity derivative contracts	$ 1,043	$ 1,203
Foreign currency contracts	10	1
Investments of certain benefit plans	103	98
Total gross fair value, assets	1,161	1,313
Commodity derivative contracts, net assets	43	14
Net Carrying Value on Balance Sheet, Assets	161	124
Cash Collateral Received Not Offset	0	0
Liabilities:
Commodity derivative contracts	1,025	1,208
Biofuels blending obligation		10
Foreign currency contracts		1
Total gross fair value, liabilities	1,058	1,219
Commodity derivative contracts, net liabilities	5	6
Net Carrying Value on Balance Sheet, Liabilities	38	17
Cash Collateral Paid Not Offset	(109)	(114)
Fair Value Measurements (Textual)
Fair value asset transfers from Level 1 to Level 2	0	0
Fair value asset transfers from Level 2 to Level 1	0	0
Fair value liability transfers from level 1 to level 2	0	0
Fair value liability transfers from level 2 to level 1	0	0
Physical Purchase Contracts [Member]
Assets:
Physical purchase contracts	5	11
Liabilities:
Physical purchase and fixed-price contracts	11
RINs Fixed-Price Contracts [Member]
Liabilities:
Physical purchase and fixed-price contracts	22
Fair Value, Inputs, Level 1 [Member]
Assets:
Commodity derivative contracts	1,015	1,143
Foreign currency contracts	10	1
Investments of certain benefit plans	92	87
Total gross fair value, assets	1,117	1,231
Liabilities:
Commodity derivative contracts	997	1,138
Biofuels blending obligation		0
Foreign currency contracts		1
Total gross fair value, liabilities	997	1,139
Fair Value, Inputs, Level 1 [Member] | Physical Purchase Contracts [Member]
Assets:
Physical purchase contracts	0	0
Liabilities:
Physical purchase and fixed-price contracts	0
Fair Value, Inputs, Level 1 [Member] | RINs Fixed-Price Contracts [Member]
Liabilities:
Physical purchase and fixed-price contracts	0
Fair Value, Inputs, Level 2 [Member]
Assets:
Commodity derivative contracts	28	60
Foreign currency contracts	0	0
Investments of certain benefit plans	0	0
Total gross fair value, assets	33	71
Liabilities:
Commodity derivative contracts	28	70
Biofuels blending obligation		10
Foreign currency contracts		0
Total gross fair value, liabilities	61	80
Fair Value, Inputs, Level 2 [Member] | Physical Purchase Contracts [Member]
Assets:
Physical purchase contracts	5	11
Liabilities:
Physical purchase and fixed-price contracts	11
Fair Value, Inputs, Level 2 [Member] | RINs Fixed-Price Contracts [Member]
Liabilities:
Physical purchase and fixed-price contracts	22
Fair Value, Inputs, Level 3 [Member]
Assets:
Commodity derivative contracts	0	0
Foreign currency contracts	0	0
Investments of certain benefit plans	11	11
Total gross fair value, assets	11	11
Liabilities:
Commodity derivative contracts	0	0
Biofuels blending obligation		0
Foreign currency contracts		0
Total gross fair value, liabilities	0	0
Fair Value, Inputs, Level 3 [Member] | Physical Purchase Contracts [Member]
Assets:
Physical purchase contracts	0	0
Liabilities:
Physical purchase and fixed-price contracts	0
Fair Value, Inputs, Level 3 [Member] | RINs Fixed-Price Contracts [Member]
Liabilities:
Physical purchase and fixed-price contracts	0
Netting [Member]
Assets:
Effect of Counterparty Netting	(997)	(1,189)
Effect of Cash Collateral Netting	(3)	0
Liabilities:
Effect of Counterparty Netting	(997)	(1,189)
Effect of Cash Collateral Netting	$ (23)	$ (13)

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Inventories (Details) (USD $)	Jun. 30, 2013	Dec. 31, 2012
Schedule of Inventories
Refinery feedstocks	$ 2,641,000,000	$ 2,458,000,000
Refined products and blendstocks	3,446,000,000	2,995,000,000
Ethanol feedstocks and products	139,000,000	191,000,000
Convenience store merchandise	0	112,000,000
Materials and supplies	220,000,000	217,000,000
Inventories	6,446,000,000	5,973,000,000
Inventories (Textual)
Excess of market value over carrying amount of LIFO inventories	$ 6,300,000,000	$ 6,700,000,000

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Equity, Reclassification Out of Accumulated Other Comprehensive Income (Loss) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended			6 Months Ended
	Jun. 30, 2013		Jun. 30, 2012	Jun. 30, 2013		Jun. 30, 2012
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss)
Net actuarial loss	$ 15		$ 9	$ 29		$ 17
Prior service credit	(9)		(6)	(15)		(10)
Total before tax	741		1,282	1,733		945
Tax benefit	(276)		(452)	(616)		(547)
Net income	465		830	1,117		398
Reclassification out of Accumulated Other Comprehensive Income (Loss) [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss)
Net income	(9)			(12)
Defined Benefit Plans Items [Member] | Reclassification out of Accumulated Other Comprehensive Income (Loss) [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss)
Net actuarial loss	(15)	[1]		(29)	[1]
Prior service credit	9	[1]		15	[1]
Total before tax	(6)			(14)
Tax benefit	2			5
Net income	(4)			(9)
Gains (Losses) on Cash Flow Hedges [Member] | Reclassification out of Accumulated Other Comprehensive Income (Loss) [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss)
Total before tax	(8)			(5)
Tax benefit	3			2
Net income	(5)			(3)
Gains (Losses) on Cash Flow Hedges [Member] | Commodity Contract [Member] | Reclassification out of Accumulated Other Comprehensive Income (Loss) [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss)
Cost of sales	$ (8)			$ (5)

[1] (a) These accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit cost, as further discussed in Note 8. Net periodic benefit cost is reflected in operating expenses and general and administrative expenses.

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Fair Value Measurements, Other Financial Instruments (Details) (USD $) In Millions, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2012	Dec. 31, 2011
Financial assets:
Cash and temporary cash investments, at carrying amount	$ 2,398	$ 1,723	$ 1,295	$ 1,024
Equity investment in CST, at carrying amount	114	0
Financial liabilities:
Debt (excluding capital leases), at carrying amount	6,522	7,000
Fair Value, Inputs, Level 1 [Member]
Financial assets:
Cash and temporary cash investments, at fair value	2,398	1,723
Equity investment in CST, at fair value	465	0
Fair Value, Inputs, Level 2 [Member]
Financial liabilities:
Debt (excluding capital leases), at fair value	$ 7,736	$ 8,621

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Basis of Presentation and Summary of Significant Accounting Policies (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Basis of Presentation and Summary of Significant Accounting Policies (Textual)
Proceeds from collection of notes receivable	$ 0	$ 160
Scenario, Previously Reported [Member] | Paulsboro Refinery [Member]
Basis of Presentation and Summary of Significant Accounting Policies (Textual)
Proceeds from collection of notes receivable		$ 160

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Earnings Per Common Share, Potentially Dilutive Securities (Details) (Stock Options [Member]) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Common Share
Amount of potentially dilutive securities excluded from computation of earnings per common share	3	6	3	6

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Employee Benefit Plans (Tables)

6 Months Ended

Jun. 30, 2013

Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract]

Periodic benefit cost related to our defined benefit plans, net

The components of net periodic benefit cost related to our defined benefit plans were as follows (in millions) :

	Pension Plans						Other Postretirement Benefit Plans
	2013			2012			2013			2012
Three months ended June 30:
Service cost	$	35		$	35		$	3		$	3
Interest cost	22			23			5			6
Expected return on plan assets	(34		)	(31		)	—			—
Amortization of:
Net actuarial loss	15			9			—			—
Prior service credit	(6		)	—			(3		)	(6		)
Net periodic benefit cost	$	32		$	36		$	5		$	3
Six months ended June 30:
Service cost	$	71		$	70		$	6		$	6
Interest cost	44			46			9			11
Expected return on plan assets	(66		)	(62		)	—			—
Amortization of:
Net actuarial loss	29			17			—			—
Prior service cost (credit)	(9		)	1			(6		)	(11		)
Net periodic benefit cost	$	69		$	72		$	9		$	6

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Consolidated Statements of Cash Flows (Unaudited) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Cash flows from operating activities:
Net income	$ 1,117	$ 398
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	835	770
Asset impairment losses	0	611
Noncash interest expense and other income, net	1	11
Stock-based compensation expense	25	20
Deferred income tax expense	341	480
Changes in current assets and current liabilities	444	565
Changes in deferred charges and credits and other operating activities, net	51	(21)
Net cash provided by operating activities	2,814	2,834
Cash flows from investing activities:
Capital expenditures	(1,211)	(1,420)
Deferred turnaround and catalyst costs	(449)	(264)
Proceeds from the sale of the Paulsboro Refinery	0	160
Minor acquisitions	0	(66)
Other investing activities, net	(23)	9
Net cash used in investing activities	(1,683)	(1,581)
Non-bank debt:
Borrowings	0	300
Repayments	(480)	(862)
Bank credit agreements:
Borrowings	0	1,100
Repayments	0	(1,100)
Accounts receivable sales program:
Proceeds from the sale of receivables	0	1,300
Repayments	0	(1,450)
Purchase of common stock for treasury	(560)	(147)
Proceeds from the exercise of stock options	43	11
Common stock dividends	(220)	(166)
Contributions from noncontrolling interests	45	25
Separation of retail business:
Proceeds from short-term debt	550	0
Cash distributed to Valero by CST Brands, Inc.	500	0
Cash held and retained by CST Brands, Inc. upon separation	(315)	0
Other financing activities, net	24	(2)
Net cash used in financing activities	(413)	(991)
Effect of foreign exchange rate changes on cash	(43)	9
Net increase in cash and temporary cash investments	675	271
Cash and temporary cash investments at beginning of period	1,723	1,024
Cash and temporary cash investments at end of period	$ 2,398	$ 1,295

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Separation of Retail Business

6 Months Ended

Jun. 30, 2013

Disposal Group, Not Discontinued Operation, Disposal Disclosures [Abstract]

SEPARATION OF RETAIL BUSINESS

2. SEPARATION OF RETAIL BUSINESS

On May 1, 2013, we completed the separation of our retail business by creating an independent public company named CST Brands, Inc. (CST) and distributing 80 percent of the outstanding shares of CST common stock to our stockholders on May 1, 2013. Each Valero stockholder received one share of CST common stock for every nine shares of Valero common stock held at the close of business on the record date of April 19, 2013. Fractional shares of CST common stock were not distributed, but instead were aggregated and sold in the open market at prevailing rates with net cash proceeds then distributed pro rata to each Valero stockholder who was entitled to receive fractional shares.

In connection with the separation, we received an aggregate of $1.05 billion in cash, consisting of $550 million from the issuance of short-term debt to a third-party financial institution on April 16, 2013 and $500 million distributed to us by CST on May 1, 2013. The cash distributed to us by CST was borrowed by CST on May 1, 2013 under its senior secured credit facility. See Note 5 for further discussion of that credit facility. Also on May 1, 2013, CST issued $550 million of its senior unsecured bonds to us, and we exchanged those bonds with the third-party financial institution in satisfaction of our short-term debt. Immediately prior to May 1, 2013, subsidiaries of CST held $315 million of cash, and CST retained that cash following the distribution on May 1, 2013. Also in connection with the separation, we incurred a tax liability of approximately $189 million primarily related to the manner in which the transaction is treated for tax purposes in Canada, and most of these taxes will not be paid until the first half of 2014. Therefore, the cash we received as a result of the separation, net of our tax liability, was $546 million. We also incurred $30 million in costs during the three months ended June 30, 2013 to effect the separation, which are included in general and administrative expenses. We expect to liquidate the remaining 20 percent of the outstanding shares of CST common stock that we own within 18 months of the date of separation.

We also entered into long-term motor fuel supply agreements with CST in the U.S. and Canada. The nature and significance of our agreements to supply motor fuel to CST through 2028 represents a continuation of activities with CST for accounting purposes. As such, the historical results of operations of our retail business have not been reported as discontinued operations in our statements of income.

Selected historical results of operations of our retail business prior to the separation are disclosed in Note 10. Subsequent to May 1, 2013, our share of CST’s results of operations associated with our retained 20 percent equity interest in CST is reflected in “other income (expense), net” and our equity investment in CST, which is accounted for under the equity method, is included in “deferred charges and other assets, net.” Our share of income taxes incurred directly by CST is reported in the equity in earnings from CST, and as such is not included in income taxes in our statements of income.

The following table presents the carrying values of the major categories of assets and liabilities of our retail business, immediately preceding its separation on May 1, 2013, which are excluded from our consolidated balance sheet as of June 30, 2013 (in millions):

Assets
Cash and temporary cash investments	$	315
Credit card receivables from Valero	44
Other receivables, net	109
Inventories	170
Deferred income taxes	14
Prepaid expenses and other	13
Total current assets	665
Property, plant and equipment, at cost	1,891
Accumulated depreciation	(611		)
Property, plant and equipment, net	1,280
Intangible assets, net	38
Deferred charges and other assets, net	205
Total assets	$	2,188
Liabilities
Current portion of capital lease obligations	$	2
Trade payable to Valero	242
Other accounts payable	96
Accrued expenses	31
Taxes other than income taxes	20
Total current liabilities	391
Debt and capital lease obligations, less current portion	1,053
Deferred income taxes	83
Other long-term liabilities	112
Total liabilities	$	1,639

We retained certain environmental and other liabilities related to our former retail business and we have indemnified CST for certain self-insurance liabilities related to its employees and property.

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Debt

6 Months Ended

Jun. 30, 2013

Debt Disclosure [Abstract]

DEBT

5. DEBT

Bank Debt and Credit Facilities

We have a $3 billion revolving credit facility (the Revolver) that has a maturity date of December 2016. The Revolver has certain restrictive covenants, including a maximum debt-to-capitalization ratio of 60 percent. As of June 30, 2013 and December 31, 2012, our debt-to-capitalization ratios, calculated in accordance with the terms of the Revolver, were 19 percent and 23 percent, respectively. We believe that we will remain in compliance with this covenant. In addition to the Revolver, one of our Canadian subsidiaries has a committed revolving credit facility under which it may borrow and obtain letters of credit up to C$50 million.

During the six months ended June 30, 2013, we had no borrowings or repayments under our Revolver. During the six months ended June 30, 2012, we borrowed and repaid $1.1 billion under our Revolver. We had no borrowings or repayments under the Canadian revolving credit facility during the six months ended June 30, 2013 and 2012. As of June 30, 2013 and December 31, 2012, we had no borrowings outstanding under the Revolver or the Canadian revolving credit facility.

On March 20, 2013, in anticipation of the separation of our retail business as described in Note 2, CST entered into a credit agreement providing for $800 million of senior secured credit facilities (consisting of a $500 million term loan facility and a revolving credit facility with an aggregate principal amount of up to $300 million). Borrowings under the term loan and revolving credit facilities bear interest at the London Interbank Offered Rate (LIBOR) plus a margin or an alternate base rate, as defined in the agreement, plus a margin. The credit agreement matures on May 1, 2018 and has certain restrictive covenants. This credit agreement and related credit facilities were retained by CST after the separation from us. Therefore, we have no rights to obtain credit under nor any liabilities in connection with this credit agreement and related credit facilities.

On April 16, 2013, also in anticipation of the separation of our retail business, we borrowed $550 million under a short-term debt agreement with a third-party financial institution. On May 1, 2013, CST issued $550 million of its senior unsecured bonds to us, and we exchanged those bonds with the third-party financial institution in satisfaction of our short-term debt.

We had outstanding letters of credit under our committed lines of credit as follows (in millions):

				Amounts Outstanding
	Borrowing Capacity		Expiration	June 30, 2013		December 31, 2012
Letter of credit facilities	$	550	June 2014	$	250	$	418
Revolver	$	3,000	December 2016	$	59	$	59
Canadian revolving credit facility	C$	50	November 2013	C$	9	C$	10

As of June 30, 2013 and December 31, 2012, we had $87 million and $275 million, respectively, of letters of credit outstanding under our uncommitted short-term bank credit facilities.

Non-Bank Debt

During the six months ended June 30, 2013, the following activity occurred:

• in June 2013, we made a scheduled debt repayment of $300 million related to our 4.75% notes; and

• in January 2013, we made a scheduled debt repayment of $180 million related to our 6.7% senior notes.

During the six months ended June 30, 2012, the following activity occurred:

• in June 2012, we remarketed and received proceeds of $300 million related to the 4.0% Gulf Opportunity Zone Revenue Bonds Series 2010 issued by the Parish of St. Charles, State of Louisiana, which are due December 1, 2040, but are subject to mandatory tender on June 1, 2022;

• in April 2012, we made scheduled debt repayments of $4 million related to our Series 1997A 5.45% industrial revenue bonds and $750 million related to our 6.875% notes; and

• in March 2012, we exercised the call provisions on our Series 1997 5.6%, Series 1998 5.6%, Series 1999 5.7%, Series 2001 6.65%, and Series 1997A 5.45% industrial revenue bonds, which were redeemed on May 3, 2012 for $108 million, or 100 percent of their outstanding stated values.

Accounts Receivable Sales Facility

We have an accounts receivable sales facility with a group of third-party entities and financial institutions to sell up to $1.5 billion of eligible trade receivables on a revolving basis. In July 2013, we amended this facility to extend the maturity date to July 2014. Proceeds from the sale of receivables under this facility are reflected as debt. Under this program, one of our marketing subsidiaries (Valero Marketing) sells eligible receivables, without recourse, to another of our subsidiaries (Valero Capital), whereupon the receivables are no longer owned by Valero Marketing. Valero Capital, in turn, sells an undivided percentage ownership interest in the eligible receivables, without recourse, to the third-party entities and financial institutions. To the extent that Valero Capital retains an ownership interest in the receivables it has purchased from Valero Marketing, such interest is included in our financial statements solely as a result of the consolidation of the financial statements of Valero Capital with those of Valero Energy Corporation; the receivables are not available to satisfy the claims of the creditors of Valero Marketing or Valero Energy Corporation.

Changes in the amounts outstanding under our accounts receivable sales facility were as follows (in millions):

	Six Months Ended June 30,
	2013		2012
Balance as of beginning of period	$	100	$	250
Proceeds from the sale of receivables	—		1,300
Repayments	—		(1,450		)
Balance as of end of period	$	100	$	100

Capitalized Interest

Capitalized interest was $45 million and $53 million for the three months ended June 30, 2013 and 2012, respectively, and $85 million and $105 million for the six months ended June 30, 2013 and 2012, respectively.

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Impairments

6 Months Ended

Jun. 30, 2013

Property, Plant and Equipment Impairment or Disposal [Abstract]

IMPAIRMENTS

3. IMPAIRMENTS

Aruba Refinery

In March 2012, we suspended the operations of the Aruba Refinery because of its inability to generate positive cash flows on a sustained basis subsequent to its restart in January 2011 and the sensitivity of its profitability to sour crude oil differentials, which had narrowed significantly in the fourth quarter of 2011. Shortly thereafter, we received a non-binding offer to purchase the refinery for $350 million, plus working capital as of the closing date. Because of our decision to suspend the operations and the possibility of selling the refinery, we evaluated the refinery for potential impairment as of March 31, 2012 and concluded that it was impaired. We recognized an asset impairment loss of $595 million in March 2012. We did not, however, classify the Aruba Refinery as “held for sale” in our balance sheet because all of the accounting criteria required for that classification had not been met.

In September 2012, we decided to reorganize the Aruba Refinery into a crude oil and refined products terminal in response to the withdrawal of the non-binding offer to purchase the refinery. We bifurcated the idled crude oil processing units and related infrastructure (refining assets) from the terminal assets and evaluated the refining assets for potential impairment as of September 30, 2012. We concluded that the refining assets were impaired and recognized an asset impairment loss of $308 million in September 2012. We also recognized an asset impairment loss of $25 million related to materials and supplies inventories that supported the refining operations, resulting in a total asset impairment loss of $333 million that was recognized in September 2012 related to the Aruba Refinery. The terminal assets were not impaired.

We have continued to maintain the refining assets to allow them to be restarted and do not consider them to be abandoned. Therefore, we have not reflected the Aruba Refinery as a discontinued operation in our financial statements. It is possible, however, that we may abandon these assets in the future. Should we ultimately decide to abandon these assets, we may be required under our land lease agreement with the Government of Aruba to dismantle and remove the abandoned assets, which would require us to recognize an asset retirement obligation, that would be immediately charged to expense. We do not expect these amounts to be material to our financial position or results of operations.

The variation in the customary relationship between income tax expense and income before income tax expense for the six months ended June 30, 2012 was primarily due to not recognizing a tax benefit associated with the asset impairment loss of $595 million related to the Aruba Refinery as we do not expect to realize this tax benefit.

Cancelled Capital Project

In March 2012, we wrote down the carrying value of equipment associated with a permanently cancelled capital project at one of our refineries, resulting in an asset impairment loss of $16 million.

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Employee Benefit Plans (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Employee Benefit Plans (Textual)
Decrease in liability related to plan amendments			$ 328
Gain arising during the period related to plan amendments	0	0	328	0
Pension Plan, Defined Benefit [Member]
Components of net periodic benefit cost:
Service cost	35	35	71	70
Interest cost	22	23	44	46
Expected return on plan assets	(34)	(31)	(66)	(62)
Amortization of:
Net actuarial loss	15	9	29	17
Prior service cost (credit)	(6)	0	(9)	1
Net periodic benefit cost	32	36	69	72
Employee Benefit Plans (Textual)
Decrease in expected employer contributions			100
Expected future employer contributions to defined benefit plans			45
Contributions to pension plans			18	16
Other Postretirement Benefit Plan, Defined Benefit [Member]
Components of net periodic benefit cost:
Service cost	3	3	6	6
Interest cost	5	6	9	11
Expected return on plan assets	0	0	0	0
Amortization of:
Net actuarial loss	0	0	0	0
Prior service cost (credit)	(3)	(6)	(6)	(11)
Net periodic benefit cost	5	3	9	6
Employee Benefit Plans (Textual)
Contributions to pension plans			$ 8	$ 10

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Supplemental Cash Flow Information (Tables)

6 Months Ended

Jun. 30, 2013

Supplemental Cash Flow Information [Abstract]

Changes in current assets and current liabilities

In order to determine net cash provided by operating activities, net income is adjusted by, among other things, changes in current assets and current liabilities as follows (in millions):

	Six Months Ended June 30,
	2013			2012
Decrease (increase) in current assets:
Receivables, net	$	412		$	1,927
Inventories	(824		)	198
Income taxes receivable	31			(79		)
Prepaid expenses and other	2			(15		)
Increase (decrease) in current liabilities:
Accounts payable	625			(1,413		)
Accrued expenses	(44		)	(60		)
Taxes other than income taxes	268			67
Income taxes payable	(26		)	(60		)
Changes in current assets and current liabilities	$	444		$	565

Cash flows related to interest and income taxes

Cash flows related to interest and income taxes were as follows (in millions):

	Six Months Ended June 30,
	2013		2012
Interest paid in excess of amount capitalized	$	160	$	164
Income taxes paid, net	243		204

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Separation of Retail Business (Details) (USD $)	6 Months Ended				0 Months Ended	3 Months Ended	0 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012	Dec. 31, 2011	May 01, 2013 Spinoff [Member]	Jun. 30, 2013 Spinoff [Member]	May 01, 2013 Spinoff [Member] Notes Payable to Banks [Member]	Apr. 16, 2013 Spinoff [Member] Sourced From Parent's Short-Term Borrowings [Member] Notes Payable to Banks [Member]	May 01, 2013 Spinoff [Member] Sourced From Entity Spunoff [Member]	May 01, 2013 Spinoff [Member] Cash Proceeds Net of Tax Liability [Member]
Assets
Cash and temporary cash investments	$ 2,398,000,000	$ 1,295,000,000	$ 1,723,000,000	$ 1,024,000,000	$ 315,000,000
Credit card receivables from Valero					44,000,000
Other receivables, net					109,000,000
Inventories	6,446,000,000		5,973,000,000		170,000,000
Deferred income taxes	246,000,000		274,000,000		14,000,000
Prepaid expenses and other	136,000,000		154,000,000		13,000,000
Total current assets	16,768,000,000		16,460,000,000		665,000,000
Property, plant and equipment, at cost	33,087,000,000		34,132,000,000		1,891,000,000
Accumulated depreciation	(7,701,000,000)		(7,832,000,000)		(611,000,000)
Property, plant and equipment, net	25,386,000,000		26,300,000,000		1,280,000,000
Intangible assets, net	159,000,000		213,000,000		38,000,000
Deferred charges and other assets, net	1,864,000,000		1,504,000,000		205,000,000
Total assets	44,177,000,000		44,477,000,000		2,188,000,000
Liabilities
Current portion of capital lease obligations	303,000,000		586,000,000		2,000,000
Trade payable to Valero					242,000,000
Other accounts payable					96,000,000
Accrued expenses	504,000,000		590,000,000		31,000,000
Taxes other than income taxes	1,239,000,000		1,026,000,000		20,000,000
Total current liabilities	12,035,000,000		11,929,000,000		391,000,000
Debt and capital lease obligations, less current portion	6,261,000,000		6,463,000,000		1,053,000,000
Deferred income taxes	6,159,000,000		5,860,000,000		83,000,000
Other long-term liabilities	1,697,000,000		2,130,000,000		112,000,000
Total liabilities					1,639,000,000
Separation of Retail Business (Textual)
Spinoff transaction, ownership percentage by Valero stockholders					80.00%
Cash distributed to Valero by CST Brands, Inc.	500,000,000	0			1,050,000,000				500,000,000	546,000,000
Proceeds from short-term debt	550,000,000	0						550,000,000
Senior unsecured bonds of CST issued to us					550,000,000
CST bonds exchanged in settlement of short-term borrowings							550,000,000
Cash held and retained by CST upon spin	315,000,000	0			315,000,000
Tax liability incurred related to business separation					189,000,000
Cost of separation in general and administrative expenses						$ 30,000,000
Ownership percentage retained					20.00%
Expected investment holding period					18 months

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Commitments and Contingencies (Details) (USD $) In Millions, unless otherwise specified		1 Months Ended	3 Months Ended
	Jun. 30, 2013	Sep. 30, 2012 Aruba Refinery [Member] employees	Mar. 31, 2013 Aruba Refinery [Member]	Dec. 31, 2012 Aruba Refinery [Member]
Commitments and Contingencies (Textual)
Minimum range of possible loss contingency	$ 0
Maximum range of possible loss contingency	200
Number of employees notified of termination		495
Termination date		Nov. 15, 2012
Severance liability		41
Severance payments			$ (10)	$ (31)

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Price Risk Management Activities (Details) (USD $) In Millions, unless otherwise specified	1 Months Ended		3 Months Ended		6 Months Ended
	Jul. 31, 2013 Foreign Currency Contract [Member]	Jun. 30, 2013 Foreign Currency Contract [Member]	Jun. 30, 2013 Biofuels Blending [Member]	Jun. 30, 2012 Biofuels Blending [Member]	Jun. 30, 2013 Biofuels Blending [Member]	Jun. 30, 2012 Biofuels Blending [Member]	Jun. 30, 2013 Fair Value Hedging [Member] Future [Member] Long (Purchases) [Member] Maturity Current Year [Member] Crude Oil (in thousands of barrels) [Member] MBbls	Jun. 30, 2013 Fair Value Hedging [Member] Future [Member] Short (Sales) [Member] Maturity Current Year [Member] Crude Oil (in thousands of barrels) [Member] MBbls	Jun. 30, 2013 Fair Value Hedging [Member] Forward Contracts [Member] Long (Purchases) [Member] Maturity Current Year [Member] Crude Oil (in thousands of barrels) [Member] MBbls	Jun. 30, 2013 Cash Flow Hedging [Member] Future [Member] Long (Purchases) [Member] Maturity Current Year [Member] Crude Oil (in thousands of barrels) [Member] MBbls	Jun. 30, 2013 Cash Flow Hedging [Member] Future [Member] Short (Sales) [Member] Maturity Current Year [Member] Crude Oil (in thousands of barrels) [Member] MBbls	Jun. 30, 2013 Cash Flow Hedging [Member] Forward Contracts [Member] Short (Sales) [Member] Maturity Current Year [Member] Crude Oil (in thousands of barrels) [Member] MBbls	Jun. 30, 2013 Economic Hedging [Member] Future [Member] Long (Purchases) [Member] Maturity Current Year [Member] Crude Oil (in thousands of barrels) [Member] MBbls	Jun. 30, 2013 Economic Hedging [Member] Future [Member] Long (Purchases) [Member] Maturity Current Year [Member] Grain (in bushels) [Member] bu	Jun. 30, 2013 Economic Hedging [Member] Future [Member] Long (Purchases) [Member] Maturity Current Year [Member] Soybean Oil (in thousands of pounds) [Member] lb	Jun. 30, 2013 Economic Hedging [Member] Future [Member] Long (Purchases) [Member] Maturity Year Two [Member] Crude Oil (in thousands of barrels) [Member] MBbls	Jun. 30, 2013 Economic Hedging [Member] Future [Member] Long (Purchases) [Member] Maturity Year Two [Member] Grain (in bushels) [Member] bu	Jun. 30, 2013 Economic Hedging [Member] Future [Member] Long (Purchases) [Member] Maturity Year Two [Member] Soybean Oil (in thousands of pounds) [Member] lb	Jun. 30, 2013 Economic Hedging [Member] Future [Member] Short (Sales) [Member] Maturity Current Year [Member] Crude Oil (in thousands of barrels) [Member] MBbls	Jun. 30, 2013 Economic Hedging [Member] Future [Member] Short (Sales) [Member] Maturity Current Year [Member] Grain (in bushels) [Member] bu	Jun. 30, 2013 Economic Hedging [Member] Future [Member] Short (Sales) [Member] Maturity Current Year [Member] Soybean Oil (in thousands of pounds) [Member] lb	Jun. 30, 2013 Economic Hedging [Member] Future [Member] Short (Sales) [Member] Maturity Year Two [Member] Crude Oil (in thousands of barrels) [Member] MBbls	Jun. 30, 2013 Economic Hedging [Member] Future [Member] Short (Sales) [Member] Maturity Year Two [Member] Grain (in bushels) [Member] bu	Jun. 30, 2013 Economic Hedging [Member] Future [Member] Short (Sales) [Member] Maturity Year Two [Member] Soybean Oil (in thousands of pounds) [Member] lb	Jun. 30, 2013 Economic Hedging [Member] Forward Contracts [Member] Long (Purchases) [Member] Maturity Current Year [Member] Grain (in bushels) [Member] bu	Jun. 30, 2013 Economic Hedging [Member] Forward Contracts [Member] Long (Purchases) [Member] Maturity Year Two [Member] Grain (in bushels) [Member] bu	Jun. 30, 2013 Economic Hedging [Member] Swap [Member] Long (Purchases) [Member] Maturity Current Year [Member] Crude Oil (in thousands of barrels) [Member] MBbls	Jun. 30, 2013 Economic Hedging [Member] Swap [Member] Long (Purchases) [Member] Maturity Year Two [Member] Crude Oil (in thousands of barrels) [Member] MBbls	Jun. 30, 2013 Economic Hedging [Member] Swap [Member] Short (Sales) [Member] Maturity Current Year [Member] Crude Oil (in thousands of barrels) [Member] MBbls	Jun. 30, 2013 Economic Hedging [Member] Swap [Member] Short (Sales) [Member] Maturity Year Two [Member] Crude Oil (in thousands of barrels) [Member] MBbls	Jun. 30, 2013 Economic Hedging [Member] Options Held [Member] Long (Purchases) [Member] Maturity Current Year [Member] Natural Gas (in millions of BTUs) [Member] MMBTU	Jun. 30, 2013 Economic Hedging [Member] Options Held [Member] Long (Purchases) [Member] Maturity Year Two [Member] Natural Gas (in millions of BTUs) [Member] MMBTU	Jun. 30, 2013 Commodity [Member] Future [Member] Long (Purchases) [Member] Maturity Current Year [Member] Crude Oil (in thousands of barrels) [Member] MBbls	Jun. 30, 2013 Commodity [Member] Future [Member] Long (Purchases) [Member] Maturity Current Year [Member] Natural Gas (in millions of BTUs) [Member] MMBTU	Jun. 30, 2013 Commodity [Member] Future [Member] Long (Purchases) [Member] Maturity Current Year [Member] Grain (in bushels) [Member] bu	Jun. 30, 2013 Commodity [Member] Future [Member] Long (Purchases) [Member] Maturity Year Two [Member] Crude Oil (in thousands of barrels) [Member] MBbls	Jun. 30, 2013 Commodity [Member] Future [Member] Long (Purchases) [Member] Maturity Year Two [Member] Natural Gas (in millions of BTUs) [Member] MMBTU	Jun. 30, 2013 Commodity [Member] Future [Member] Long (Purchases) [Member] Maturity Year Two [Member] Grain (in bushels) [Member] bu	Jun. 30, 2013 Commodity [Member] Future [Member] Short (Sales) [Member] Maturity Current Year [Member] Crude Oil (in thousands of barrels) [Member] MBbls	Jun. 30, 2013 Commodity [Member] Future [Member] Short (Sales) [Member] Maturity Current Year [Member] Natural Gas (in millions of BTUs) [Member] MMBTU	Jun. 30, 2013 Commodity [Member] Future [Member] Short (Sales) [Member] Maturity Current Year [Member] Grain (in bushels) [Member] bu	Jun. 30, 2013 Commodity [Member] Future [Member] Short (Sales) [Member] Maturity Year Two [Member] Crude Oil (in thousands of barrels) [Member] MBbls	Jun. 30, 2013 Commodity [Member] Future [Member] Short (Sales) [Member] Maturity Year Two [Member] Natural Gas (in millions of BTUs) [Member] MMBTU	Jun. 30, 2013 Commodity [Member] Future [Member] Short (Sales) [Member] Maturity Year Two [Member] Grain (in bushels) [Member] bu	Jun. 30, 2013 Commodity [Member] Forward Contracts [Member] Short (Sales) [Member] Maturity Current Year [Member] RINs (in thousands of gallons) [Member] gal	Jun. 30, 2013 Commodity [Member] Forward Contracts [Member] Short (Sales) [Member] Maturity Year Two [Member] RINs (in thousands of gallons) [Member] gal	Jun. 30, 2013 Commodity [Member] Swap [Member] Long (Purchases) [Member] Maturity Current Year [Member] Crude Oil (in thousands of barrels) [Member] MBbls	Jun. 30, 2013 Commodity [Member] Swap [Member] Long (Purchases) [Member] Maturity Current Year [Member] Grain (in bushels) [Member] bu	Jun. 30, 2013 Commodity [Member] Swap [Member] Long (Purchases) [Member] Maturity Year Two [Member] Crude Oil (in thousands of barrels) [Member] MBbls	Jun. 30, 2013 Commodity [Member] Swap [Member] Long (Purchases) [Member] Maturity Year Two [Member] Grain (in bushels) [Member] bu	Jun. 30, 2013 Commodity [Member] Swap [Member] Short (Sales) [Member] Maturity Current Year [Member] Crude Oil (in thousands of barrels) [Member] MBbls	Jun. 30, 2013 Commodity [Member] Swap [Member] Short (Sales) [Member] Maturity Current Year [Member] Grain (in bushels) [Member] bu	Jun. 30, 2013 Commodity [Member] Swap [Member] Short (Sales) [Member] Maturity Year Two [Member] Crude Oil (in thousands of barrels) [Member] MBbls	Jun. 30, 2013 Commodity [Member] Swap [Member] Short (Sales) [Member] Maturity Year Two [Member] Grain (in bushels) [Member] bu	Jun. 30, 2013 Commodity [Member] Options Held [Member] Long (Purchases) [Member] Maturity Current Year [Member] Crude Oil (in thousands of barrels) [Member] MBbls	Jun. 30, 2013 Commodity [Member] Options Held [Member] Long (Purchases) [Member] Maturity Current Year [Member] Natural Gas (in millions of BTUs) [Member] MMBTU	Jun. 30, 2013 Commodity [Member] Options Held [Member] Long (Purchases) [Member] Maturity Year Two [Member] Crude Oil (in thousands of barrels) [Member] MBbls	Jun. 30, 2013 Commodity [Member] Options Held [Member] Long (Purchases) [Member] Maturity Year Two [Member] Natural Gas (in millions of BTUs) [Member] MMBTU	Jun. 30, 2013 Commodity [Member] Options Held [Member] Short (Sales) [Member] Maturity Current Year [Member] Crude Oil (in thousands of barrels) [Member] MBbls	Jun. 30, 2013 Commodity [Member] Options Held [Member] Short (Sales) [Member] Maturity Year Two [Member] Crude Oil (in thousands of barrels) [Member] MBbls
Volume of Outstanding Contracts
Nonmonetary notional amount of price risk derivatives							8,062	10,954	2,892	7,938	5,527	2,411	39,316	28,405,000	5,220,000	58	5,000	0	53,514	49,030,000	27,900,000	0	1,180,000	0	21,678,000	1,215,000	3,510	0	2,585	0	10,750,000	0	99,886	1,700,000	5,620,000	37,527	0	0	99,311	750,000	5,620,000	37,927	0	0	25,000,000	0	26,255	145,000	21,135	0	26,255	145,000	21,135	0	26,321	1,700,000	0	0	25,256	0
Monetary notional amount of derivative liabilities		$ 581
Price Risk Management Activities (Textual)
Foreign currency commitments maturity date	Jul. 31, 2013
Compliance program costs			$ 137	$ 59	$ 267	$ 126

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Supplemental Cash Flow Information (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Decrease (increase) in current assets:
Receivables, net	$ 412	$ 1,927
Inventories	(824)	198
Income taxes receivable	31	(79)
Prepaid expenses and other	2	(15)
Increase (decrease) in current liabilities:
Accounts payable	625	(1,413)
Accrued expenses	(44)	(60)
Taxes other than income taxes	268	67
Income taxes payable	(26)	(60)
Changes in current assets and current liabilities	444	565
Cash Flows Related to Interest and Income Taxes
Interest paid in excess of amount capitalized	160	164
Income taxes paid, net	$ 243	$ 204

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Consolidated Balance Sheets (Parenthetical) (USD $)	Jun. 30, 2013	Dec. 31, 2012
Valero Energy Corporation stockholders’ equity:
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	1,200,000,000	1,200,000,000
Common stock, shares issued	673,501,593	673,501,593
Treasury stock, common shares	131,412,237	121,406,520

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Employee Benefit Plans

6 Months Ended

Jun. 30, 2013

Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract]

EMPLOYEE BENEFIT PLANS

8. EMPLOYEE BENEFIT PLANS

The components of net periodic benefit cost related to our defined benefit plans were as follows (in millions) :

	Pension Plans						Other Postretirement Benefit Plans
	2013			2012			2013			2012
Three months ended June 30:
Service cost	$	35		$	35		$	3		$	3
Interest cost	22			23			5			6
Expected return on plan assets	(34		)	(31		)	—			—
Amortization of:
Net actuarial loss	15			9			—			—
Prior service credit	(6		)	—			(3		)	(6		)
Net periodic benefit cost	$	32		$	36		$	5		$	3
Six months ended June 30:
Service cost	$	71		$	70		$	6		$	6
Interest cost	44			46			9			11
Expected return on plan assets	(66		)	(62		)	—			—
Amortization of:
Net actuarial loss	29			17			—			—
Prior service cost (credit)	(9		)	1			(6		)	(11		)
Net periodic benefit cost	$	69		$	72		$	9		$	6

On February 15, 2013, we announced changes to certain of our U.S. qualified pension plans that cover the majority of our U.S. employees who work in our refining segment and corporate operations. Benefits under our primary pension plan will change from a final average pay formula to a cash balance formula with staged effective dates that commence either on July 1, 2013 or January 1, 2015 depending on the age and service of the affected employees. All final average pay benefits will be frozen as of December 31, 2014, with all future benefits to be earned under the new cash balance formula. These plan amendments resulted in a $328 million decrease to pension liabilities and a related increase to other comprehensive income during the six months ended June 30, 2013. The benefit of this remeasurement will be amortized into income through 2025.

As a result of these plan amendments, management reduced its discretionary contributions to our pension plans by $100 million, resulting in expected contributions to our pension plans of $45 million for 2013. During the six months ended June 30, 2013 and 2012, we contributed $18 million and $16 million, respectively, to our pension plans and $8 million and $10 million, respectively, to our other postretirement benefit plans.

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Consolidated Statements of Comprehensive Income (Unaudited) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Net income	$ 465	$ 830	$ 1,117	$ 398
Other comprehensive income (loss):
Foreign currency translation adjustment	(64)	(91)	(268)	32
Pension and other postretirement benefits:
Gain arising during the period related to remeasurement due to plan amendments	0	0	328	0
(Gain) loss reclassified into income related to:
Net actuarial loss	15	9	29	17
Prior service credit	(9)	(6)	(15)	(10)
Net gain on pension and other postretirement benefits	6	3	342	7
Derivative instruments designated and qualifying as cash flow hedges:
Net gain (loss) arising during the period	(10)	(31)	(9)	16
Net (gain) loss reclassified into income	8	12	5	(36)
Net loss on cash flow hedges	(2)	(19)	(4)	(20)
Other comprehensive income (loss), before income tax expense (benefit)	(60)	(107)	70	19
Income tax expense (benefit) related to items of other comprehensive income (loss)	1	(5)	118	(4)
Other comprehensive income (loss)	(61)	(102)	(48)	23
Comprehensive income	404	728	1,069	421
Less: Comprehensive loss attributable to noncontrolling interests	(1)	(1)	(3)	(1)
Comprehensive income attributable to Valero Energy Corporation stockholders	$ 405	$ 729	$ 1,072	$ 422

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Consolidated Balance Sheets (USD $) In Millions, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Current assets:
Cash and temporary cash investments	$ 2,398	$ 1,723
Receivables, net	7,486	8,167
Inventories	6,446	5,973
Income taxes receivable	56	169
Deferred income taxes	246	274
Prepaid expenses and other	136	154
Total current assets	16,768	16,460
Property, plant and equipment, at cost	33,087	34,132
Accumulated depreciation	(7,701)	(7,832)
Property, plant and equipment, net	25,386	26,300
Intangible assets, net	159	213
Deferred charges and other assets, net	1,864	1,504
Total assets	44,177	44,477
Current liabilities:
Current portion of debt and capital lease obligations	303	586
Accounts payable	9,507	9,348
Accrued expenses	504	590
Taxes other than income taxes	1,239	1,026
Income taxes payable	85	1
Deferred income taxes	397	378
Total current liabilities	12,035	11,929
Debt and capital lease obligations, less current portion	6,261	6,463
Deferred income taxes	6,159	5,860
Other long-term liabilities	1,697	2,130
Commitments and contingencies
Valero Energy Corporation stockholders’ equity:
Common stock, $0.01 par value; 1,200,000,000 shares authorized; 673,501,593 and 673,501,593 shares issued	7	7
Additional paid-in capital	7,237	7,322
Treasury stock, at cost; 131,412,237 and 121,406,520 common shares	(6,818)	(6,437)
Retained earnings	17,593	17,032
Accumulated other comprehensive income (loss)	(99)	108
Total Valero Energy Corporation stockholders’ equity	17,920	18,032
Noncontrolling interests	105	63
Total equity	18,025	18,095
Total liabilities and equity	$ 44,177	$ 44,477

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Price Risk Management Activities, Hedging Instruments by Consolidated Balance Sheet Location (Details) (USD $) In Millions, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Fair Values of Derivative Instruments
Total derivative assets, net	$ 1,058	$ 1,215
Total derivative liabilities, net	1,058	1,209
Designated as Hedging Instrument [Member]
Fair Values of Derivative Instruments
Derivative asset, fair value, gross asset		94
Derivative liability, fair value, gross liability		79
Designated as Hedging Instrument [Member] | Future [Member] | Commodity Contract [Member] | Trade Accounts Receivable [Member]
Fair Values of Derivative Instruments
Derivative asset, fair value, gross asset	49	77
Derivative asset, fair value, gross liability	53	64
Designated as Hedging Instrument [Member] | Swap [Member] | Commodity Contract [Member] | Trade Accounts Receivable [Member]
Fair Values of Derivative Instruments
Derivative asset, fair value, gross asset		15
Derivative asset, fair value, gross liability		13
Designated as Hedging Instrument [Member] | Swap [Member] | Commodity Contract [Member] | Prepaid Expenses and Other Current Assets [Member]
Fair Values of Derivative Instruments
Derivative asset, fair value, gross asset		2
Derivative asset, fair value, gross liability		2
Not Designated as Hedging Instrument [Member]
Fair Values of Derivative Instruments
Derivative asset, fair value, gross asset	1,009	1,121
Derivative liability, fair value, gross liability	1,005	1,130
Not Designated as Hedging Instrument [Member] | Future [Member] | Commodity Contract [Member] | Trade Accounts Receivable [Member]
Fair Values of Derivative Instruments
Derivative asset, fair value, gross asset	966	1,066
Derivative asset, fair value, gross liability	942	1,073
Not Designated as Hedging Instrument [Member] | Swap [Member] | Commodity Contract [Member] | Trade Accounts Receivable [Member]
Fair Values of Derivative Instruments
Derivative asset, fair value, gross asset	16	9
Derivative asset, fair value, gross liability	11	6
Not Designated as Hedging Instrument [Member] | Swap [Member] | Commodity Contract [Member] | Prepaid Expenses and Other Current Assets [Member]
Fair Values of Derivative Instruments
Derivative asset, fair value, gross asset	2
Derivative asset, fair value, gross liability	1
Not Designated as Hedging Instrument [Member] | Swap [Member] | Commodity Contract [Member] | Accrued Expenses [Member]
Fair Values of Derivative Instruments
Derivative liability, fair value, gross asset	5	32
Derivative liability, fair value, gross liability	11	46
Not Designated as Hedging Instrument [Member] | Options Held [Member] | Commodity Contract [Member] | Trade Accounts Receivable [Member]
Fair Values of Derivative Instruments
Derivative asset, fair value, gross asset	4	1
Derivative asset, fair value, gross liability	6	4
Not Designated as Hedging Instrument [Member] | Options Held [Member] | Commodity Contract [Member] | Prepaid Expenses and Other Current Assets [Member]
Fair Values of Derivative Instruments
Derivative asset, fair value, gross asset	1
Derivative asset, fair value, gross liability	0
Not Designated as Hedging Instrument [Member] | Options Held [Member] | Commodity Contract [Member] | Accrued Expenses [Member]
Fair Values of Derivative Instruments
Derivative liability, fair value, gross asset	0	1
Derivative liability, fair value, gross liability	1	0
Not Designated as Hedging Instrument [Member] | Forward Contracts [Member] | Physical Purchase Contracts [Member] | Inventories [Member]
Fair Values of Derivative Instruments
Derivative asset, fair value, gross asset	5	11
Derivative asset, fair value, gross liability	11	0
Not Designated as Hedging Instrument [Member] | Forward Contracts [Member] | RINs Fixed-Price Contracts [Member] | Prepaid Expenses and Other Current Assets [Member]
Fair Values of Derivative Instruments
Derivative asset, fair value, gross asset	0
Derivative asset, fair value, gross liability	22
Not Designated as Hedging Instrument [Member] | Forward Contracts [Member] | Foreign Currency Contract [Member] | Trade Accounts Receivable [Member]
Fair Values of Derivative Instruments
Derivative asset, fair value, gross asset	10	1
Derivative asset, fair value, gross liability	0	0
Not Designated as Hedging Instrument [Member] | Forward Contracts [Member] | Foreign Currency Contract [Member] | Accrued Expenses [Member]
Fair Values of Derivative Instruments
Derivative liability, fair value, gross asset		0
Derivative liability, fair value, gross liability		$ 1

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

Fair value of assets and liabilities measured on recurring basis

The tables below present information (in millions) about our assets and liabilities recognized at their fair values in our balance sheets categorized according to the fair value hierarchy of the inputs utilized by us to determine the fair values as of June 30, 2013 and December 31, 2012.

We have elected to offset the fair value amounts recognized for multiple similar derivative contracts executed with the same counterparty, including any related cash collateral assets or obligations as shown below; however, fair value amounts by hierarchy level are presented on a gross basis in the tables below. We have no derivative contracts that are subject to master netting arrangements that are reflected gross on the balance sheet.

	June 30, 2013
							Total Gross Fair Value		Effect of Counter- party Netting			Effect of Cash Collateral Netting			Net Carrying Value on Balance Sheet		Cash Collateral Paid or Received Not Offset
	Fair Value Hierarchy
	Level 1		Level 2		Level 3
Assets:
Commodity derivative contracts	$	1,015	$	28	$	—	$	1,043	$	(997	)	$	(3	)	$	43	$	—
Physical purchase contracts	—		5		—		5		N/A			N/A			5		N/A
Foreign currency contracts	10		—		—		10		N/A			N/A			10		N/A
Investments of certain benefit plans	92		—		11		103		N/A			N/A			103		N/A
Total	$	1,117	$	33	$	11	$	1,161	$	(997	)	$	(3	)	$	161
Liabilities:
Commodity derivative contracts	$	997	$	28	$	—	$	1,025	$	(997	)	$	(23	)	$	5	$	(109	)
Physical purchase contracts	—		11		—		11		N/A			N/A			11		N/A
RINs fixed-price contracts	—		22		—		22		N/A			N/A			22		N/A
Total	$	997	$	61	$	—	$	1,058	$	(997	)	$	(23	)	$	38

	December 31, 2012
							Total Gross Fair Value		Effect of Counter- party Netting			Effect of Cash Collateral Netting			Net Carrying Value on Balance Sheet		Cash Collateral Paid or Received Not Offset
	Fair Value Hierarchy
	Level 1		Level 2		Level 3
Assets:
Commodity derivative contracts	$	1,143	$	60	$	—	$	1,203	$	(1,189	)	$	—		$	14	$	—
Physical purchase contracts	—		11		—		11		N/A			N/A			11		N/A
Foreign currency contracts	1		—		—		1		N/A			N/A			1		N/A
Investments of certain benefit plans	87		—		11		98		N/A			N/A			98		N/A
Total	$	1,231	$	71	$	11	$	1,313	$	(1,189	)	$	—		$	124
Liabilities:
Commodity derivative contracts	$	1,138	$	70	$	—	$	1,208	$	(1,189	)	$	(13	)	$	6	$	(114	)
Biofuels blending obligation	—		10		—		10		N/A			N/A			10		N/A
Foreign currency contracts	1		—		—		1		N/A			N/A			1		N/A
Total	$	1,139	$	80	$	—	$	1,219	$	(1,189	)	$	(13	)	$	17

Fair value of assets measured on a nonrecurring basis

The table below presents the fair value of certain assets that were measured at fair value on a nonrecurring basis as of December 31, 2012 (in millions).

							Total Fair Value as of December 31, 2012
	Fair Value Hierarchy
	Level 1		Level 2		Level 3
Cancelled capital project	$	—	$	—	$	2	$	2
Property, plant and equipment of convenience stores	—		—		8		8

Carrying amounts and estimated fair value of financial instruments

Financial instruments that we recognize in our balance sheets at their carrying amounts are shown in the table below (in millions):

	June 30, 2013				December 31, 2012
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Cash and temporary cash investments	$	2,398	$	2,398	$	1,723	$	1,723
Equity investment in CST	114		465		—		—
Financial liabilities:
Debt (excluding capital leases)	6,522		7,736		7,000		8,621

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Debt (Tables)

6 Months Ended

Jun. 30, 2013

Debt Disclosure [Abstract]

Outstanding letters of credit under committed lines of credit

We had outstanding letters of credit under our committed lines of credit as follows (in millions):

				Amounts Outstanding
	Borrowing Capacity		Expiration	June 30, 2013		December 31, 2012
Letter of credit facilities	$	550	June 2014	$	250	$	418
Revolver	$	3,000	December 2016	$	59	$	59
Canadian revolving credit facility	C$	50	November 2013	C$	9	C$	10

Changes in accounts receivable sales facility

Changes in the amounts outstanding under our accounts receivable sales facility were as follows (in millions):

	Six Months Ended June 30,
	2013		2012
Balance as of beginning of period	$	100	$	250
Proceeds from the sale of receivables	—		1,300
Repayments	—		(1,450		)
Balance as of end of period	$	100	$	100

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Segment Information (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Segment information for our reportable segments
Operating revenues	$ 34,034	$ 34,662	$ 67,508	$ 69,829
Operating income (loss)	808	1,361	1,869	1,117
Total assets by reportable segment
Reportable segment assets	44,177		44,177		44,477
Refining [Member]
Total assets by reportable segment
Reportable segment assets	40,527		40,527		39,490
Retail [Member]
Total assets by reportable segment
Reportable segment assets	0		0		2,043
Ethanol [Member]
Total assets by reportable segment
Reportable segment assets	867		867		929
Corporate and Other [Member]
Total assets by reportable segment
Reportable segment assets	2,783		2,783		2,015
Operating Segments [Member] | Refining [Member]
Segment information for our reportable segments
Operating revenues	31,564	30,488	61,117	61,638
Operating income (loss)	921	1,364	2,133	1,245
Operating Segments [Member] | Retail [Member]
Segment information for our reportable segments
Operating revenues	979	3,062	3,896	5,997
Operating income (loss)	39	172	81	212
Operating Segments [Member] | Ethanol [Member]
Segment information for our reportable segments
Operating revenues	1,491	1,112	2,495	2,194
Operating income (loss)	95	5	109	14
Corporate, Non-Segment [Member] | Corporate and Other [Member]
Segment information for our reportable segments
Operating revenues	0	0	0	0
Operating income (loss)	(247)	(180)	(454)	(354)
Intersegment Eliminations [Member]
Segment information for our reportable segments
Operating revenues	686	2,249	2,946	4,518
Intersegment Eliminations [Member] | Refining [Member]
Segment information for our reportable segments
Operating revenues	671	2,203	2,876	4,458
Intersegment Eliminations [Member] | Retail [Member]
Segment information for our reportable segments
Operating revenues	0	0	0	0
Intersegment Eliminations [Member] | Ethanol [Member]
Segment information for our reportable segments
Operating revenues	$ 15	$ 46	$ 70	$ 60

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Equity, Changes in Accumulated Other Comprehensive Income (Loss) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Changes in the Balances of Each Component of Accumulated Other Comprehensive Income (Loss)
Beginning balance, accumulated other comprehensive income (loss), net of tax			$ 108
Net other comprehensive income (loss)	(61)	(102)	(48)	23
Separation of retail business			(499)	0
Ending balance, accumulated other comprehensive income (loss), net of tax	(99)		(99)
Accumulated Other Comprehensive Income (Loss) [Member]
Changes in the Balances of Each Component of Accumulated Other Comprehensive Income (Loss)
Beginning balance, accumulated other comprehensive income (loss), net of tax			108
Other comprehensive income (loss) before reclassifications			(60)
Amounts reclassified from accumulated other comprehensive income (loss)			12
Net other comprehensive income (loss)			(48)
Separation of retail business			(159)
Ending balance, accumulated other comprehensive income (loss), net of tax	(99)		(99)
Foreign Currency Translation Adjustment [Member]
Changes in the Balances of Each Component of Accumulated Other Comprehensive Income (Loss)
Beginning balance, accumulated other comprehensive income (loss), net of tax			665
Other comprehensive income (loss) before reclassifications			(268)
Amounts reclassified from accumulated other comprehensive income (loss)			0
Net other comprehensive income (loss)			(268)
Separation of retail business			(159)
Ending balance, accumulated other comprehensive income (loss), net of tax	238		238
Defined Benefit Plans Items [Member]
Changes in the Balances of Each Component of Accumulated Other Comprehensive Income (Loss)
Beginning balance, accumulated other comprehensive income (loss), net of tax			(558)
Other comprehensive income (loss) before reclassifications			214
Amounts reclassified from accumulated other comprehensive income (loss)			9
Net other comprehensive income (loss)			223
Separation of retail business			0
Ending balance, accumulated other comprehensive income (loss), net of tax	(335)		(335)
Gains (Losses) on Cash Flow Hedges [Member]
Changes in the Balances of Each Component of Accumulated Other Comprehensive Income (Loss)
Beginning balance, accumulated other comprehensive income (loss), net of tax			1
Other comprehensive income (loss) before reclassifications			(6)
Amounts reclassified from accumulated other comprehensive income (loss)			3
Net other comprehensive income (loss)			(3)
Separation of retail business			0
Ending balance, accumulated other comprehensive income (loss), net of tax	$ (2)		$ (2)

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Debt, Bank Debt and Credit Facilities (Details)	6 Months Ended						0 Months Ended			6 Months Ended		6 Months Ended						6 Months Ended
	Jun. 30, 2013 USD ($)	Jun. 30, 2012 USD ($)	Jun. 30, 2013 A/R Sales Facility [Member] USD ($)	Jun. 30, 2012 A/R Sales Facility [Member] USD ($)	May 01, 2013 Spinoff [Member] USD ($)	Mar. 20, 2013 Spinoff [Member] USD ($)	May 01, 2013 Spinoff [Member] Notes Payable to Banks [Member] USD ($)	Apr. 16, 2013 Spinoff [Member] Sourced From Parent's Short-Term Borrowings [Member] Notes Payable to Banks [Member] USD ($)	Mar. 20, 2013 Revolving Credit Facility [Member] Spinoff [Member] USD ($)	Jun. 30, 2013 Letter of Credit [Member] USD ($)	Dec. 31, 2012 Letter of Credit [Member] USD ($)	Jun. 30, 2013 U S Revolver [Member] USD ($)	Jun. 30, 2012 U S Revolver [Member] USD ($)	Dec. 31, 2012 U S Revolver [Member] USD ($)	Jun. 30, 2013 U S Revolver [Member] Maximum [Member]	Jun. 30, 2013 U S Revolver Letter of Credit [Member] USD ($)	Dec. 31, 2012 U S Revolver Letter of Credit [Member] USD ($)	Jun. 30, 2013 Canadian Revolver [Member] CAD	Jun. 30, 2012 Canadian Revolver [Member] CAD	Dec. 31, 2012 Canadian Revolver [Member] CAD	Jun. 30, 2013 Canadian Revolver Letter of Credit [Member] CAD	Dec. 31, 2012 Canadian Revolver Letter of Credit [Member] CAD	Mar. 20, 2013 Line of Credit [Member] Spinoff [Member] USD ($)	Jun. 30, 2013 Other Letter of Credit [Member] USD ($)	Dec. 31, 2012 Other Letter of Credit [Member] USD ($)
Line of Credit Facility
Line of credit facility, maximum borrowing capacity			$ 1,500,000,000			$ 800,000,000			$ 300,000,000	$ 550,000,000		$ 3,000,000,000						50,000,000					$ 500,000,000
Line of credit facility, expiration date (month, year)										June 2014		December 2016						November 2013
Amount outstanding										250,000,000	418,000,000	0		0		59,000,000	59,000,000	0		0	9,000,000	10,000,000		87,000,000	275,000,000
Accounts Receivable Sales Facility
Balance as of beginning of period			100,000,000	250,000,000
Proceeds from the sale of receivables	0	1,300,000,000	0	1,300,000,000
Repayments	0	(1,450,000,000)	0	(1,450,000,000)
Balance as of end of period			100,000,000	100,000,000
Credit Facilities (Textual)
Debt to capitalization ratios as per terms of revolver												0.19		0.23	0.60
Borrowings from long-term lines of credit	0	1,100,000,000										0	1,100,000,000					0	0
Repayments of long-term lines of credit	0	1,100,000,000										0	1,100,000,000					0	0
Proceeds from short-term debt	550,000,000	0						550,000,000
Senior unsecured bonds of CST issued to us					550,000,000
CST bonds exchanged in settlement of short-term borrowings							$ 550,000,000
Accounts Receivable Sales Facility (Textual)
Maturity date of accounts receivable sales facility			July 2014

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Debt, Non-Bank Debt and Capitalized Interest (Details) (USD $)	3 Months Ended		6 Months Ended		1 Months Ended					1 Months Ended					0 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013 Notes Due In 2013 [Member]	Jan. 31, 2013 Senior Notes Due In 2013 [Member]	Jun. 30, 2012 Gulf Opportunity Zone Revenue Bonds Series 2010 [Member]	Apr. 30, 2012 Tax Exempt Revenue Refunding Bonds Series 1997A [Member]	Mar. 31, 2012 Tax Exempt Revenue Refunding Bonds Series 1997A [Member]	Apr. 30, 2012 Notes Due In 2012 [Member]	Mar. 31, 2012 Tax Exempt Waste Disposal Revenue Bonds Series 1997 [Member]	Mar. 31, 2012 Tax Exempt Waste Disposal Revenue Bonds Series 1998 [Member]	Mar. 31, 2012 Tax Exempt Waste Disposal Revenue Bonds Series 1999 [Member]	Mar. 31, 2012 Tax Exempt Waste Disposal Revenue Bonds Series 2001 [Member]	May 03, 2012 Industrial Revenue Bonds Tax Exempt Refunding Bonds [Member]
Non-Bank Debt (Textual)
Debt repayments			$ 480,000,000	$ 862,000,000	$ 300,000,000	$ 180,000,000		$ 4,000,000		$ 750,000,000					$ 108,000,000
Interest rate of notes in percentage					4.75%	6.70%	4.00%	5.45%	5.45%	6.875%	5.60%	5.60%	5.70%	6.65%
Proceeds from Advances for Construction							300,000,000
Debt Instrument, Maturity Date							Dec. 01, 2040
Debt Instrument, Mandatory Tender Date							Jun. 01, 2022
Redemption value in percentage															100.00%
Capitalized Interest (Textual)
Interest costs incurred, capitalized	$ 45,000,000	$ 53,000,000	$ 85,000,000	$ 105,000,000

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Equity

6 Months Ended

Jun. 30, 2013

Equity [Abstract]

EQUITY

7. EQUITY

Reconciliation of Balances

The following is a reconciliation of the beginning and ending balances of equity attributable to our stockholders, equity attributable to the noncontrolling interests, and total equity for the six months ended June 30, 2013 and 2012 (in millions):

	2013									2012
	Valero Stockholders’ Equity			Non- controlling Interests			Total Equity			Valero Stockholders’ Equity			Non- controlling Interest			Total Equity
Balance as of beginning of period	$	18,032		$	63		$	18,095		$	16,423		$	22		$	16,445
Net income (loss)	1,120			(3		)	1,117			399			(1		)	398
Dividends	(220		)	—			(220		)	(166		)	—			(166		)
Stock-based compensation expense	25			—			25			20			—			20
Tax deduction in excess of stock-based compensation expense	27			—			27			3			—			3
Transactions in connection with stock-based compensation plans:
Stock issuances	43			—			43			11			—			11
Stock repurchases	(196		)	—			(196		)	(136		)	—			(136		)
Stock repurchases under buyback program	(364		)	—			(364		)	—			—			—
Separation of retail business	(499		)	—			(499		)	—			—			—
Contributions from noncontrolling interests	—			45			45			—			25			25
Other comprehensive income (loss)	(48		)	—			(48		)	23			—			23
Balance as of end of period	$	17,920		$	105		$	18,025		$	16,577		$	46		$	16,623

The noncontrolling interests relate to third-party ownership interests in two joint venture companies, whose financial statements we consolidate due to our controlling interests.

Share Activity

Activity in the number of shares of common stock and treasury stock was as follows for the six months ended June 30, 2013 and 2012 (in millions):

	2013			2012
	Common Stock	Treasury Stock		Common Stock	Treasury Stock
Balance as of beginning of period	673	(121	)	673	(117	)
Transactions in connection with stock-based compensation plans:
Stock issuances	—	3		—	1
Stock purchases	—	(5	)	—	(6	)
Stock repurchases under buyback program	—	(8	)	—	—
Balance as of end of period	673	(131	)	673	(122	)

Common Stock Dividends

On July 25, 2013, our board of directors declared a quarterly cash dividend of $0.225 per common share payable on September 11, 2013 to holders of record at the close of business on August 14, 2013.

Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss) by component, net of tax, were as follows for the six months ended June 30, 2013 (in millions):

	Foreign Currency Translation Adjustment			Defined Benefit Pension Items			Gains and (Losses) on Cash Flow Hedges			Total
Balance as of December 31, 2012	$	665		$	(558	)	$	1		$	108
Other comprehensive income (loss) before reclassifications	(268		)	214			(6		)	(60		)
Amounts reclassified from accumulated other comprehensive income (loss)	—			9			3			12
Net other comprehensive income (loss)	(268		)	223			(3		)	(48		)
Separation of retail business	(159		)	—			—			(159		)
Balance as of June 30, 2013	$	238		$	(335	)	$	(2	)	$	(99	)

Gains (losses) reclassified out of accumulated other comprehensive income (loss) and into net income were as follows (in millions):

Details about Accumulated Other Comprehensive Income  (Loss) Components	Three Months Ended June 30, 2013			Six Months Ended June 30, 2013			Affected Line Item in the Statement of Income
Amortization of items related to defined benefit pension plans:
Net actuarial loss	$	(15	)	$	(29	)	(a)
Prior service credit	9			15			(a)
	(6		)	(14		)	Total before tax
	2			5			Tax benefit
	$	(4	)	$	(9	)	Net of tax
Losses on cash flow hedges:
Commodity contracts	$	(8	)	$	(5	)	Cost of sales
	(8		)	(5		)	Total before tax
	3			2			Tax benefit
	$	(5	)	$	(3	)	Net of tax
Total reclassifications for the period	$	(9	)	$	(12	)	Net of tax

_________________________

(a) These accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit cost, as further discussed in Note 8. Net periodic benefit cost is reflected in operating expenses and general and administrative expenses.

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Price Risk Management Activities (Tables)

6 Months Ended

Jun. 30, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Volume of outstanding contracts in fair value hedges

As of June 30, 2013, we had the following outstanding commodity derivative instruments that were entered into to hedge crude oil and refined product inventories and commodity derivative instruments related to the physical purchase of crude oil and refined products at a fixed price. The information presents the notional volume of outstanding contracts by type of instrument and year of maturity (volumes in thousands of barrels).

	Notional Contract Volumes by Year of Maturity
Derivative Instrument	2013
Crude oil and refined products:
Futures – long	8,062
Futures – short	10,954
Physical contracts - long	2,892

Volume of outstanding contracts in cash flow hedges

As of June 30, 2013, we had the following outstanding commodity derivative instruments that were entered into to hedge forecasted purchases or sales of crude oil and refined products. The information presents the notional volume of outstanding contracts by type of instrument and year of maturity (volumes in thousands of barrels).

	Notional Contract Volumes by Year of Maturity
Derivative Instrument	2013
Crude oil and refined products:
Futures – long	7,938
Futures – short	5,527
Physical contracts – short	2,411

Volume of outstanding contracts in economic hedges

As of June 30, 2013, we had the following outstanding commodity derivative instruments that were used as economic hedges and commodity derivative instruments related to the physical purchase of corn at a fixed price. The information presents the notional volume of outstanding contracts by type of instrument and year of maturity (volumes in thousands of barrels, except those identified as natural gas contracts that are presented in billions of British thermal units, corn contracts that are presented in thousands of bushels, and soybean oil contracts that are presented in thousands of pounds).

	Notional Contract Volumes by Year of Maturity
Derivative Instrument	2013	2014
Crude oil and refined products:
Swaps – long	3,510	—
Swaps – short	2,585	—
Futures – long	39,316	58
Futures – short	53,514	—
Natural gas:
Options – long	10,750	—
Corn:
Futures – long	28,405	5
Futures – short	49,030	1,180
Physical contracts – long	21,678	1,215
Soybean oil:
Futures – long	5,220	—
Futures – short	27,900	—

Volume of outstanding contracts in trading activities

As of June 30, 2013, we had the following outstanding commodity and other derivative instruments that were entered into for trading purposes. The information presents the notional volume of outstanding contracts by type of instrument and year of maturity (volumes represent thousands of barrels, except those identified as natural gas contracts that are presented in billions of British thermal units, corn contracts that are presented in thousands of bushels, and RINs contracts that are presented in thousands of gallons).

	Notional Contract Volumes by Year of Maturity
Derivative Instrument	2013	2014
Crude oil and refined products:
Swaps – long	26,255	21,135
Swaps – short	26,255	21,135
Futures – long	99,886	37,527
Futures – short	99,311	37,927
Options – long	26,321	—
Options – short	25,256	—
Natural gas:
Futures – long	1,700	—
Futures – short	750	—
Options – long	1,700	—
Corn:
Swaps – long	145	—
Swaps – short	145	—
Futures – long	5,620	—
Futures – short	5,620	—
Other:
RINs fixed-price contracts – short	25,000	—

Fair value of derivative instruments

The following tables provide information about the fair values of our derivative instruments as of June 30, 2013 and December 31, 2012 (in millions) and the line items in the balance sheets in which the fair values are reflected. See Note 12 for additional information related to the fair values of our derivative instruments.

As indicated in Note 12, we net fair value amounts recognized for multiple similar derivative contracts executed with the same counterparty under master netting arrangements, including cash collateral assets and obligations. The tables below, however, are presented on a gross asset and gross liability basis, which results in the reflection of certain assets in liability accounts and certain liabilities in asset accounts.

	Balance Sheet Location	June 30, 2013
		Asset Derivatives		Liability Derivatives
Derivatives designated as hedging instruments
Commodity contracts:
Futures	Receivables, net	$	49	$	53
Derivatives not designated as hedging instruments
Commodity contracts:
Futures	Receivables, net	$	966	$	942
Swaps	Receivables, net	16		11
Swaps	Prepaid expenses and other	2		1
Swaps	Accrued expenses	5		11
Options	Receivables, net	4		6
Options	Prepaid expenses and other	1		—
Options	Accrued expenses	—		1
Physical purchase contracts	Inventories	5		11
RINs fixed-price contracts	Prepaid expenses and other	—		22
Foreign currency contracts	Receivables, net	10		—
Total		$	1,009	$	1,005
Total derivatives		$	1,058	$	1,058

	Balance Sheet Location	December 31, 2012
		Asset Derivatives		Liability Derivatives
Derivatives designated as hedging instruments
Commodity contracts:
Futures	Receivables, net	$	77	$	64
Swaps	Receivables, net	15		13
Swaps	Prepaid expenses and other	2		2
Total		$	94	$	79
Derivatives not designated as hedging instruments
Commodity contracts:
Futures	Receivables, net	$	1,066	$	1,073
Swaps	Receivables, net	9		6
Swaps	Accrued expenses	32		46
Options	Receivables, net	1		4
Options	Accrued expenses	1		—
Physical purchase contracts	Inventories	11		—
Foreign currency contracts	Receivables, net	1		—
Foreign currency contracts	Accrued expenses	—		1
Total		$	1,121	$	1,130
Total derivatives		$	1,215	$	1,209

Effect of derivative instruments on income and OCI

Derivatives Designated as Economic Hedges and Other Derivative Instruments	Location of Gain (Loss) Recognized in Income on Derivatives	Three Months Ended June 30,				Six Months Ended June 30,
		2013		2012		2013		2012
Commodity contracts	Cost of sales	$	246	$	574	$	281	$	423
Foreign currency contracts	Cost of sales	11		1		36		(22		)
Total		$	257	$	575	$	317	$	401

The following tables provide information about the gain or loss recognized in income and other comprehensive income on our derivative instruments and the line items in the financial statements in which such gains and losses are reflected (in millions).

Derivatives in Fair Value Hedging Relationships	Location of Gain (Loss) Recognized in Income on Derivatives	Three Months Ended June 30,						Six Months Ended June 30,
		2013			2012			2013			2012
Commodity contracts:
Gain (loss) recognized in income on derivatives	Cost of sales	$	(20	)	$	87		$	(21	)	$	(180	)
Gain (loss) recognized in income on hedged item	Cost of sales	22			(91		)	22			137
Gain (loss) recognized in income on derivatives (ineffective portion)	Cost of sales	2			(4		)	1			(43		)

Trading Derivatives	Location of Gain (Loss) Recognized in Income on Derivatives	Three Months Ended June 30,					Six Months Ended June 30,
		2013			2012		2013			2012
Commodity contracts	Cost of sales	$	3		$	8	$	5		$	4
RINs fixed-price contracts	Cost of sales	(7		)	—		(20		)	—
Total		$	(4	)	$	8	$	(15	)	$	4

Derivatives in Cash Flow Hedging Relationships	Location of Gain (Loss) Recognized in Income on Derivatives	Three Months Ended June 30,						Six Months Ended June 30,
		2013			2012			2013			2012
Commodity contracts:
Gain (loss) recognized in OCI on derivatives (effective portion)		$	(10	)	$	(31	)	$	(9	)	$	16
Gain (loss) reclassified from accumulated OCI into income (effective portion)	Cost of sales	(8		)	(12		)	(5		)	36
Gain (loss) recognized in income on derivatives (ineffective portion)	Cost of sales	(2		)	31			(3		)	26

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Earnings Per Common Share (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Less dividends paid:
Common stock			$ 220	$ 166
Weighted-average common shares outstanding	543	550	546	550
Earnings per common share:
Distributed earnings	$ 0.20	$ 0.15	$ 0.40	$ 0.30
Earnings per common share – assuming dilution:
Weighted-average common shares outstanding	543	550	546	550
Common equivalent shares:
Weighted-average common shares outstanding – assuming dilution	548	555	552	556
Common Stock [Member]
Earnings per common share:
Net income attributable to Valero stockholders	466	831	1,120	399
Less dividends paid:
Common stock	109	82	219	165
Nonvested restricted stock	0	1	1	1
Undistributed earnings	357	748	900	233
Weighted-average common shares outstanding	543	550	546	550
Earnings per common share:
Distributed earnings	$ 0.20	$ 0.15	$ 0.40	$ 0.30
Undistributed earnings	$ 0.66	$ 1.35	$ 1.64	$ 0.42
Total earnings per common share	$ 0.86	$ 1.50	$ 2.04	$ 0.72
Earnings per common share – assuming dilution:
Net income attributable to Valero stockholders	$ 466	$ 831	$ 1,120	$ 399
Weighted-average common shares outstanding	543	550	546	550
Common equivalent shares:
Stock options	3	3	4	4
Performance awards and nonvested restricted stock	2	2	2	2
Weighted-average common shares outstanding – assuming dilution	548	555	552	556
Earnings per common share – assuming dilution	$ 0.85	$ 1.50	$ 2.03	$ 0.72
Restricted Stock [Member]
Less dividends paid:
Weighted-average common shares outstanding	3	3	3	3
Earnings per common share:
Distributed earnings	$ 0.20	$ 0.15	$ 0.40	$ 0.30
Undistributed earnings	$ 0.66	$ 1.35	$ 1.64	$ 0.42
Total earnings per common share	$ 0.86	$ 1.50	$ 2.04	$ 0.72
Earnings per common share – assuming dilution:
Weighted-average common shares outstanding	3	3	3	3

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Segment Information

6 Months Ended

Jun. 30, 2013

Segment Reporting [Abstract]

SEGMENT INFORMATION

10. SEGMENT INFORMATION

As discussed in Note 2, we completed the separation of our retail business on May 1, 2013. Segment activity related to our retail business prior to the separation is reflected in the retail segment results below. Motor fuel sales to CST (our former retail business), which were eliminated in consolidation prior to the separation, are reported as refining segment operating revenues from external customers after May 1, 2013.

The following table reflects activity related to our reportable segments (in millions):

	Refining		Retail		Ethanol		Corporate			Total
Three months ended June 30, 2013:
Operating revenues from external customers	$	31,564	$	979	$	1,491	$	—		$	34,034
Intersegment revenues	671		—		15		—			686
Operating income (loss)	921		39		95		(247		)	808
Three months ended June 30, 2012:
Operating revenues from external customers	30,488		3,062		1,112		—			34,662
Intersegment revenues	2,203		—		46		—			2,249
Operating income (loss)	1,364		172		5		(180		)	1,361
Six months ended June 30, 2013:
Operating revenues from external customers	61,117		3,896		2,495		—			67,508
Intersegment revenues	2,876		—		70		—			2,946
Operating income (loss)	2,133		81		109		(454		)	1,869
Six months ended June 30, 2012:
Operating revenues from external customers	61,638		5,997		2,194		—			69,829
Intersegment revenues	4,458		—		60		—			4,518
Operating income (loss)	1,245		212		14		(354		)	1,117

Total assets by reportable segment were as follows (in millions):

	June 30, 2013		December 31, 2012
Refining	$	40,527	$	39,490
Retail	—		2,043
Ethanol	867		929
Corporate	2,783		2,015
Total assets	$	44,177	$	44,477

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2013

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

6. COMMITMENTS AND CONTINGENCIES

Environmental Matter

We are involved, together with several other companies, in an environmental cleanup in the Village of Hartford, Illinois (the Village) and the adjacent shutdown refinery site, which we acquired as part of a prior acquisition. In cooperation with some of the other companies, we have been conducting initial mitigation and cleanup response pursuant to an administrative order issued by the U.S. Environmental Protection Agency (EPA). The EPA is seeking further cleanup obligations from us and other potentially responsible parties for the Village. In parallel with the Village cleanup, we are also in litigation with the State of Illinois Environmental Protection Agency and other potentially responsible parties relating to the remediation of the shutdown refinery site. In each of these matters, we have various defenses and rights for contribution from the other potentially responsible parties. We have accrued for our own expected contribution obligations. However, because of the unpredictable nature of these cleanups and the methodology for allocation of liabilities, it is reasonably possible that we could incur a loss in a range of$0 to $200 million in excess of the amount of our accrual to ultimately resolve these matters. Factors underlying this estimated range are expected to change from time to time, and actual results may vary significantly from this estimate.

Litigation Matters

We are party to claims and legal proceedings arising in the ordinary course of business. We have not recorded a loss contingency liability with respect to some of these matters because we have determined that it is remote that a loss has been incurred. For other matters, we have recorded a loss contingency liability where we have determined that it is probable that a loss has been incurred and that the loss is reasonably estimable. These loss contingency liabilities are not material to our financial position. We re-evaluate and update our loss contingency liabilities as matters progress over time, and we believe that any changes to the recorded liabilities will not be material to our financial position or results of operations.

One-Time Severance Benefits

As described in Note 3, we decided to reorganize the Aruba Refinery into a crude oil and refined products terminal in September 2012 resulting in a decrease in required personnel for our operations in Aruba. We notified 495 employees in September 2012 of the termination of their employment effective November 15, 2012. Benefits to each terminated employee consisted primarily of a cash payment based on a formula that considers the employee’s current compensation and years of service, among other factors. We recognized a severance liability of $41 million in September 2012, which approximated fair value. We paid $31 million of these benefits in the fourth quarter of 2012 and we paid the remaining termination benefits of $10 million during the first quarter of 2013.

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Basis of Presentation and Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2013

Basis of Presentation and Summary of Significant Accounting Policies [Abstract]

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

As used in this report, the terms “Valero,” “we,” “us,” or “our” may refer to Valero Energy Corporation, one or more of its consolidated subsidiaries, or all of them taken as a whole.

These unaudited financial statements have been prepared in accordance with United States (U.S.) generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Act of 1934. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal recurring nature unless disclosed otherwise. Financial information for the three and six months ended June 30, 2013 and 2012 included in these Condensed Notes to Consolidated Financial Statements is derived from our unaudited financial statements. Operating results for the three and six months ended June 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.

The balance sheet as of December 31, 2012 has been derived from our audited financial statements as of that date. For further information, refer to our financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2012.

Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. On an ongoing basis, we review our estimates based on currently available information. Changes in facts and circumstances may result in revised estimates.

Comprehensive Income

In February 2013, the provisions of Accounting Standards Codification (ASC) Topic 220, “Comprehensive Income,” were amended to require an entity to disclose information about the amounts reclassified out of accumulated other comprehensive income and into net income. An entity is required to present information on the face of the statement of income or in the notes to the financial statements about the effects on net income from significant amounts reclassified out of accumulated other comprehensive income if those amounts were required to be reclassified into net income in their entirety in the same reporting period they were initially charged to other comprehensive income. For other significant amounts that were not required to be reclassified into net income in their entirety in the same reporting period they were initially charged to other comprehensive income, a cross-reference is required in the notes to the financial statements to the disclosures that provide additional details about those amounts. These provisions were effective for interim and annual reporting periods beginning after December 15, 2012. The adoption of this guidance effective January 1, 2013 did not affect our financial position or results of operations, but resulted in additional disclosures, which are included in Note 7.

Balance Sheet Offsetting Arrangements

In December 2011, the provisions of ASC Topic 210, “Balance Sheet,” were amended to require an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of these arrangements on its financial position. In January 2013, the provisions of ASC Topic 210 were further amended to clarify that the scope of the previous amendment only applies to derivative instruments, including bifurcated derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either eligible for offset in the balance sheet or are subject to an agreement similar to a master netting agreement. The guidance requires entities to disclose both gross information and net information about assets and liabilities within the scope of the amendment. These provisions were effective for interim and annual reporting periods beginning on or after January 1, 2013. The adoption of this guidance effective January 1, 2013 did not affect our financial position or results of operations, but resulted in additional disclosures, which are included in Note 12.

Other

The statement of cash flows for the six months ended June 30, 2012, which was included in our Form 10‑Q for the quarterly period ended June 30, 2012, reflected an incorrect classification of $160 million in proceeds on a note receivable related to the sale of our Paulsboro Refinery in December 2010. We previously reflected such proceeds as a component of cash flows from operating activities rather than as a component of cash flows from investing activities. The statement of cash flows for the six months ended June 30, 2012 included in this Form 10-Q for the quarterly period ended June 30, 2013 has been corrected to properly reflect the classification of those proceeds.

New Accounting Pronouncements

In July 2013, the provisions of ASC Topic 740, “Income Taxes,” were amended to provide specific guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date. The amendment requires entities to present an unrecognized tax benefit as a reduction to the deferred tax asset generated by the net operating loss carryforward, similar tax loss, or tax credit carryforward, if such items are available to be used to offset the unrecognized tax benefit. These provisions are effective for interim and annual reporting periods beginning after December 15, 2013 and should be applied prospectively to all unrecognized tax benefits that exist at the effective date, with retrospective application permitted. The adoption of this guidance effective January 1, 2014 will not affect our financial position or results of operations, nor will it require any additional disclosures, but may result in a change in presentation to our consolidated balance sheets.

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Price Risk Management Activities, Gain (Loss) by Income Statement Location (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Price Risk Management Activities (Textual)
Gain (loss) from hedged firm commitment not qualifying as fair value hedge, net	$ 0	$ 28	$ 0	$ 28
Accumulated other comprehensive income, cumulative after-tax losses on cash flow hedges	(2)		(2)
Gain (loss) from cash flow hedges to be reclassified within 12 months			(3)
Fair Value Hedging [Member] | Commodity Contract [Member] | Cost of Sales [Member]
Effect of Derivative Instruments on Income and OCI
Gain (loss) recognized in income on derivatives	(20)	87	(21)	(180)
Gain recognized in income on hedged item	22	(91)	22	137
Loss recognized in income on derivatives (ineffective portion)	2	(4)	1	(43)
Cash Flow Hedging [Member] | Commodity Contract [Member]
Effect of Derivative Instruments on Income and OCI
Gain recognized in OCI on derivatives (effective portion)	(10)	(31)	(9)	16
Cash Flow Hedging [Member] | Commodity Contract [Member] | Cost of Sales [Member]
Effect of Derivative Instruments on Income and OCI
Gain reclassified from accumulated OCI into income (effective portion)	(8)	(12)	(5)	36
Loss recognized in income on derivatives (ineffective portion)	(2)	31	(3)	26
Economic Hedging [Member]
Effect of Derivative Instruments on Income and OCI
Gain (loss) recognized in income on derivatives	257	575	317	401
Economic Hedging [Member] | Commodity Contract [Member] | Cost of Sales [Member]
Effect of Derivative Instruments on Income and OCI
Gain (loss) recognized in income on derivatives	246	574	281	423
Economic Hedging [Member] | Foreign Currency Contract [Member] | Cost of Sales [Member]
Effect of Derivative Instruments on Income and OCI
Gain (loss) recognized in income on derivatives	11	1	36	(22)
Trading Derivatives [Member]
Effect of Derivative Instruments on Income and OCI
Gain (loss) recognized in income on derivatives	(4)	8	(15)	4
Trading Derivatives [Member] | Commodity Contract [Member] | Cost of Sales [Member]
Effect of Derivative Instruments on Income and OCI
Gain (loss) recognized in income on derivatives	3	8	5	4
Trading Derivatives [Member] | RINs Fixed-Price Contracts [Member] | Cost of Sales [Member]
Effect of Derivative Instruments on Income and OCI
Gain (loss) recognized in income on derivatives	$ (7)	$ 0	$ (20)	$ 0

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Fair Value Measurements, Level 3 Reconciliation (Details) (Fair Value, Measurements, Recurring [Member], USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Fair Value, Measurements, Recurring [Member]
Fair Value Measurements (Textual)
Activity related to fair value amounts categorized in Level 3	$ 0	$ 0	$ 0	$ 0

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Impairments (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended		1 Months Ended		6 Months Ended		1 Months Ended			6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Sep. 30, 2012 Aruba Refinery [Member]	Mar. 31, 2012 Aruba Refinery [Member]	Jun. 30, 2012 Aruba Refinery [Member]	Mar. 28, 2012 Aruba Refinery [Member]	Sep. 30, 2012 Refining Assets [Member]	Sep. 30, 2012 Inventory Related Assets [Member]	Mar. 31, 2012 Construction in Progress [Member]	Jun. 30, 2012 Construction in Progress [Member]
Impairments (Textual)
Non-binding purchase offer								$ 350
Asset impairment losses	$ 0	$ 0	$ 0	$ 611	$ 333	$ 595	$ 595		$ 308	$ 25	$ 16	$ 16

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Price Risk Management Activities

6 Months Ended

Jun. 30, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

PRICE RISK MANAGEMENT ACTIVITIES

13. PRICE RISK MANAGEMENT ACTIVITIES

General

We are exposed to market risks related to the volatility in the price of commodities, interest rates, and foreign currency exchange rates. We enter into derivative instruments to manage some of these risks, including derivative instruments related to the various commodities we purchase or produce, interest rate swaps, and foreign currency exchange and purchase contracts, as described below under “Risk Management Activities by Type of Risk.” These derivative instruments are recorded as either assets or liabilities measured at their fair values (see Note 12), as summarized below under “Fair Values of Derivative Instruments.” In addition, the effect of these derivative instruments on our income is summarized below under “Effect of Derivative Instruments on Income and Other Comprehensive Income.”

When we enter into a derivative instrument, it is designated as a fair value hedge, a cash flow hedge, an economic hedge, or a trading derivative. The gain or loss on a derivative instrument designated and qualifying as a fair value hedge, as well as the offsetting loss or gain on the hedged item attributable to the hedged risk, is recognized currently in income in the same period. The effective portion of the gain or loss on a derivative instrument designated and qualifying as a cash flow hedge is initially reported as a component of other comprehensive income and is then recorded into income in the period or periods during which the hedged forecasted transaction affects income. The ineffective portion of the gain or loss on the cash flow derivative instrument, if any, is recognized in income as incurred. For our economic hedges (derivative instruments not designated as fair value or cash flow hedges) and for derivative instruments entered into by us for trading purposes, the derivative instrument is recorded at fair value and changes in the fair value of the derivative instrument are recognized currently in income. The cash flow effects of all of our derivative instruments are reflected in operating activities in our statements of cash flows for all periods presented.

We are also exposed to market risk related to the volatility in the price of credits needed to comply with various governmental and regulatory programs. To manage this risk, we enter into contracts to purchase these credits when prices are deemed favorable. Some of these contracts are derivative instruments; however, we elect the normal purchase and sale exception and do not record these contracts at their fair values.

Risk Management Activities by Type of Risk

Commodity Price Risk

We are exposed to market risks related to the volatility in the price of crude oil, refined products (primarily gasoline and distillate), grain (primarily corn), soybean oil, and natural gas used in our operations. To reduce the impact of price volatility on our results of operations and cash flows, we use commodity derivative instruments, including futures, swaps, and options. We use the futures markets for the available liquidity, which provides greater flexibility in transacting our hedging and trading operations. We use swaps primarily to manage our price exposure. Our positions in commodity derivative instruments are monitored and managed on a daily basis by a risk control group to ensure compliance with our stated risk management policy that has been approved by our board of directors.

For risk management purposes, we use fair value hedges, cash flow hedges, and economic hedges. In addition to the use of derivative instruments to manage commodity price risk, we also enter into certain commodity derivative instruments for trading purposes. Our objective for entering into each type of hedge or trading derivative is described below.

• Fair Value Hedges – Fair value hedges are used to hedge price volatility in certain refining inventories and firm commitments to purchase inventories. The level of activity for our fair value hedges is based on the level of our operating inventories, and generally represents the amount by which our inventories differ from our previous year-end LIFO inventory levels.

As of June 30, 2013, we had the following outstanding commodity derivative instruments that were entered into to hedge crude oil and refined product inventories and commodity derivative instruments related to the physical purchase of crude oil and refined products at a fixed price. The information presents the notional volume of outstanding contracts by type of instrument and year of maturity (volumes in thousands of barrels).

	Notional Contract Volumes by Year of Maturity
Derivative Instrument	2013
Crude oil and refined products:
Futures – long	8,062
Futures – short	10,954
Physical contracts - long	2,892

• Cash Flow Hedges – Cash flow hedges are used to hedge price volatility in certain forecasted feedstock and refined product purchases, refined product sales, and natural gas purchases. The objective of our cash flow hedges is to lock in the price of forecasted feedstock, refined product, or natural gas purchases or refined product sales at existing market prices that we deem favorable.

As of June 30, 2013, we had the following outstanding commodity derivative instruments that were entered into to hedge forecasted purchases or sales of crude oil and refined products. The information presents the notional volume of outstanding contracts by type of instrument and year of maturity (volumes in thousands of barrels).

	Notional Contract Volumes by Year of Maturity
Derivative Instrument	2013
Crude oil and refined products:
Futures – long	7,938
Futures – short	5,527
Physical contracts – short	2,411

• Economic Hedges – Economic hedges represent commodity derivative instruments that are not designated as fair value or cash flow hedges and are used to manage price volatility in certain (i) refinery feedstock, refined product, and corn inventories, (ii) forecasted refinery feedstock, refined product, and corn purchases, and refined product sales, and (iii) fixed-price corn purchase contracts. Our objective for entering into economic hedges is consistent with the objectives discussed above for fair value hedges and cash flow hedges. However, the economic hedges are not designated as a fair value hedge or a cash flow hedge for accounting purposes, usually due to the difficulty of establishing the required documentation at the date that the derivative instrument is entered into that would allow us to achieve “hedge deferral accounting.”

As of June 30, 2013, we had the following outstanding commodity derivative instruments that were used as economic hedges and commodity derivative instruments related to the physical purchase of corn at a fixed price. The information presents the notional volume of outstanding contracts by type of instrument and year of maturity (volumes in thousands of barrels, except those identified as natural gas contracts that are presented in billions of British thermal units, corn contracts that are presented in thousands of bushels, and soybean oil contracts that are presented in thousands of pounds).

	Notional Contract Volumes by Year of Maturity
Derivative Instrument	2013	2014
Crude oil and refined products:
Swaps – long	3,510	—
Swaps – short	2,585	—
Futures – long	39,316	58
Futures – short	53,514	—
Natural gas:
Options – long	10,750	—
Corn:
Futures – long	28,405	5
Futures – short	49,030	1,180
Physical contracts – long	21,678	1,215
Soybean oil:
Futures – long	5,220	—
Futures – short	27,900	—

• Trading Derivatives – Our objective for entering into commodity and other derivative instruments for trading purposes is to take advantage of existing market conditions related to future results of operations and cash flows.

As of June 30, 2013, we had the following outstanding commodity and other derivative instruments that were entered into for trading purposes. The information presents the notional volume of outstanding contracts by type of instrument and year of maturity (volumes represent thousands of barrels, except those identified as natural gas contracts that are presented in billions of British thermal units, corn contracts that are presented in thousands of bushels, and RINs contracts that are presented in thousands of gallons).

	Notional Contract Volumes by Year of Maturity
Derivative Instrument	2013	2014
Crude oil and refined products:
Swaps – long	26,255	21,135
Swaps – short	26,255	21,135
Futures – long	99,886	37,527
Futures – short	99,311	37,927
Options – long	26,321	—
Options – short	25,256	—
Natural gas:
Futures – long	1,700	—
Futures – short	750	—
Options – long	1,700	—
Corn:
Swaps – long	145	—
Swaps – short	145	—
Futures – long	5,620	—
Futures – short	5,620	—
Other:
RINs fixed-price contracts – short	25,000	—

Interest Rate Risk

Our primary market risk exposure for changes in interest rates relates to our debt obligations. We manage our exposure to changing interest rates through the use of a combination of fixed-rate and floating-rate debt. In addition, at times we have used interest rate swap agreements to manage our fixed to floating interest rate position by converting certain fixed-rate debt to floating-rate debt. We had no interest rate derivative instruments outstanding as of June 30, 2013 or December 31, 2012, or during the three and six months ended June 30, 2013 and 2012.

Foreign Currency Risk

We are exposed to exchange rate fluctuations on transactions entered into by our international operations that are denominated in currencies other than the local (functional) currencies of those operations. To manage our exposure to these exchange rate fluctuations, we use foreign currency exchange and purchase contracts. These contracts are not designated as hedging instruments for accounting purposes, and therefore they are classified as economic hedges. As of June 30, 2013, we had commitments to purchase $581 million of U.S. dollars. These commitments matured on or before July 31, 2013, resulting in an immaterial loss in the third quarter of 2013.

Compliance Program Price Risk

We are exposed to market risk related to the volatility in the price of credits needed to comply with various governmental and regulatory programs. The most significant programs impacting our operations are those that require us to blend biofuels into the products we produce, and we are subject to such programs in most of the countries in which we operate. These countries set annual quotas for the percentage of biofuels that must be blended into the motor fuels consumed in these countries. As a producer of motor fuels from petroleum, we are obligated to blend biofuels into the products we produce at a rate that is at least equal to the applicable quota. To the degree we are unable to blend at the applicable rate, we must purchase biofuel credits (primarily RINs in the U.S.). We are exposed to the volatility in the market price of these credits, and we manage that risk by purchasing biofuel credits when prices are deemed favorable. Due to rising RINs prices in the U.S. during the six months ended June 30, 2013, we purchased a portion of our expected RINs obligation for 2013. The cost of meeting our obligations under these compliance programs was $137 million and $59 million for the three months ended June 30, 2013 and 2012, respectively, and $267 million and $126 million for the six months ended June 30, 2013 and 2012, respectively. These amounts are reflected in cost of sales.

Fair Values of Derivative Instruments

The following tables provide information about the fair values of our derivative instruments as of June 30, 2013 and December 31, 2012 (in millions) and the line items in the balance sheets in which the fair values are reflected. See Note 12 for additional information related to the fair values of our derivative instruments.

As indicated in Note 12, we net fair value amounts recognized for multiple similar derivative contracts executed with the same counterparty under master netting arrangements, including cash collateral assets and obligations. The tables below, however, are presented on a gross asset and gross liability basis, which results in the reflection of certain assets in liability accounts and certain liabilities in asset accounts.

	Balance Sheet Location	June 30, 2013
		Asset Derivatives		Liability Derivatives
Derivatives designated as hedging instruments
Commodity contracts:
Futures	Receivables, net	$	49	$	53
Derivatives not designated as hedging instruments
Commodity contracts:
Futures	Receivables, net	$	966	$	942
Swaps	Receivables, net	16		11
Swaps	Prepaid expenses and other	2		1
Swaps	Accrued expenses	5		11
Options	Receivables, net	4		6
Options	Prepaid expenses and other	1		—
Options	Accrued expenses	—		1
Physical purchase contracts	Inventories	5		11
RINs fixed-price contracts	Prepaid expenses and other	—		22
Foreign currency contracts	Receivables, net	10		—
Total		$	1,009	$	1,005
Total derivatives		$	1,058	$	1,058

	Balance Sheet Location	December 31, 2012
		Asset Derivatives		Liability Derivatives
Derivatives designated as hedging instruments
Commodity contracts:
Futures	Receivables, net	$	77	$	64
Swaps	Receivables, net	15		13
Swaps	Prepaid expenses and other	2		2
Total		$	94	$	79
Derivatives not designated as hedging instruments
Commodity contracts:
Futures	Receivables, net	$	1,066	$	1,073
Swaps	Receivables, net	9		6
Swaps	Accrued expenses	32		46
Options	Receivables, net	1		4
Options	Accrued expenses	1		—
Physical purchase contracts	Inventories	11		—
Foreign currency contracts	Receivables, net	1		—
Foreign currency contracts	Accrued expenses	—		1
Total		$	1,121	$	1,130
Total derivatives		$	1,215	$	1,209

Market and Counterparty Risk

Our price risk management activities involve the receipt or payment of fixed price commitments into the future. These transactions give rise to market risk, which is the risk that future changes in market conditions may make an instrument less valuable. We closely monitor and manage our exposure to market risk on a daily basis in accordance with policies approved by our board of directors. Market risks are monitored by a risk control group to ensure compliance with our stated risk management policy. Concentrations of customers in the refining industry may impact our overall exposure to counterparty risk because these customers may be similarly affected by changes in economic or other conditions. In addition, financial services companies are the counterparties in certain of our price risk management activities, and such financial services companies may be adversely affected by periods of uncertainty and illiquidity in the credit and capital markets.

There were no material amounts due from counterparties in the refining or financial services industry as of June 30, 2013orDecember 31, 2012. We do not require any collateral or other security to support derivative instruments into which we enter. We also do not have any derivative instruments that require us to maintain a minimum investment-grade credit rating.

Effect of Derivative Instruments on Income and Other Comprehensive Income

The following tables provide information about the gain or loss recognized in income and other comprehensive income on our derivative instruments and the line items in the financial statements in which such gains and losses are reflected (in millions).

Derivatives in Fair Value Hedging Relationships	Location of Gain (Loss) Recognized in Income on Derivatives	Three Months Ended June 30,						Six Months Ended June 30,
		2013			2012			2013			2012
Commodity contracts:
Gain (loss) recognized in income on derivatives	Cost of sales	$	(20	)	$	87		$	(21	)	$	(180	)
Gain (loss) recognized in income on hedged item	Cost of sales	22			(91		)	22			137
Gain (loss) recognized in income on derivatives (ineffective portion)	Cost of sales	2			(4		)	1			(43		)

For fair value hedges, no component of the derivative instruments’ gains or losses was excluded from the assessment of hedge effectiveness for the three and six months ended June 30, 2013 and 2012. There were no amounts recognized in income for hedged firm commitments that no longer qualified as fair value hedges during the three or six months ended June 30, 2013. We recognized a gain of $28 million in income for hedged firm commitments that no longer qualified as fair value hedges during the three and six months ended June 30, 2012.

Derivatives in Cash Flow Hedging Relationships	Location of Gain (Loss) Recognized in Income on Derivatives	Three Months Ended June 30,						Six Months Ended June 30,
		2013			2012			2013			2012
Commodity contracts:
Gain (loss) recognized in OCI on derivatives (effective portion)		$	(10	)	$	(31	)	$	(9	)	$	16
Gain (loss) reclassified from accumulated OCI into income (effective portion)	Cost of sales	(8		)	(12		)	(5		)	36
Gain (loss) recognized in income on derivatives (ineffective portion)	Cost of sales	(2		)	31			(3		)	26

For cash flow hedges, no component of the derivative instruments’ gains or losses was excluded from the assessment of hedge effectiveness for the three and six months ended June 30, 2013 and 2012. For the three and six months ended June 30, 2013, cash flow hedges primarily related to forward sales of gasoline and distillates, and associated forward purchases of crude oil, with $2 million of cumulative after-tax losses on cash flow hedges remaining in accumulated other comprehensive income. We estimate that $3 million of the deferred loss as of June 30, 2013 will be reclassified into cost of sales over the next 12 months as a result of hedged transactions that are forecasted to occur. For the three and six months ended June 30, 2013 and 2012, there were no amounts reclassified from accumulated other comprehensive income into income as a result of the discontinuance of cash flow hedge accounting.

Derivatives Designated as Economic Hedges and Other Derivative Instruments	Location of Gain (Loss) Recognized in Income on Derivatives	Three Months Ended June 30,				Six Months Ended June 30,
		2013		2012		2013		2012
Commodity contracts	Cost of sales	$	246	$	574	$	281	$	423
Foreign currency contracts	Cost of sales	11		1		36		(22		)
Total		$	257	$	575	$	317	$	401

Trading Derivatives	Location of Gain (Loss) Recognized in Income on Derivatives	Three Months Ended June 30,					Six Months Ended June 30,
		2013			2012		2013			2012
Commodity contracts	Cost of sales	$	3		$	8	$	5		$	4
RINs fixed-price contracts	Cost of sales	(7		)	—		(20		)	—
Total		$	(4	)	$	8	$	(15	)	$	4

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Earnings Per Common Share

6 Months Ended

Jun. 30, 2013

Earnings Per Share [Abstract]

EARNINGS PER COMMON SHARE

9. EARNINGS PER COMMON SHARE

Earnings per common share were computed as follows (dollars and shares in millions, except per share amounts):

	Three Months Ended June 30,
	2013				2012
	Restricted Stock		Common Stock		Restricted Stock		Common Stock
Earnings per common share:
Net income attributable to Valero stockholders			$	466			$	831
Less dividends paid:
Common stock			109				82
Nonvested restricted stock			—				1
Undistributed earnings			$	357			$	748
Weighted-average common shares outstanding	3		543		3		550
Earnings per common share:
Distributed earnings	$	0.20	$	0.20	$	0.15	$	0.15
Undistributed earnings	0.66		0.66		1.35		1.35
Total earnings per common share	$	0.86	$	0.86	$	1.50	$	1.50
Earnings per common share – assuming dilution:
Net income attributable to Valero stockholders			$	466			$	831
Weighted-average common shares outstanding			543				550
Common equivalent shares:
Stock options			3				3
Performance awards and nonvested restricted stock			2				2
Weighted-average common shares outstanding – assuming dilution			548				555
Earnings per common share – assuming dilution			$	0.85			$	1.50

	Six Months Ended June 30,
	2013				2012
	Restricted Stock		Common Stock		Restricted Stock		Common Stock
Earnings per common share:
Net income attributable to Valero stockholders			$	1,120			$	399
Less dividends paid:
Common stock			219				165
Nonvested restricted stock			1				1
Undistributed earnings			$	900			$	233
Weighted-average common shares outstanding	3		546		3		550
Earnings per common share:
Distributed earnings	$	0.40	$	0.40	$	0.30	$	0.30
Undistributed earnings	1.64		1.64		0.42		0.42
Total earnings per common share	$	2.04	$	2.04	$	0.72	$	0.72
Earnings per common share – assuming dilution:
Net income attributable to Valero stockholders			$	1,120			$	399
Weighted-average common shares outstanding			546				550
Common equivalent shares:
Stock options			4				4
Performance awards and nonvested restricted stock			2				2
Weighted-average common shares outstanding – assuming dilution			552				556
Earnings per common share – assuming dilution			$	2.03			$	0.72

The following table reflects potentially dilutive securities (in millions) that were excluded from the calculation of “earnings per common share – assuming dilution” as the effect of including such securities would have been antidilutive. Stock options were excluded from weighted-average common shares outstanding – assuming dilution because the exercise price of the stock option was greater than the average market price of our common shares during each reporting period.

	Three Months Ended June 30,		Six Months Ended June 30,
	2013	2012	2013	2012
Stock options	3	6	3	6

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Inventories (Tables)

6 Months Ended

Jun. 30, 2013

Inventory Disclosure [Abstract]

Schedule of inventories

Inventories consisted of the following (in millions):

	June 30, 2013		December 31, 2012
Refinery feedstocks	$	2,641	$	2,458
Refined products and blendstocks	3,446		2,995
Ethanol feedstocks and products	139		191
Convenience store merchandise	—		112
Materials and supplies	220		217
Inventories	$	6,446	$	5,973

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Basis of Presentation and Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2013

Basis of Presentation and Summary of Significant Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

As used in this report, the terms “Valero,” “we,” “us,” or “our” may refer to Valero Energy Corporation, one or more of its consolidated subsidiaries, or all of them taken as a whole.

These unaudited financial statements have been prepared in accordance with United States (U.S.) generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Act of 1934. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal recurring nature unless disclosed otherwise. Financial information for the three and six months ended June 30, 2013 and 2012 included in these Condensed Notes to Consolidated Financial Statements is derived from our unaudited financial statements. Operating results for the three and six months ended June 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.

The balance sheet as of December 31, 2012 has been derived from our audited financial statements as of that date. For further information, refer to our financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2012.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. On an ongoing basis, we review our estimates based on currently available information. Changes in facts and circumstances may result in revised estimates.

Offsetting fair value amounts of commodity derivative contracts

We have elected to offset the fair value amounts recognized for multiple similar derivative contracts executed with the same counterparty, including any related cash collateral assets or obligations as shown below; however, fair value amounts by hierarchy level are presented on a gross basis in the tables below. We have no derivative contracts that are subject to master netting arrangements that are reflected gross on the balance sheet.

Derivatives

We are exposed to market risks related to the volatility in the price of commodities, interest rates, and foreign currency exchange rates. We enter into derivative instruments to manage some of these risks, including derivative instruments related to the various commodities we purchase or produce, interest rate swaps, and foreign currency exchange and purchase contracts, as described below under “Risk Management Activities by Type of Risk.” These derivative instruments are recorded as either assets or liabilities measured at their fair values (see Note 12), as summarized below under “Fair Values of Derivative Instruments.” In addition, the effect of these derivative instruments on our income is summarized below under “Effect of Derivative Instruments on Income and Other Comprehensive Income.”

When we enter into a derivative instrument, it is designated as a fair value hedge, a cash flow hedge, an economic hedge, or a trading derivative. The gain or loss on a derivative instrument designated and qualifying as a fair value hedge, as well as the offsetting loss or gain on the hedged item attributable to the hedged risk, is recognized currently in income in the same period. The effective portion of the gain or loss on a derivative instrument designated and qualifying as a cash flow hedge is initially reported as a component of other comprehensive income and is then recorded into income in the period or periods during which the hedged forecasted transaction affects income. The ineffective portion of the gain or loss on the cash flow derivative instrument, if any, is recognized in income as incurred. For our economic hedges (derivative instruments not designated as fair value or cash flow hedges) and for derivative instruments entered into by us for trading purposes, the derivative instrument is recorded at fair value and changes in the fair value of the derivative instrument are recognized currently in income. The cash flow effects of all of our derivative instruments are reflected in operating activities in our statements of cash flows for all periods presented.

Derivative instruments collateral requirements

We do not require any collateral or other security to support derivative instruments into which we enter.

XML

Document and Entity Information	6 Months Ended
	Jun. 30, 2013	Jul. 31, 2013
Document and Entity Information
Entity Registrant Name	VALERO ENERGY CORP/TX
Entity Central Index Key	0001035002
Document Type	10-Q
Document Period End Date	Jun. 30, 2013
Amendment Flag	false
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		542,142,749

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Separation of Retail Business (Tables)

6 Months Ended

Jun. 30, 2013

Disposal Group, Not Discontinued Operation, Disposal Disclosures [Abstract]

Carrying value of retail business assets and liabilities prior to separation

The following table presents the carrying values of the major categories of assets and liabilities of our retail business, immediately preceding its separation on May 1, 2013, which are excluded from our consolidated balance sheet as of June 30, 2013 (in millions):

Assets
Cash and temporary cash investments	$	315
Credit card receivables from Valero	44
Other receivables, net	109
Inventories	170
Deferred income taxes	14
Prepaid expenses and other	13
Total current assets	665
Property, plant and equipment, at cost	1,891
Accumulated depreciation	(611		)
Property, plant and equipment, net	1,280
Intangible assets, net	38
Deferred charges and other assets, net	205
Total assets	$	2,188
Liabilities
Current portion of capital lease obligations	$	2
Trade payable to Valero	242
Other accounts payable	96
Accrued expenses	31
Taxes other than income taxes	20
Total current liabilities	391
Debt and capital lease obligations, less current portion	1,053
Deferred income taxes	83
Other long-term liabilities	112
Total liabilities	$	1,639