10-K

FORM 10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(Mark One)

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

For the fiscal year ended December 31, 2014

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		78249
San Antonio, Texas		(Zip Code)
(Address of principal executive offices)
	Registrant’s telephone number, including area code: (210) 345-2000

Securities registered pursuant to Section 12(b) of the Act: Common stock, $0.01 par value per share listed on the New York Stock Exchange.

Securities registered pursuant to Section 12(g) of the Act: None.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes þ No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes o No þ

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 þ 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 þ No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

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 Rule12b-2 of the Exchange Act.

Large accelerated filer þ 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 þ

The aggregate market value of the voting and non-voting common stock held by non-affiliates was approximately $26.5 billion based on the last sales price quoted as of June 30, 2014 on the New York Stock Exchange, the last business day of the registrant’s most recently completed second fiscal quarter.

As of January 30, 2015, 514,888,348 shares of the registrant’s common stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

We intend to file with the Securities and Exchange Commission a definitive Proxy Statement for our Annual Meeting of Stockholders scheduled for April 30, 2015, at which directors will be elected. Portions of the 2015 Proxy Statement are incorporated by reference in Part III of this Form 10-K and are deemed to be a part of this report.

CROSS-REFERENCE SHEET

The following table indicates the headings in the 2015 Proxy Statement where certain information required in Part III of this Form 10-K may be found.

Form 10-K Item No. and Caption		Heading in 2015 Proxy Statement
10.	Directors, Executive Officers and Corporate Governance	Information Regarding the Board of Directors, Independent Directors, Audit Committee, Proposal No. 1 Election of Directors, Information Concerning Nominees and Other Directors,Identification of Executive Officers,Section 16(a) Beneficial Ownership Reporting Compliance, and Governance Documents and Codes of Ethics
11.	Executive Compensation	Compensation Committee, Compensation Discussion and Analysis, Director Compensation, Executive Compensation, and Certain Relationships and Related Transactions
12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	Beneficial Ownership of Valero Securities and Equity Compensation Plan Information
13.	Certain Relationships and Related Transactions, and Director Independence	Certain Relationships and Related Transactions and Independent Directors
14.	Principal Accountant Fees and Services	KPMG Fees for Fiscal Years 2014 and 2013 and Audit Committee Pre-Approval Policy

Copies of all documents incorporated by reference, other than exhibits to such documents, will be provided without charge to each person who receives a copy of this Form 10-K upon written request to Valero Energy Corporation, Attn: Secretary, P.O. Box 696000, San Antonio, Texas 78269-6000.

i

CONTENTS

		PAGE
PART I
Items 1. & 2.	Business and Properties	1
	Segments	1
	Valero’s Operations	2
	Environmental Matters	11
	Properties	11
Item 1A.	Risk Factors	12
Item 1B.	Unresolved Staff Comments	18
Item 3.	Legal Proceedings	18
Item 4.	Mine Safety Disclosures	18
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities	19
Item 6.	Selected Financial Data	22
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	52
Item 8.	Financial Statements and Supplementary Data	54
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	127
Item 9A.	Controls and Procedures	127
Item 9B.	Other Information	127
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	128
Item 11.	Executive Compensation	128
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	128
Item 13.	Certain Relationships and Related Transactions, and Director Independence	128
Item 14.	Principal Accountant Fees and Services	128
PART IV
Item 15.	Exhibits and Financial Statement Schedules	128
Signature		132

ii

PART I

The terms “Valero,” “we,” “our,” and “us,” as used in this report, may refer to Valero Energy Corporation, to one or more of our consolidated subsidiaries, or to all of them taken as a whole. In this Form 10-K, we make certain forward-looking statements, including statements regarding our plans, strategies, objectives, expectations, intentions, and resources under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. You should read our forward-looking statements together with our disclosures beginning on page 23 of this report under the heading: “CAUTIONARY STATEMENT FOR THE PURPOSE OF SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.”

ITEMS 1. and 2. BUSINESS AND PROPERTIES

Overview. We are a Fortune 500 company based in San Antonio, Texas. Our corporate offices are at One Valero Way, San Antonio, Texas, 78249, and our telephone number is (210) 345-2000. Our common stock trades on the New York Stock Exchange (NYSE) under the symbol “VLO.” We were incorporated in Delaware in 1981 under the name Valero Refining and Marketing Company. We changed our name to Valero Energy Corporation on August 1, 1997. On January 31, 2015, we had 10,065 employees.

Our 15 petroleum refineries are located in the United States (U.S.), Canada, and the United Kingdom (U.K.). Our refineries can produce conventional gasolines, premium gasolines, gasoline meeting the specifications of the California Air Resources Board (CARB), diesel fuel, low-sulfur diesel fuel, ultra-low-sulfur diesel fuel, CARB diesel fuel, other distillates, jet fuel, asphalt, petrochemicals, lubricants, and other refined products. We market branded and unbranded refined products on a wholesale basis in the U.S., Canada, the Caribbean, the U.K., and Ireland through an extensive bulk and rack marketing network and through approximately 7,400 outlets that carry our brand names. We also own 11 ethanol plants in the central plains region of the U.S. that primarily produce ethanol, which we market on a wholesale basis through a bulk marketing network.

Available Information. Our website address is www.valero.com. Information on our website is not part of this annual report on Form 10-K. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K filed with (or furnished to) the U.S. Securities and Exchange Commission (SEC) are available on our website (under “Investor Relations”) free of charge, soon after we file or furnish such material. In this same location, we also post our corporate governance guidelines, codes of ethics, and the charters of the committees of our board of directors. These documents are available in print to any stockholder that makes a written request to Valero Energy Corporation, Attn: Secretary, P.O. Box 696000, San Antonio, Texas 78269-6000.

SEGMENTS

We have two reportable segments: refining and ethanol. Our refining segment includes refining operations, wholesale marketing, product supply and distribution, and transportation operations in the U.S., Canada, the U.K., Aruba, and Ireland. Our ethanol segment primarily includes sales of internally produced ethanol and distillers grains. Financial information about our segments is presented in Note 18 of Notes to Consolidated Financial Statements and is incorporated herein by reference.

We formerly had a third reportable segment: retail. In 2013, we completed the separation of our retail business by creating an independent public company named CST Brands, Inc. (CST). The separation of our retail business is discussed in Note 3 of Notes to Consolidated Financial Statements and that discussion is incorporated herein by reference.

1

VALERO’S OPERATIONS

REFINING

On December 31, 2014, our refining operations included 15 petroleum refineries in the U.S., Canada, and the U.K., with a combined total throughput capacity of approximately 2.9 million barrels per day (BPD). The following table presents the locations of these refineries and their approximate feedstock throughput capacities as of December 31, 2014.

Refinery	Location	Throughput Capacity (a) (BPD)
U.S. Gulf Coast:
Corpus Christi (b)	Texas	325,000
Port Arthur	Texas	375,000
St. Charles	Louisiana	290,000
Texas City	Texas	260,000
Houston	Texas	175,000
Meraux	Louisiana	135,000
Three Rivers	Texas	100,000
		1,660,000
U.S. Mid-Continent:
Memphis	Tennessee	195,000
McKee	Texas	180,000
Ardmore	Oklahoma	90,000
		465,000
North Atlantic:
Pembroke	Wales, U.K.	270,000
Quebec City	Quebec, Canada	235,000
		505,000
U.S. West Coast:
Benicia	California	170,000
Wilmington	California	135,000
		305,000
Total		2,935,000

(a) “Throughput capacity” represents estimated capacity for processing crude oil, inter-mediates, and other feedstocks. Total estimated crude oil capacity is approximately 2.4 million BPD.

(b) Represents the combined capacities of two refineries – the Corpus Christi East and Corpus Christi West Refineries.

2

Total Refining System

The following table presents the percentages of principal charges and yields (on a combined basis) for all of our refineries for the year ended December 31, 2014. Our total combined throughput volumes averaged approximately 2.8 million BPD for the year ended December 31, 2014.

Combined Total Refining System Charges and Yields
Charges:
	sour crude oil	33	%
	sweet crude oil	42	%
	residual fuel oil	8	%
	other feedstocks	5	%
	blendstocks	12	%
Yields:
	gasolines and blendstocks	48	%
	distillates	37	%
	petrochemicals	3	%
	other products (includes gas oils, No. 6 fuel oil, petroleum coke, and asphalt)	12	%

U.S. Gulf Coast

The following table presents the percentages of principal charges and yields (on a combined basis) for the eight refineries in this region for the year ended December 31, 2014. Total throughput volumes for the U.S. Gulf Coast refining region averaged approximately 1.6 million BPD for the year ended December 31, 2014.

Combined U.S. Gulf Coast Region Charges and Yields
Charges:
	sour crude oil	44	%
	sweet crude oil	23	%
	residual fuel oil	14	%
	other feedstocks	6	%
	blendstocks	13	%
Yields:
	gasolines and blendstocks	46	%
	distillates	37	%
	petrochemicals	4	%
	other products (includes gas oil, No. 6 fuel oil, petroleum coke, and asphalt)	13	%

Corpus Christi East and West Refineries. Our Corpus Christi East and West Refineries are located on the Texas Gulf Coast along the Corpus Christi Ship Channel. The East Refinery processes sour crude oil, and the West Refinery processes sweet crude oil, sour crude oil, and residual fuel oil. The feedstocks are delivered by tanker or barge via deepwater docking facilities along the Corpus Christi Ship Channel, and West Texas or South Texas crude oil is delivered via pipelines. The refineries’ physical locations allow for the transfer of various feedstocks and blending components between them. The refineries produce gasoline, aromatics, jet fuel, diesel, and asphalt. Truck racks service local markets for gasoline, diesel, jet fuels, liquefied petroleum gases, and asphalt. These and other finished products are also distributed by ship or barge across docks and third-party pipelines.

3

Port Arthur Refinery. Our Port Arthur Refinery is located on the Texas Gulf Coast approximately 90 miles east of Houston. The refinery processes heavy sour crude oils and other feedstocks into gasoline, diesel, and jet fuel. The refinery receives crude oil by rail, marine docks, and crude oil pipelines. Finished products are distributed into the Colonial, Explorer, and other pipelines and across the refinery docks into ships or barges.

St. Charles Refinery. Our St. Charles Refinery is located approximately 15 miles west of New Orleans along the Mississippi River. The refinery processes sour crude oils and other feedstocks into gasoline and diesel. The refinery receives crude oil over docks and has access to the Louisiana Offshore Oil Port. Finished products can be shipped over these docks or through the Colonial pipeline network.

Texas City Refinery. Our Texas City Refinery is located southeast of Houston on the Texas City Ship Channel. The refinery processes crude oils into gasoline, diesel, and jet fuel. The refinery receives its feedstocks by pipeline and by ship or barge via deepwater docking facilities along the Texas City Ship Channel. The refinery uses ships and barges, as well as the Colonial, Explorer, and other pipelines for distribution of its products.

Houston Refinery. Our Houston Refinery is located on the Houston Ship Channel. It processes a mix of crude and intermediate oils into gasoline, jet fuel, and diesel. The refinery receives its feedstocks by tankers or barges at deepwater docking facilities along the Houston Ship Channel and by various interconnecting pipelines with the Texas City Refinery. The majority of its finished products are delivered to local, mid-continent U.S., and northeastern U.S. markets through various pipelines, including the Colonial and Explorer pipelines.

Meraux Refinery. Our Meraux Refinery is located approximately 25 miles southeast of New Orleans along the Mississippi River. The refinery processes sour and sweet crude oils into gasoline, diesel, jet fuel, and high sulfur fuel oil. The refinery receives crude oil at its dock and has access to the Louisiana Offshore Oil Port. Finished products can be shipped from the refinery’s dock or through the Colonial pipeline. The Meraux Refinery is located about 40 miles from our St. Charles Refinery, allowing for integration of feedstocks and refined product blending.

Three Rivers Refinery. Our Three Rivers Refinery is located in South Texas between Corpus Christi and San Antonio. It processes sweet and sour crude oils into gasoline, distillates, and aromatics. The refinery has access to crude oil from sources outside the U.S. delivered to the Texas Gulf Coast at Corpus Christi as well as crude oil from local sources through third-party pipelines and trucks. The refinery distributes its refined products primarily through third-party pipelines.

4

U.S. Mid-Continent

The following table presents the percentages of principal charges and yields (on a combined basis) for the three refineries in this region for the year ended December 31, 2014. Total throughput volumes for the U.S. Mid-Continent refining region averaged approximately 446,000 BPD for the year ended December 31, 2014.

Combined U.S. Mid-Continent Region Charges and Yields
Charges:
	sour crude oil	6	%
	sweet crude oil	82	%
	other feedstocks	1	%
	blendstocks	11	%
Yields:
	gasolines and blendstocks	53	%
	distillates	36	%
	petrochemicals	4	%
	other products (includes gas oil, No. 6 fuel oil, and asphalt)	7	%

Memphis Refinery. Our Memphis Refinery is located in Tennessee along the Mississippi River. It processes primarily sweet crude oils. Most of its production is gasoline, diesel, and jet fuels. Crude oil is supplied to the refinery via the Capline pipeline and can also be received, along with other feedstocks, via barge. Most of the refinery’s products are distributed via truck rack and barges.

McKee Refinery. Our McKee Refinery is located in the Texas Panhandle. It processes primarily sweet crude oils into gasoline, diesel, jet fuels, and asphalt. The refinery has access to local and Permian Basin crude oil sources via third-party pipelines. The refinery distributes its products primarily via third-party pipelines to markets in Texas, New Mexico, Arizona, Colorado, and Oklahoma.

Ardmore Refinery. Our Ardmore Refinery is located in Ardmore, Oklahoma, approximately 100 miles south of Oklahoma City. It processes medium sour and sweet crude oils into gasoline, diesel, and asphalt. The refinery receives local crude oil and feedstock supply via third-party pipelines. Refined products are transported to market via rail, trucks, and the Magellan pipeline system.

5

North Atlantic

The following table presents the percentages of principal charges and yields (on a combined basis) for the two refineries in this region for the year ended December 31, 2014. Total throughput volumes for the North Atlantic refining region averaged approximately 457,000 BPD for the year ended December 31, 2014.

Combined North Atlantic Region Charges and Yields
Charges:
	sour crude oil	1	%
	sweet crude oil	88	%
	residual fuel oil	2	%
	other feedstocks	1	%
	blendstocks	8	%
Yields:
	gasolines and blendstocks	40	%
	distillates	47	%
	petrochemicals	1	%
	other products (includes gas oil, No. 6 fuel oil, and other products)	12	%

Pembroke Refinery. Our Pembroke Refinery is located in the County of Pembrokeshire in southwest Wales, U.K. The refinery processes primarily sweet crude oils into gasoline, diesel, jet fuel, heating oil, and low-sulfur fuel oil. The refinery receives all of its feedstocks and delivers the majority of its products by ship and barge via deepwater docking facilities along the Milford Haven Waterway, with its remaining products being delivered by our Mainline pipeline system and by trucks.

Quebec City Refinery. Our Quebec City Refinery is located in Lévis, Canada (near Quebec City). It processes sweet crude oils into gasoline, diesel, jet fuel, heating oil, and low-sulfur fuel oil. The refinery receives crude oil by ship at its deepwater dock on the St. Lawrence River and by rail. The refinery transports its products through our pipeline from Quebec City to our terminal in Montreal and to various other terminals throughout eastern Canada by rail, ships, trucks, and third-party pipelines.

6

U.S. West Coast

The following table presents the percentages of principal charges and yields (on a combined basis) for the two refineries in this region for the year ended December 31, 2014. Total throughput volumes for the U.S. West Coast refining region averaged approximately 262,000 BPD for the year ended December 31, 2014.

Combined U.S. West Coast Region Charges and Yields
Charges:
	sour crude oil	70	%
	sweet crude oil	3	%
	other feedstocks	12	%
	blendstocks	15	%
Yields:
	gasolines and blendstocks	59	%
	distillates	26	%
	other products (includes gas oil, No. 6 fuel oil, petroleum coke, and asphalt)	15	%

Benicia Refinery. Our Benicia Refinery is located northeast of San Francisco on the Carquinez Straits of San Francisco Bay. It processes sour crude oils into gasoline, diesel, jet fuel, and asphalt. Gasoline production is primarily CARBOB gasoline, which meets CARB specifications when blended with ethanol. The refinery receives crude oil feedstocks via a marine dock and crude oil pipelines connected to a southern California crude oil delivery system. Most of the refinery’s products are distributed via pipeline and truck rack into northern California markets.

Wilmington Refinery. Our Wilmington Refinery is located near Los Angeles, California. The refinery processes a blend of heavy and high-sulfur crude oils. The refinery produces CARBOB gasoline, diesel, CARB diesel, jet fuel, and asphalt. The refinery is connected by pipeline to marine terminals and associated dock facilities that can move and store crude oil and other feedstocks. Refined products are distributed via pipeline systems to various third-party terminals in southern California, Nevada, and Arizona.

7

Feedstock Supply

Approximately 46 percent of our current crude oil feedstock requirements are purchased through term contracts while the remaining requirements are generally purchased on the spot market. Our term supply agreements include arrangements to purchase feedstocks at market-related prices directly or indirectly from various national oil companies as well as international and U.S. oil companies. The contracts generally permit the parties to amend the contracts (or terminate them), effective as of the next scheduled renewal date, by giving the other party proper notice within a prescribed period of time (e.g., 60 days, 6 months) before expiration of the current term. The majority of the crude oil purchased under our term contracts is purchased at the producer’s official stated price (i.e., the “market” price established by the seller for all purchasers) and not at a negotiated price specific to us.

Refining Segment Sales

Overview

Our refining segment includes sales of refined products in both the wholesale rack and bulk markets. These sales include refined products that are manufactured in our refining operations as well as refined products purchased or received on exchange from third parties. Most of our refineries have access to marine transportation facilities and interconnect with common-carrier pipeline systems, allowing us to sell products in the U.S., Canada, the U.K., and other countries. No customer accounted for more than 10 percent of our total operating revenues in 2014.

Wholesale Marketing

We market branded and unbranded refined products on a wholesale basis through an extensive rack marketing network. The principal purchasers of our refined products from terminal truck racks are wholesalers, distributors, retailers, and truck-delivered end users throughout the U.S., Canada, the U.K., and Ireland.

The majority of our rack volume is sold through unbranded channels. The remainder is sold to distributors and dealers that are members of the Valero-brand family that operate approximately 5,600 branded sites in the U.S. and the Caribbean, approximately 1,000 branded sites in the U.K. and Ireland, and approximately 800 branded sites in Canada. These sites are independently owned and are supplied by us under multi-year contracts. For wholesale branded sites, we promote the Valero^®, Beacon^®, and Shamrock^® brands in the U.S. and the Caribbean, the Ultramar^® brand in Canada, and the Texaco^® brand in the U.K. and Ireland.

Bulk Sales and Trading

We sell a significant portion of our gasoline and distillate production through bulk sales channels in U.S. and international markets. Our bulk sales are made to various oil companies and traders as well as certain bulk end-users such as railroads, airlines, and utilities. Our bulk sales are transported primarily by pipeline, barges, and tankers to major tank farms and trading hubs.

We also enter into refined product exchange and purchase agreements. These agreements help minimize transportation costs, optimize refinery utilization, balance refined product availability, broaden geographic distribution, and provide access to markets not connected to our refined-product pipeline systems. Exchange agreements provide for the delivery of refined products by us to unaffiliated companies at our and third-parties’ terminals in exchange for delivery of a similar amount of refined products to us by these unaffiliated companies at specified locations. Purchase agreements involve our purchase of refined products from third parties with delivery occurring at specified locations.

8

Specialty Products

We sell a variety of other products produced at our refineries, which we refer to collectively as “Specialty Products.” Our Specialty Products include asphalt, lube oils, natural gas liquids (NGLs), petroleum coke, petrochemicals, and sulfur.

• We produce asphalt at five of our refineries. Our asphalt products are sold for use in road construction, road repair, and roofing applications through a network of refinery and terminal loading racks.

• We produce naphthenic oils at one of our refineries suitable for a wide variety of lubricant and process applications.

• NGLs produced at our refineries include butane, isobutane, and propane. These products can be used for gasoline blending, home heating, and petrochemical plant feedstocks.

• We are a significant producer of petroleum coke, supplying primarily power generation customers and cement manufacturers. Petroleum coke is used largely as a substitute for coal.

• We produce and market a number of commodity petrochemicals including aromatics (benzene, toluene, and xylene) and two grades of propylene. Aromatics and propylenes are sold to customers in the chemical industry for further processing into such products as paints, plastics, and adhesives.

• We are a large producer of sulfur with sales primarily to customers serving the agricultural sector. Sulfur is used in manufacturing fertilizer.

Logistics and Transportation

We own several transportation and logistics assets (crude oil pipelines, refined product pipelines, terminals, tanks, marine docks, truck rack bays, rail cars, and rail facilities) that support our refining and ethanol operations. In addition, through subsidiaries, we own 100 percent of the general partner interest of Valero Energy Partners LP (VLP) and approximately 70 percent of its limited partner interests. VLP is a midstream master limited partnership. Its common units representing limited partner interests are traded on the NYSE under the symbol “VLP.” Its assets support the operations of our Port Arthur, McKee, Three Rivers, Ardmore, and Memphis Refineries. VLP is discussed more fully in Note 5 of Notes to Consolidated Financial Statements.

9

ETHANOL

We own 11 ethanol plants with a combined ethanol production capacity of about 1.3 billion gallons per year. Our ethanol plants are dry mill facilities¹that process corn to produce ethanol and distillers grains.² We source our corn supply from local farmers and commercial elevators. Our facilities receive corn primarily by rail and truck. We publish on our website a corn bid for local farmers and cooperative dealers to use to facilitate corn supply transactions.

After processing, our ethanol is held in storage tanks on-site pending loading to trucks and rail cars. We sell our ethanol (i) to large customers – primarily refiners and gasoline blenders – under term and spot contracts, and (ii) in bulk markets such as New York, Chicago, the U.S. Gulf Coast, Florida, and the U.S. West Coast. We ship our dry distillers grains (DDG) by truck or rail primarily to animal feed customers in the U.S. and Mexico, with some sales into the Far East. We also sell modified distillers grains locally at our plant sites.

The following table presents the locations of our ethanol plants, their approximate ethanol and DDG production capacities, and their approximate corn processing capacities.

State	City	Ethanol Production Capacity (in gallons per year)	Production of DDG (in tons per year)	Corn Processed (in bushels per year)
Indiana	Linden	120 million	355,000	42 million
	Mount Vernon	100 million	320,000	37 million
Iowa	Albert City	120 million	355,000	42 million
	Charles City	125 million	370,000	44 million
	Fort Dodge	125 million	370,000	44 million
	Hartley	125 million	370,000	44 million
Minnesota	Welcome	125 million	370,000	44 million
Nebraska	Albion	120 million	355,000	42 million
Ohio	Bloomingburg	120 million	355,000	42 million
South Dakota	Aurora	125 million	370,000	44 million
Wisconsin	Jefferson	100 million	320,000	37 million
	total	1,305 million	3,910,000	462 million

The combined production of denatured ethanol from our plants in 2014 averaged 3.4 million gallons per day.

________________________

¹  Ethanol is commercially produced using either the wet mill or dry mill process. Wet milling involves separating the grain kernel into its component parts (germ, fiber, protein, and starch) prior to fermentation. In the dry mill process, the entire grain kernel is ground into flour. The starch in the flour is converted to ethanol during the fermentation process, creating carbon dioxide and distillers grains.

²  During fermentation, nearly all of the starch in the grain is converted into ethanol and carbon dioxide, while the remaining nutrients (proteins, fats, minerals, and vitamins) are concentrated to yield modified distillers grains, or, after further drying, dried distillers grains. Distillers grains generally are an economical partial replacement for corn and soybeans in feeds for cattle, swine, and poultry.

10

ENVIRONMENTAL MATTERS

We incorporate by reference into this Item the environmental disclosures contained in the following sections of this report:

• Item 1A, “Risk Factors”—Compliance with and changes in environmental laws, including proposed climate change laws and regulations, could adversely affect our performance,

• Item 1A, “Risk Factors”—We may incur additional costs as a result of our use of rail cars for the transportation of crude oil and the products that we manufacture,

• Item 3, “Legal Proceedings” under the caption “Environmental Enforcement Matters,” and

• Item 8, “Financial Statements and Supplementary Data” in Note 10 of Notes to Consolidated Financial Statements under the caption “Environmental Liabilities,” and Note 12 of Notes to Consolidated Financial Statements under the caption “Environmental Matters.”

Capital Expenditures Attributable to Compliance with Environmental Regulations. In 2014, our capital expenditures attributable to compliance with environmental regulations were $62 million, and they are currently estimated to be $106 million for 2015 and $67 million for 2016. The estimates for 2015 and 2016 do not include amounts related to capital investments at our facilities that management has deemed to be strategic investments. These amounts could materially change as a result of governmental and regulatory actions.

PROPERTIES

Our principal properties are described above under the caption “Valero’s Operations,” and that information is incorporated herein by reference. We believe that our properties and facilities are generally adequate for our operations and that our facilities are maintained in a good state of repair. As of December 31, 2014, we were the lessee under a number of cancelable and noncancelable leases for certain properties. Our leases are discussed more fully in Notes 11 and 12 of Notes to Consolidated Financial Statements. Financial information about our properties is presented in Note 8 of Notes to Consolidated Financial Statements and is incorporated herein by reference.

Our patents relating to our refining operations are not material to us as a whole. The trademarks and tradenames under which we conduct our branded wholesale business – including Valero^®, Diamond Shamrock^®, Shamrock^®, Ultramar^®, Beacon^®, Texaco^® – and other trademarks employed in the marketing of petroleum products are integral to our wholesale marketing operations.

11

ITEM 1A. RISK FACTORS

You should carefully consider the following risk factors in addition to the other information included in this report. Each of these risk factors could adversely affect our business, operating results, and/or financial condition, as well as adversely affect the value of an investment in our common stock.

Our financial results are affected by volatile refining margins, which are dependent upon factors beyond our control, including the price of crude oil and the market price at which we can sell refined products.

Our financial results are primarily affected by the relationship, or margin, between refined product prices and the prices for crude oil and other feedstocks. Historically, refining margins have been volatile, and we believe they will continue to be volatile in the future. Our cost to acquire feedstocks and the price at which we can ultimately sell refined products depend upon several factors beyond our control, including regional and global supply of and demand for crude oil, gasoline, diesel, and other feedstocks and refined products. These in turn depend on, among other things, the availability and quantity of imports, the production levels of U.S. and international suppliers, levels of refined product inventories, productivity and growth (or the lack thereof) of U.S. and global economies, U.S. relationships with foreign governments, political affairs, and the extent of governmental regulation.

Some of these factors can vary by region and may change quickly, adding to market volatility, while others may have longer-term effects. The longer-term effects of these and other factors on refining and marketing margins are uncertain. We do not produce crude oil and must purchase all of the crude oil we refine. We may purchase our crude oil and other refinery feedstocks long before we refine them and sell the refined products. Price level changes during the period between purchasing feedstocks and selling the refined products from these feedstocks could have a significant effect on our financial results. A decline in market prices may negatively impact the carrying value of our inventories.

Economic turmoil and political unrest or hostilities, including the threat of future terrorist attacks, could affect the economies of the U.S. and other countries. Lower levels of economic activity could result in declines in energy consumption, including declines in the demand for and consumption of our refined products, which could cause our revenues and margins to decline and limit our future growth prospects.

Refining margins are also significantly impacted by additional refinery conversion capacity through the expansion of existing refineries or the construction of new refineries. Worldwide refining capacity expansions may result in refining production capability exceeding refined product demand, which would have an adverse effect on refining margins.

A significant portion of our profitability is derived from the ability to purchase and process crude oil feedstocks that historically have been cheaper than benchmark crude oils, such as Louisiana Light Sweet (LLS) and Brent crude oils. These crude oil feedstock differentials vary significantly depending on overall economic conditions and trends and conditions within the markets for crude oil and refined products, and they could decline in the future, which would have a negative impact on our results of operations.

Compliance with and changes in environmental laws, including proposed climate change laws and regulations, could adversely affect our performance.

The principal environmental risks associated with our operations are emissions into the air and releases into the soil, surface water, or groundwater. Our operations are subject to extensive environmental laws and regulations, including those relating to the discharge of materials into the environment, waste management, pollution prevention measures, greenhouse gas emissions, and characteristics and composition of gasoline

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and diesel fuels. Certain of these laws and regulations could impose obligations to conduct assessment or remediation efforts at our facilities as well as at formerly owned properties or third-party sites where we have taken wastes for disposal or where our wastes have migrated. Environmental laws and regulations also may impose liability on us for the conduct of third parties, or for actions that complied with applicable requirements when taken, regardless of negligence or fault. If we violate or fail to comply with these laws and regulations, we could be fined or otherwise sanctioned.

Because environmental laws and regulations are becoming more stringent and new environmental laws and regulations are continuously being enacted or proposed, such as those relating to greenhouse gas emissions and climate change, the level of expenditures required for environmental matters could increase in the future. Current and future legislative action and regulatory initiatives could result in changes to operating permits, material changes in operations, increased capital expenditures and operating costs, increased costs of the goods we sell, and decreased demand for our products that cannot be assessed with certainty at this time. We may be required to make expenditures to modify operations or install pollution control equipment that could materially and adversely affect our business, financial condition, results of operations, and liquidity.

For example, the U.S. Environmental Protection Agency (EPA) has, in recent years, adopted final rules making more stringent the National Ambient Air Quality Standards (NAAQS) for ozone, sulfur dioxide, and nitrogen dioxide, and the U.S. EPA is considering further revisions to the NAAQS. Emerging rules and permitting requirements implementing these revised standards may require us to install more stringent controls at our facilities, which may result in increased capital expenditures. Governmental restrictions on greenhouse gas emissions – including so-called “cap-and-trade” programs targeted at reducing carbon dioxide emissions – could result in material increased compliance costs, additional operating restrictions or permitting delays for our business, and an increase in the cost of, and reduction in demand for, the products we produce, which could have a material adverse effect on our financial position, results of operations, and liquidity.

Disruption of our ability to obtain crude oil could adversely affect our operations.

A significant portion of our feedstock requirements is satisfied through supplies originating in the Middle East, Africa, Asia, North America, and South America. We are, therefore, subject to the political, geographic, and economic risks attendant to doing business with suppliers located in, and supplies originating from, these areas. If one or more of our supply contracts were terminated, or if political events disrupt our traditional crude oil supply, we believe that adequate alternative supplies of crude oil would be available, but it is possible that we would be unable to find alternative sources of supply. If we are unable to obtain adequate crude oil volumes or are able to obtain such volumes only at unfavorable prices, our results of operations could be materially adversely affected, including reduced sales volumes of refined products or reduced margins as a result of higher crude oil costs.

In addition, the U.S. government can prevent or restrict us from doing business in or with other countries. These restrictions, and those of other governments, could limit our ability to gain access to business opportunities in various countries. Actions by both the U.S. and other countries have affected our operations in the past and will continue to do so in the future.

We are subject to interruptions and increased costs as a result of our reliance on third-party transportation of crude oil and the products that we manufacture.

We generally use the services of third parties to transport feedstocks to our facilities and to transport the products we manufacture to market. If we experience prolonged interruptions of supply or increases in costs to deliver our products to market, or if the ability of the pipelines, vessels, or railroads to transport feedstocks or products is disrupted because of weather events, accidents, derailment, collision, fire, explosion,

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governmental regulations, or third-party actions, it could have a material adverse effect on our financial position, results of operations, and liquidity.

We may incur additional costs as a result of our use of rail cars for the transportation of crude oil and the products that we manufacture.

We currently use rail cars for the transportation of some feedstocks to certain of our facilities and for the transportation of some of the products we manufacture to their markets. We own and lease rail cars for our operations. Rail transportation is subject to a variety of federal, state, and local regulations. New laws and regulations and changes in existing laws and regulations are continuously being enacted or proposed that could result in increased expenditures for compliance. For example, in 2014 the U.S. Department of Transportation (DOT) and Transport Canada (TC) issued proposed regulations for rail car standards and railroad operating requirements for flammable liquids with particular emphasis on shipments of crude oil, gasoline, and ethanol. The regulations as proposed would require significant physical modifications to rail cars. We may be required to incur additional costs in connection with these and other future regulations of rail transportation to the extent they are applicable to us.

Competitors that produce their own supply of feedstocks, own their own retail sites, have greater financial resources, or provide alternative energy sources may have a competitive advantage.

The refining and marketing industry is highly competitive with respect to both feedstock supply and refined product markets. We compete with many companies for available supplies of crude oil and other feedstocks and for sites for our refined products. We do not produce any of our crude oil feedstocks and, following the separation of our retail business, we do not have a company-owned retail network. Many of our competitors, however, obtain a significant portion of their feedstocks from company-owned production and some have extensive retail sites. Such competitors are at times able to offset losses from refining operations with profits from producing or retailing operations, and may be better positioned to withstand periods of depressed refining margins or feedstock shortages.

Some of our competitors also have materially greater financial and other resources than we have. Such competitors have a greater ability to bear the economic risks inherent in all phases of our industry. In addition, we compete with other industries that provide alternative means to satisfy the energy and fuel requirements of our industrial, commercial, and individual consumers.

Uncertainty and illiquidity in credit and capital markets can impair our ability to obtain credit and financing on acceptable terms, and can adversely affect the financial strength of our business partners.

Our ability to obtain credit and capital depends in large measure on capital markets and liquidity factors that we do not control. Our ability to access credit and capital markets may be restricted at a time when we would like, or need, to access those markets, which could have an impact on our flexibility to react to changing economic and business conditions. In addition, the cost and availability of debt and equity financing may be adversely impacted by unstable or illiquid market conditions. Protracted uncertainty and illiquidity in these markets also could have an adverse impact on our lenders, commodity hedging counterparties, or our customers, causing them to fail to meet their obligations to us. In addition, decreased returns on pension fund assets may also materially increase our pension funding requirements.

Our access to credit and capital markets also depends on the credit ratings assigned to our debt by independent credit rating agencies. We currently maintain investment-grade ratings by Standard & Poor’s Ratings Services (S&P), Moody’s Investors Service (Moody’s), and Fitch Ratings (Fitch) on our senior unsecured debt. Ratings from credit agencies are not recommendations to buy, sell, or hold our securities. Each rating should be

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evaluated independently of any other rating. We cannot provide assurance that any of our current ratings will remain in effect for any given period of time or that a rating will not be lowered or withdrawn entirely by a rating agency if, in its judgment, circumstances so warrant. Specifically, if ratings agencies were to downgrade our long-term rating, particularly below investment grade, our borrowing costs would increase, which could adversely affect our ability to attract potential investors and our funding sources could decrease. In addition, we may not be able to obtain favorable credit terms from our suppliers or they may require us to provide collateral, letters of credit, or other forms of security, which would increase our operating costs. As a result, a downgrade below investment grade in our credit ratings could have a material adverse impact on our financial position, results of operations, and liquidity.

From time to time, our cash needs may exceed our internally generated cash flow, and our business could be materially and adversely affected if we were unable to obtain necessary funds from financing activities. From time to time, we may need to supplement our cash generated from operations with proceeds from financing activities. We have existing revolving credit facilities, committed letter of credit facilities, and an accounts receivable sales facility to provide us with available financing to meet our ongoing cash needs. In addition, we rely on the counterparties to our derivative instruments to fund their obligations under such arrangements. Uncertainty and illiquidity in financial markets may materially impact the ability of the participating financial institutions and other counterparties to fund their commitments to us under our various financing facilities or our derivative instruments, which could have a material adverse effect on our financial position, results of operations, and liquidity.

A significant interruption in one or more of our refineries could adversely affect our business.

Our refineries are our principal operating assets. As a result, our operations could be subject to significant interruption if one or more of our refineries were to experience a major accident or mechanical failure, be damaged by severe weather or other natural or man-made disaster, such as an act of terrorism, or otherwise be forced to shut down. If any refinery were to experience an interruption in operations, earnings from the refinery could be materially adversely affected (to the extent not recoverable through insurance) because of lost production and repair costs. Significant interruptions in our refining system could also lead to increased volatility in prices for crude oil feedstocks and refined products, and could increase instability in the financial and insurance markets, making it more difficult for us to access capital and to obtain insurance coverage that we consider adequate.

A significant interruption related to our information technology systems could adversely affect our business.

Our information technology systems and network infrastructure may be subject to unauthorized access or attack, which could result in a loss of sensitive business information, systems interruption, or the disruption of our business operations. There can be no assurance that our infrastructure protection technologies and disaster recovery plans can prevent a technology systems breach or systems failure, which could have a material adverse effect on our financial position or results of operations.

Our business may be negatively affected by work stoppages, slowdowns or strikes by our employees, as well as new labor legislation issued by regulators.

Workers at various of our refineries are covered by collective bargaining agreements. To the extent we are in negotiations for labor agreements expiring in the future, there is no assurance an agreement will be reached without a strike, work stoppage, or other labor action. Any prolonged strike, work stoppage, or other labor action could have an adverse effect on our financial condition or results of operations. In addition, future

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federal or state labor legislation could result in labor shortages and higher costs, especially during critical maintenance periods.

We are subject to operational risks and our insurance may not be sufficient to cover all potential losses arising from operating hazards. Failure by one or more insurers to honor its coverage commitments for an insured event could materially and adversely affect our financial position, results of operations, and liquidity.

Our refining and marketing operations are subject to various hazards common to the industry, including explosions, fires, toxic emissions, maritime hazards, and natural catastrophes. As protection against these hazards, we maintain insurance coverage against some, but not all, potential losses and liabilities. We may not be able to maintain or obtain insurance of the type and amount we desire at reasonable rates. As a result of market conditions, premiums and deductibles for certain of our insurance policies could increase substantially. In some instances, certain insurance could become unavailable or available only for reduced amounts of coverage. For example, coverage for hurricane damage is very limited, and coverage for terrorism risks includes very broad exclusions. If we were to incur a significant liability for which we were not fully insured, it could have a material adverse effect on our financial position, results of operations, and liquidity.

Our insurance program includes a number of insurance carriers. Significant disruptions in financial markets could lead to a deterioration in the financial condition of many financial institutions, including insurance companies. We can make no assurances that we will be able to obtain the full amount of our insurance coverage for insured events.

Large capital projects can take many years to complete, and market conditions could deteriorate over time, negatively impacting project returns.

We may engage in capital projects based on the forecasted project economics and level of return on the capital to be employed in the project. Large-scale projects take many years to complete, and market conditions can change from our forecast. As a result, we may be unable to fully realize our expected returns, which could negatively impact our financial condition, results of operations, and cash flows.

Compliance with and changes in tax laws could adversely affect our performance.

We are subject to extensive tax liabilities imposed by multiple jurisdictions, including income taxes, indirect taxes (excise/duty, sales/use, gross receipts, and value-added taxes), payroll taxes, franchise taxes, withholding taxes, and ad valorem taxes. New tax laws and regulations and changes in existing tax laws and regulations are continuously being enacted or proposed that could result in increased expenditures for tax liabilities in the future. Many of these liabilities are subject to periodic audits by the respective taxing authority. Subsequent changes to our tax liabilities as a result of these audits may subject us to interest and penalties.

We may incur losses and incur additional costs as a result of our forward-contract activities and derivative transactions.

We currently use commodity derivative instruments, and we expect to continue their use in the future. If the instruments we use to hedge our exposure to various types of risk are not effective, we may incur losses. In addition, we may be required to incur additional costs in connection with future regulation of derivative instruments to the extent it is applicable to us.

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One of our subsidiaries acts as the general partner of a publicly traded master limited partnership, VLP, which may involve a greater exposure to legal liability than our historic business operations.

One of our subsidiaries acts as the general partner of VLP, a publicly traded master limited partnership. Our control of the general partner of VLP may increase the possibility of claims of breach of fiduciary duties, including claims of conflicts of interest, related to VLP. Liability resulting from such claims could have a material adverse effect on our financial position, results of operations, and liquidity.

If our spin-off of CST (the “Spin-off”), or certain internal transactions undertaken in anticipation of the Spin-off, were determined to be taxable for U.S. federal income tax purposes, then we and our stockholders could be subject to significant tax liability.

We received a private letter ruling from the Internal Revenue Service (IRS) substantially to the effect that, for U.S. federal income tax purposes, the Spin-off, except for cash received in lieu of fractional shares, qualified as tax-free under sections 355 and 361 of the U.S. Internal Revenue Code of 1986, as amended (Code), and that certain internal transactions undertaken in anticipation of the Spin-off qualified for favorable treatment. The IRS did not rule, however, on whether the Spin-off satisfied certain requirements necessary to obtain tax-free treatment under section 355 of the Code. Instead, the private letter ruling was based on representations by us that those requirements were satisfied, and any inaccuracy in those representations could invalidate the private letter ruling. In connection with the private letter ruling, we also obtained an opinion from a nationally recognized accounting firm, substantially to the effect that, for U.S. federal income tax purposes, the Spin-off qualified under sections 355 and 361 of the Code. The opinion relied on, among other things, the continuing validity of the private letter ruling and various assumptions and representations as to factual matters made by CST and us which, if inaccurate or incomplete in any material respect, would jeopardize the conclusions reached by such counsel in its opinion. The opinion is not binding on the IRS or the courts, and there can be no assurance that the IRS or the courts would not challenge the conclusions stated in the opinion or that any such challenge would not prevail. Furthermore, notwithstanding the private letter ruling, the IRS could determine on audit that the Spin-off or the internal transactions undertaken in anticipation of the Spin-off should be treated as taxable transactions if it determines that any of the facts, assumptions, representations, or undertakings we or CST have made or provided to the IRS are incorrect or incomplete, or that the Spin-off or the internal transactions should be taxable for other reasons, including as a result of a significant change in stock or asset ownership after the Spin-off.

If the Spin-off ultimately were determined to be taxable, each holder of our common stock who received shares of CST common stock in the Spin-off generally would be treated as receiving a spin-off of property in an amount equal to the fair market value of the shares of CST common stock received by such holder. Any such spin-off would be a dividend to the extent of our current earnings and profits as of the end of 2013, and any accumulated earnings and profits. Any amount that exceeded our relevant earnings and profits would be treated first as a non-taxable return of capital to the extent of such holder’s tax basis in our shares of common stock with any remaining amount generally being taxed as a capital gain. In addition, we would recognize gain in an amount equal to the excess of the fair market value of shares of CST common stock distributed to our holders on the Spin-off date over our tax basis in such shares of CST common stock. Moreover, we could incur significant U.S. federal income tax liabilities if it ultimately were determined that certain internal transactions undertaken in anticipation of the Spin-off were taxable.

Under the terms of the tax matters agreement we entered into with CST in connection with the Spin-off, we generally are responsible for any taxes imposed on us and our subsidiaries in the event that the Spin-off and/or certain related internal transactions were to fail to qualify for tax-free treatment. However, if the Spin-off and/or such internal transactions were to fail to qualify for tax-free treatment because of actions or failures to act by CST or its subsidiaries, CST would be responsible for all such taxes. If we were to become liable

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for taxes under the tax matters agreement, that liability could have a material adverse effect on us. The Spin-off is more fully described in Note 3 of Notes to Consolidated Financial Statements.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 3. LEGAL PROCEEDINGS

Litigation

We incorporate by reference into this Item our disclosures made in Part II, Item 8 of this report included in Note 12 of Notes to Consolidated Financial Statements under the caption “Litigation Matters.”

Environmental Enforcement Matters

While it is not possible 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, results of operations, or liquidity. 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 into the environment or protecting the environment if we reasonably believe that such proceedings will result in monetary sanctions of $100,000 or more.

People of the State of Illinois, ex rel. v. The Premcor Refining Group Inc., et al., Third Judicial Circuit Court, Madison County (Case No. 03-CH-00459, filed May 29, 2003) (Hartford Refinery and terminal). The Illinois EPA has issued several Notices of Violation (NOVs) alleging violations of air and waste regulations at Premcor’s Hartford, Illinois terminal and closed refinery. We are negotiating the terms of a consent order for corrective action.

Bay Area Air Quality Management District (BAAQMD) (Benicia Refinery). We currently have multiple outstanding Violation Notices (VNs) issued by the BAAQMD, which we reasonably believe may result in penalties of $100,000 or more. These VNs are for various alleged air regulation and air permit violations at our Benicia Refinery and asphalt plant. We continue to work with the BAAQMD to resolve these VNs.

South Coast Air Quality Management District (SCAQMD) (Wilmington Refinery). We currently have multiple NOVs issued by the SCAQMD, which we reasonably believe may result in penalties of $100,000 or more. These NOVs are for alleged reporting violations and excess emissions at our Wilmington Refinery. In the first quarter of 2015, we entered into an Agreement to resolve various NOVs, and we continue to work with the SCAQMD to resolve the remaining NOVs.

Texas Commission on Environmental Quality (TCEQ) (Port Arthur Refinery). In our annual report on Form 10-K for the year ended December 31, 2013, we reported that our Port Arthur Refinery had received a proposed agreed order from the TCEQ that assessed a penalty of $180,911 for alleged air emission and reporting violations, and a Notice of Enforcement (NOE) for unauthorized emissions with potential stipulated penalties of $166,000. In the first quarter of 2014, we received two proposed Agreed Orders from the TCEQ resolving multiple violations that occurred between May 2007 and April 2013, including all the unauthorized emissions, reporting violations, and stipulated penalties in the two NOEs referenced above. We continue to work with the TCEQ to finalize these Agreed Orders.

ITEM 4. MINE SAFETY DISCLOSURES

None.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock trades on the NYSE under the symbol “VLO.”

As of January 31, 2015, there were 6,213holders of record of our common stock.

The following table shows the high and low sales prices of and dividends declared on our common stock for each quarter of 2014 and 2013.

	Sales Prices of the Common Stock				Dividends Per Common Share
Quarter Ended	High		Low
2014:
December 31	$	52.10	$	42.53	$	0.275
September 30	54.61		45.73		0.275
June 30	59.69		50.03		0.250
March 31	55.96		45.90		0.250
2013:
December 31	50.54		33.20		0.225
September 30	37.50		33.00		0.225
June 30	45.53		33.27		0.200
March 31	48.97		34.05		0.200

On January 23, 2015, our board of directors declared a quarterly cash dividend of $0.40 per common share payable March 3, 2015 to holders of record at the close of business on February 11, 2015.

Dividends are considered quarterly by the board of directors and may be paid only when approved by the board.

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The following table discloses purchases of shares of Valero’s common stock made by us or on our behalf during the fourth quarter of 2014.

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)
October 2014	3,180,678	$	46.27	302,005	2,878,673	$ 1.8 billion
November 2014	2,001,273	$	50.32	119,047	1,882,226	$ 1.7 billion
December 2014	5,120,398	$	48.56	2,624	5,117,774	$ 1.5 billion
Total	10,302,349	$	48.20	423,676	9,878,673	$ 1.5 billion

(a) The shares reported in this column represent purchases settled in the fourth quarter of 2014 relating to (i) our purchases of shares in open-market transactions to meet our obligations under stock-based compensation plans, and (ii) 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 stock-based compensation plans.

(b) On February 28, 2008, we announced that our board of directors approved a $3 billion common stock purchase program. This $3 billion program has no expiration date.

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The following performance graph is not “soliciting material,” is not deemed filed with the SEC, and is not to be incorporated by reference into any of Valero’s filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, as amended, respectively.

This performance graph and the related textual information are based on historical data and are not indicative of future performance. The following line graph compares the cumulative total return¹ on an investment in our common stock against the cumulative total return of the S&P 500 Composite Index and an index of peer companies (that we selected) for the five-year period commencing December 31, 2009 and ending December 31, 2014. Our peer group comprises the following 11 companies: Alon USA Energy, Inc.; BP plc; CVR Energy, Inc.; Delek US Holdings, Inc.; HollyFrontier Corporation; Marathon Petroleum Corporation; PBF Energy Inc.; Phillips 66; Royal Dutch Shell plc; Tesoro Corporation; and Western Refining, Inc.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN¹ 

Among Valero Energy Corporation, the S&P 500 Index,

and Peer Group

	12/2009		12/2010		12/2011		12/2012		12/2013		12/2014
Valero Common Stock	$	100.00	$	139.54	$	128.59	$	213.68	$	352.58	$	353.43
S&P 500	100.00		115.06		117.49		136.30		180.44		205.14
Peer Group	100.00		93.33		100.51		109.79		133.61		123.08

____________________________________

¹  Assumes that an investment in Valero common stock and each index was $100 on December 31, 2009. “Cumulative total return” is based on share price appreciation plus reinvestment of dividends from December 31, 2009 through December 31, 2014.

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ITEM 6. SELECTED FINANCIAL DATA

The selected financial data for the five-year period ended December 31, 2014 was derived from our audited financial statements. The following table should be read together with Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and with the historical financial statements and accompanying notes included in Item 8, “Financial Statements and Supplementary Data.”

The following summaries are in millions of dollars, except for per share amounts:

	Year Ended December 31, (a)
	2014 (b)		2013 (c)		2012		2011 (d)		2010 (e)
Operating revenues	$	130,844	$	138,074	$	138,393	$	120,607	$	82,154
Income from continuing operations	3,775		2,722		3,114		2,336		1,178
Earnings per common share from continuing operations – assuming dilution	6.97		4.96		5.61		4.11		2.07
Dividends per common share	1.05		0.85		0.65		0.30		0.20
Total assets	45,550		47,260		44,477		42,783		37,621
Debt and capital lease obligations, less current portion	5,780		6,261		6,463		6,732		7,515

_________________________________________________

(a) As further described in Note 2 of Notes to Consolidated Financial Statements, the results of operations of the Aruba Refinery are reported as discontinued operations for all years presented.

(b) We acquired an idled ethanol plant in the first quarter of 2014, and resumed production during the third quarter of 2014. The information presented in 2014 includes the results of operations for this plant commencing on its acquisition date.

(c) Includes the operations of our retail business prior to its separation from us on May 1, 2013, as further described in Note 3 of Notes to Consolidated Financial Statements.

(d) We acquired the Meraux Refinery on October 1, 2011 and the Pembroke Refinery on August 1, 2011. The information presented for 2011 includes the results of operations from these acquisitions commencing on their respective acquisition dates.

(e) We acquired three ethanol plants in the first quarter of 2010. The information presented for 2010 includes the results of operations of these plants commencing on their respective acquisition dates.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following review of our results of operations and financial condition should be read in conjunction with Item 1A, “Risk Factors,” and Item 8, “Financial Statements and Supplementary Data,” included in this report.

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

This report, including without limitation our disclosures 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 these capital investments on our results of operations;

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

• 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 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;

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• 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;

• 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 alternative fuels;

• the volatility in the market price of biofuel credits (primarily Renewable Identification Numbers (RINs) needed to comply with the U.S. federal Renewable Fuel Standard);

• 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 implemented under the California Global Warming Solutions Act (also known as AB 32), Quebec’s Regulation respecting the cap-and-trade system for greenhouse gas emission allowances (the Quebec cap-and-trade system), and the U.S. EPA’s 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;

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

• other factors generally described in the “Risk Factors” section included in Item 1A, “Risk Factors” in this report.

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.

24

OVERVIEW AND OUTLOOK

Overview

For the year ended December 31, 2014, we reported net income attributable to Valero stockholders from continuing operations of $3.7 billion, or $6.97 per share (assuming dilution), compared to $2.7 billion, or $4.96 per share (assuming dilution), for the year ended December 31, 2013. The increase of $980 million was due primarily to the increase of $1.9 billion in our operating income as shown in the table below. The increase in our operating income was partially offset by a $325 million nontaxable gain recorded in 2013 related to the disposition of our retained interest in CST, which is more fully described in Notes 3 and 11 of Notes to Consolidated Financial Statements.

Our operating income increased $1.9 billion from 2013 to 2014 as outlined by business segment in the following table (in millions):

	Year Ended December 31,
	2014			2013			Change
Operating income (loss) by business segment:
Refining	$	5,884		$	4,211		$	1,673
Ethanol	786			491			295
Retail	—			81			(81		)
Corporate	(768		)	(826		)	58
Total	$	5,902		$	3,957		$	1,945

The $1.7 billion increase in refining segment operating income for 2014 compared to 2013 was due to wider discounts for sweet and sour crude oils relative to Brent crude oil, higher throughput volumes in our U.S. Gulf Coast region, and higher margins on other refined products (e.g., petroleum coke and sulfur), partially offset by weaker distillate margins. Higher energy costs and depreciation expense between the periods also impacted our refining segment income. Our ethanol segment operating income increased $295 million in 2014 compared to 2013 due to lower corn feedstock costs and higher production volumes, partially offset by lower co-product prices and lower ethanol prices.

On May 1, 2013, we completed the separation of our retail business, by spinning off CST as an independent public company. Therefore, we did not have any retail segment operations in 2014, resulting in the $81 million decrease in retail segment operating income in 2014 compared to 2013.

Additional details and analysis of the changes in the operating income of our business segments and other components of net income attributable to Valero stockholders are provided below under “RESULTS OF OPERATIONS.”

25

Outlook

Energy markets and margins were volatile during 2014, especially in the latter part of the year, and we expect them to continue to be volatile in the near to mid-term. Below is a summary of factors that have impacted or may impact our results of operations during the first quarter of 2015:

• Discounts in the price of medium sour and heavy sour crude oils as compared to the price of Brent crude oil have widened since year end as producers of those crude oils have attempted to maintain market share in an oversupplied crude oil market.

• Discounts in the price of North American sweet crude oils as compared to the price of Brent crude oil are expected to increase due to a build in U.S. crude oil inventories, driven primarily by (i) increasing imports of medium sour and heavy sour crude oils, (ii) seasonal planned refinery maintenance, and (iii) a crude oil market structure where the future price is higher than the current price of crude oil, which indicates that the crude oil market is oversupplied.

• Refined product margins are expected to strengthen due to an increase in the demand for refined products and the impact on product inventories from refinery maintenance thus far in the first quarter of 2015.

• Ethanol margins are expected to remain relatively low as long as gasoline prices remain low.

• The market price of biofuel credits (primarily RINs) is expected to remain volatile during 2015.

• The cost to implement certain provisions of the AB 32 cap-and-trade system and low carbon fuel standard in California and the Quebec cap-and-trade system may be significant; however, we expect to recover the majority of these costs from our customers.

• A further decline in market prices of crude oil and refined products may negatively impact the carrying value of our inventories.

• The United Steelworkers union and the U.S. refining industry are currently in the process of collective bargaining and strikes have been called at 12 U.S. refineries. We have four refineries that could be targeted for a strike but none has been targeted at this time. Also note our disclosures in Item 1A, “Risk Factors” — Our business may be negatively affected by work stoppages, slowdowns or strikes by our employees, as well as new labor legislation issued by regulators.

26

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.

2014 Compared to 2013

Financial Highlights (a)

(millions of dollars, except per share amounts)

	Year Ended December 31,
	2014			2013 (b)			Change
Operating revenues	$	130,844		$	138,074		$	(7,230	)
Costs and expenses:
Cost of sales	118,141			127,316			(9,175		)
Operating expenses:
Refining	3,900			3,710			190
Retail	—			226			(226		)
Ethanol	487			387			100
General and administrative expenses	724			758			(34		)
Depreciation and amortization expense:
Refining	1,597			1,566			31
Retail	—			41			(41		)
Ethanol	49			45			4
Corporate	44			68			(24		)
Total costs and expenses	124,942			134,117			(9,175		)
Operating income	5,902			3,957			1,945
Gain on disposition of retained interest in CST Brands, Inc. (b)	—			325			(325		)
Other income, net	47			59			(12		)
Interest and debt expense, net of capitalized interest	(397		)	(365		)	(32		)
Income from continuing operations before income tax expense	5,552			3,976			1,576
Income tax expense	1,777			1,254			523
Income from continuing operations	3,775			2,722			1,053
Income (loss) from discontinued operations	(64		)	6			(70		)
Net income	3,711			2,728			983
Less: Net income attributable to noncontrolling interests	81			8			73
Net income attributable to Valero Energy Corporation stockholders	$	3,630		$	2,720		$	910
Net income attributable to Valero Energy Corporation stockholders:
Continuing operations	$	3,694		$	2,714		$	980
Discontinued operations	(64		)	6			(70		)
Total	$	3,630		$	2,720		$	910
Earnings per common share – assuming dilution:
Continuing operations	$	6.97		$	4.96		$	2.01
Discontinued operations	(0.12		)	0.01			(0.13		)
Total	$	6.85		$	4.97		$	1.88

________________

See note references on page 31.

27

Refining Operating Highlights (a)

(millions of dollars, except per barrel amounts)

	Year Ended December 31,
	2014		2013		Change
Refining:
Operating income	$	5,884	$	4,211	$	1,673
Throughput margin per barrel (c)	$	11.28	$	9.69	$	1.59
Operating costs per barrel:
Operating expenses	3.87		3.79		0.08
Depreciation and amortization expense	1.58		1.60		(0.02		)
Total operating costs per barrel	5.45		5.39		0.06
Operating income per barrel	$	5.83	$	4.30	$	1.53
Throughput volumes (thousand BPD):
Feedstocks:
Heavy sour crude oil	457		486		(29		)
Medium/light sour crude oil	466		466		—
Sweet crude oil	1,149		1,039		110
Residuals	230		282		(52		)
Other feedstocks	134		106		28
Total feedstocks	2,436		2,379		57
Blendstocks and other	329		303		26
Total throughput volumes	2,765		2,682		83
Yields (thousand BPD):
Gasolines and blendstocks	1,329		1,287		42
Distillates	1,047		984		63
Other products (d)	423		440		(17		)
Total yields	2,799		2,711		88

________________

See note references on page 31.

28

Refining Operating Highlights by Region (e)

(millions of dollars, except per barrel amounts)

	Year Ended December 31,
	2014		2013			Change
U.S. Gulf Coast (a):
Operating income	$	3,484	$	2,375		$	1,109
Throughput volumes (thousand BPD)	1,600		1,523			77
Throughput margin per barrel (c)	$	11.23	$	9.57		$	1.66
Operating costs per barrel:
Operating expenses	3.66		3.67			(0.01		)
Depreciation and amortization expense	1.60		1.63			(0.03		)
Total operating costs per barrel	5.26		5.30			(0.04		)
Operating income per barrel	$	5.97	$	4.27		$	1.70
U.S. Mid-Continent:
Operating income	$	1,358	$	1,293		$	65
Throughput volumes (thousand BPD)	446		435			11
Throughput margin per barrel (c)	$	13.85	$	13.37		$	0.48
Operating costs per barrel:
Operating expenses	3.90		3.58			0.32
Depreciation and amortization expense	1.61		1.64			(0.03		)
Total operating costs per barrel	5.51		5.22			0.29
Operating income per barrel	$	8.34	$	8.15		$	0.19
North Atlantic:
Operating income	$	971	$	570		$	401
Throughput volumes (thousand BPD)	457		459			(2		)
Throughput margin per barrel (c)	$	10.38	$	7.93		$	2.45
Operating costs per barrel:
Operating expenses	3.40		3.50			(0.10		)
Depreciation and amortization expense	1.16		1.03			0.13
Total operating costs per barrel	4.56		4.53			0.03
Operating income per barrel	$	5.82	$	3.40		$	2.42
U.S. West Coast:
Operating income (loss)	$	71	$	(27	)	$	98
Throughput volumes (thousand BPD)	262		265			(3		)
Throughput margin per barrel (c)	$	8.79	$	7.43		$	1.36
Operating costs per barrel:
Operating expenses	5.91		5.35			0.56
Depreciation and amortization expense	2.14		2.35			(0.21		)
Total operating costs per barrel	8.05		7.70			0.35
Operating income (loss) per barrel	$	0.74	$	(0.27	)	$	1.01
Total refining operating income	$	5,884	$	4,211		$	1,673

________________

See note references on page 31.

29

Average Market Reference Prices and Differentials

(dollars per barrel, except as noted)

	Year Ended December 31,
	2014		2013			Change
Feedstocks:
Brent crude oil	$	99.57	$	108.74		(9.17	)
Brent less West Texas Intermediate (WTI) crude oil	6.40		10.80			(4.40	)
Brent less Alaska North Slope (ANS) crude oil	1.73		1.00			0.73
Brent less Louisiana Light Sweet (LLS) crude oil	2.79		0.41			2.38
Brent less Mars crude oil	6.75		5.52			1.23
Brent less Maya crude oil	13.73		11.31			2.42
LLS crude oil	96.78		108.33			(11.55	)
LLS less Mars crude oil	3.96		5.11			(1.15	)
LLS less Maya crude oil	10.94		10.90			0.04
WTI crude oil	93.17		97.94			(4.77	)
Natural gas (dollars per million British thermal units (MMBtu))	4.36		3.69			0.67
Products:
U.S. Gulf Coast:
CBOB gasoline less Brent	3.54		2.69			0.85
Ultra-low-sulfur diesel less Brent	14.28		15.95			(1.67	)
Propylene less Brent	5.57		(2.72		)	8.29
CBOB gasoline less LLS	6.33		3.10			3.23
Ultra-low-sulfur diesel less LLS	17.07		16.36			0.71
Propylene less LLS	8.36		(2.31		)	10.67
U.S. Mid-Continent:
CBOB gasoline less WTI	12.28		16.77			(4.49	)
Ultra-low-sulfur diesel less WTI	24.05		28.33			(4.28	)
North Atlantic:
CBOB gasoline less Brent	9.07		8.50			0.57
Ultra-low-sulfur diesel less Brent	18.25		17.84			0.41
U.S. West Coast:
CARBOB 87 gasoline less ANS	13.40		12.69			0.71
CARB diesel less ANS	19.14		18.83			0.31
CARBOB 87 gasoline less WTI	18.07		22.49			(4.42	)
CARB diesel less WTI	23.81		28.63			(4.82	)
New York Harbor corn crush (dollars per gallon)	0.85		0.42			0.43

________________

See note references on page 31.

30

Ethanol and Retail Operating Highlights

(millions of dollars, except per gallon amounts)

	Year Ended December 31,
	2014		2013		Change
Ethanol:
Operating income	$	786	$	491	$	295
Production (thousand gallons per day)	3,422		3,294		128
Gross margin per gallon of production (c)	$	1.06	$	0.77	$	0.29
Operating costs per gallon of production:
Operating expenses	0.39		0.32		0.07
Depreciation and amortization expense	0.04		0.04		—
Total operating costs per gallon of production	0.43		0.36		0.07
Operating income per gallon of production	$	0.63	$	0.41	$	0.22
Retail:
Operating income	$	—	$	81	$	(81	)

________________

See note references on page 31.

The following notes relate to references on pages 27 through 31.

(a) In May 2014, we abandoned our Aruba Refinery, except for the associated crude oil and refined products terminal assets that we continue to operate. As a result, the refinery’s results of operations have been presented as discontinued operations and the operating highlights for the refining segment and the U.S. Gulf Coast region exclude the Aruba Refinery for all years presented. This transaction is more fully described in Note 2 of Notes to Consolidated Financial Statements.

(b) On May 1, 2013, we completed the separation of our retail business. As a result and effective May 1, 2013, our results of operations no longer include those of CST, our former retail business. 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. This transaction is more fully discussed in Note 3 of Notes to Consolidated Financial Statements.

(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, sulfur, 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, 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.

31

General

Operating revenues decreased $7.2 billion (or 5 percent) for the year ended December 31, 2014 compared to the year ended December 31, 2013. This decrease was primarily due to a decrease in refined product prices in all of our regions. Despite the decline in operating revenues, operating income increased $1.9 billion for the year ended December 31, 2014 compared to the year ended December 31, 2013 due primarily to a $1.7 billion increase in refining segment operating income, a $295 million increase in ethanol segment operating income, and a $34 million decrease in general and administrative expenses, partially offset by an $81 million decrease in retail segment operating income due to the spin-off of our retail business in 2013 as mentioned previously. 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 $1.7 billion from $4.2 billion for the year ended December 31, 2013 to $5.9 billion for the year ended December 31, 2014, due primarily to a $1.9 billion increase in refining margin, partially offset by a $190 million increase in operating expenses and a $31 million increase in depreciation and amortization expense.

Refining margin increased $1.9 billion (a $1.59 per barrel increase) in 2014 compared to 2013, due primarily to the following:

• Higher discounts on light sweet crude oils and sour crude oils - Because the market prices for refined products generally track 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. For the year ended December 31, 2014, the discount in the price of some light sweet crude oils and sour crude oils compared to the price of Brent crude oil widened. For example, LLS crude oil processed in our U.S. Gulf Coast region, which is a light sweet crude oil, sold at a discount of $2.79 per barrel to Brent crude oil for the year ended December 31, 2014 compared to $0.41 per barrel for the year ended December 31, 2013, representing a favorable increase of $2.38 per barrel. Another example is Maya crude oil, a sour crude oil, which sold at a discount of $13.73 per barrel to Brent crude oil during the year ended December 31, 2014 compared to a discount of $11.31 per barrel during the year ended December 31, 2013, representing a favorable increase of $2.42 per barrel. We estimate that the discounts for light sweet crude oils and sour crude oils that we processed during the year ended December 31, 2014 had a positive impact to our refining margin of approximately $680 million and $800 million, respectively.

• Higher throughput volumes - Refining throughput volumes increased 83,000 BPD for the year ended December 31, 2014 compared to the year ended December 31, 2013. We estimate that the increase in refining throughput volumes had a positive impact on our refining margin of approximately $340 million.

• Lower costs of biofuel credits - As more fully described in Note 21 of Notes to Consolidated Financial Statements, we 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.) decreased by $145 million from $517 million in 2013 to $372 million in 2014. This decrease was due primarily to a reduction in the market price of RINs between the two years.

• Increase in other refinery products margins - We experienced an increase in the margins of other refinery products relative to Brent crude oil, such as petroleum coke and sulfur during 2014 compared to 2013. Margins for other refinery products were higher during 2014 due to the decrease in the cost of crude oils during the year compared to 2013. For example, the benchmark price of Brent crude oil was $99.57 per barrel for the year ended December 31, 2014 compared to $108.74 for the year ended December 31,

32

2013. We estimate that the increase in other refinery products margins during the year ended December 31, 2014 compared to the year ended December 31, 2013 had a positive impact to our refining margin of approximately $430 million.

• Decrease in distillate margins - We experienced a decrease in distillate margins in our U.S. Gulf Coastregion primarily due to the decrease in refined product prices . For example, the Brent-based benchmark reference margin for U.S. Gulf Coast ultra-low sulfur diesel was $14.28 per barrel for the year ended December 31, 2014 compared to $15.95 per barrel for the year ended December 31, 2013, representing an unfavorable decrease of $1.67 per barrel. We estimate that the decline in distillate margins during the year ended December 31, 2014 compared to the year ended December 31, 2013 had a negative impact to our refining margin of approximately $400 million.

The increase of $190 million in operating expenses was primarily due to a $128 million increase in energy costs related to higher natural gas prices ($4.36 per MMBtu for the year ended December 31, 2014 compared to $3.69 per MMBtu for the year ended December 31, 2013) and a $22 million increase in maintenance expense primarily related to higher levels of routine maintenance activities during the year ended December 31, 2014.

The increase of $31 million in depreciation and amortization expense was primarily due to additional depreciation expense of $25 million associated with the new hydrocracker unit at our St. Charles Refinery that began operating in July 2013.

Ethanol

Ethanol segment operating income was $786 million for the year ended December 31, 2014 compared to $491 million for the year ended December 31, 2013. The $295 million increase in operating income was due primarily to a $399 million increase in gross margin (a $0.29 per gallon increase), partially offset by a $100 million increase in operating expenses.

Ethanol gross margin per gallon increased to $1.06 per gallon for the year ended December 31, 2014 from $0.77 per gallon for the year ended December 31, 2013 due primarily to the following:

• Lower corn prices - Corn prices were lower in 2014 due to higher corn inventories in 2014 compared to 2013, which resulted from a higher yielding harvest in 2013 compared to the drought-stricken harvest of 2012. For example, the Chicago Board of Trade corn price was $4.16 per bushel in 2014 compared to $5.80 per bushel in 2013. The decrease in the price of corn that we processed during 2014 favorably impacted our ethanol margin by approximately $910 million.

• Lower ethanol prices - Ethanol prices were lower in 2014 due to higher ethanol inventories resulting from higher industry run rates in 2014 as compared to 2013. The decrease in crude oil and gasoline prices in 2014 also contributed to the decrease in ethanol prices. For example, the New York Harbor ethanol price was $2.37 per gallon in 2014 compared to $2.53 per gallon in 2013. The decrease in the price of ethanol per gallon during 2014 had an unfavorable impact to our ethanol margin of approximately $260 million.

• Lower co-product prices - The decrease in corn prices in 2014 had a negative effect on the prices we received for corn-related ethanol co-products, such as distillers grains and corn oil. The decrease in co-products prices had an unfavorable impact to our ethanol segment margin of approximately $250 million.

33

The $100 million increase in operating expenses during 2014 compared to 2013 was partially due to $22 million in operating expenses of the Mount Vernon plant acquired in March 2014. The remaining increase of $78 million was primarily due to increased energy costs and chemical costs. The increase in energy costs of $57 million was due primarily to the severe winter weather in the U.S. in the first quarter of 2014 that caused a significant increase in regional natural gas prices combined with higher use of natural gas due to the increase in production volumes. The increase in chemical costs of $16 million was due to higher production volumes.

Corporate Expenses and Other

General and administrative expenses decreased $34 million from the year ended December 31, 2013 to the year ended December 31, 2014 primarily due to $30 million of transaction costs related to the separation of our retail business on May 1, 2013 that were recorded in 2013 and did not recur.

Depreciation and amortization expense decreased $24 million primarily due to a $20 million loss on the sale of certain corporate property in 2013 that was reflected in depreciation and amortization expense.

“Interest and debt expense, net of capitalized interest” for the year ended December 31, 2014 increased $32 million from the year ended December 31, 2013. This increase was primarily due to a $48 million decrease in capitalized interest due to the completion of several large capital projects during 2013, including the new hydrocracker at our St. Charles Refinery, partially offset by a $20 million favorable impact from a decrease in average borrowings.

Income tax expense increased $523 million from the year ended December 31, 2013 to the year ended December 31, 2014 due to higher income from continuing operations before income tax expense. The effective rate for both years is lower than the U.S. statutory rate because income from continuing operations from our international operations was taxed at statutory rates that were lower than in the U.S. and due to a higher benefit from our U.S. manufacturing deduction.

Income (loss) from discontinued operations for the year ended December 31, 2014 includes expenses of $59 million for an asset retirement obligation and $4 million for certain contractual obligations associated with our decision in May 2014 to abandon the Aruba Refinery, as further described in Note 2 of Notes to Consolidated Financial Statements.

34

2013 Compared to 2012

Financial Highlights (a)

(millions of dollars, except per share amounts)

	Year Ended December 31,
	2013 (b)			2012			Change
Operating revenues	$	138,074		$	138,393		$	(319	)
Costs and expenses:
Cost of sales	127,316			126,485			831
Operating expenses:
Refining	3,710			3,513			197
Retail	226			686			(460		)
Ethanol	387			332			55
General and administrative expenses	758			698			60
Depreciation and amortization expense:
Refining	1,566			1,345			221
Retail	41			119			(78		)
Ethanol	45			42			3
Corporate	68			43			25
Asset impairment losses (c)	—			86			(86		)
Total costs and expenses	134,117			133,349			768
Operating income	3,957			5,044			(1,087		)
Gain on disposition of retained interest in CST Brands, Inc. (b)	325			—			325
Other income, net	59			10			49
Interest and debt expense, net of capitalized interest	(365		)	(314		)	(51		)
Income from continuing operations before income tax expense	3,976			4,740			(764		)
Income tax expense	1,254			1,626			(372		)
Income from continuing operations	2,722			3,114			(392		)
Income (loss) from discontinued operations	6			(1,034		)	1,040
Net income	2,728			2,080			648
Less: Net income (loss) attributable to noncontrolling interest	8			(3		)	11
Net income attributable to Valero Energy Corporation stockholders	$	2,720		$	2,083		$	637
Net income attributable to Valero Energy Corporation stockholders:
Continuing operations	$	2,714		$	3,117		$	(403	)
Discontinued operations	6			(1,034		)	1,040
Total	$	2,720		$	2,083		$	637
Earnings per common share – assuming dilution:
Continuing operations	$	4.96		$	5.61		$	(0.65	)
Discontinued operations	0.01			(1.86		)	1.87
Total	$	4.97		$	3.75		$	1.22

________________

See note references on page 39.

35

Refining Operating Highlights (a)

(millions of dollars, except per barrel amounts)

	Year Ended December 31,
	2013		2012		Change
Refining (c):
Operating income	$	4,211	$	5,484	$	(1,273	)
Throughput margin per barrel (e)	$	9.69	$	11.00	$	(1.31	)
Operating costs per barrel:
Operating expenses	3.79		3.71		0.08
Depreciation and amortization expense	1.60		1.42		0.18
Total operating costs per barrel	5.39		5.13		0.26
Operating income per barrel	$	4.30	$	5.87	$	(1.57	)
Throughput volumes (thousand BPD):
Feedstocks:
Heavy sour crude oil	486		431		55
Medium/light sour crude oil	466		546		(80		)
Sweet crude oil	1,039		991		48
Residuals	282		199		83
Other feedstocks	106		118		(12		)
Total feedstocks	2,379		2,285		94
Blendstocks and other	303		299		4
Total throughput volumes	2,682		2,584		98
Yields (thousand BPD):
Gasolines and blendstocks	1,287		1,249		38
Distillates	984		909		75
Other products (f)	440		451		(11		)
Total yields	2,711		2,609		102

________________

See note references on page 39.

36

Refining Operating Highlights by Region (g)

(millions of dollars, except per barrel amounts)

	Year Ended December 31,
	2013			2012			Change
U.S. Gulf Coast (a) (c):
Operating income	$	2,375		$	2,606		$	(231	)
Throughput volumes (thousand BPD)	1,523			1,459			64
Throughput margin per barrel (e)	$	9.57		$	9.71		$	(0.14	)
Operating costs per barrel:
Operating expenses	3.67			3.41			0.26
Depreciation and amortization expense	1.63			1.42			0.21
Total operating costs per barrel	5.30			4.83			0.47
Operating income per barrel	$	4.27		$	4.88		$	(0.61	)
U.S. Mid-Continent:
Operating income	$	1,293		$	2,044		$	(751	)
Throughput volumes (thousand BPD)	435			430			5
Throughput margin per barrel (e)	$	13.37		$	18.49		$	(5.12	)
Operating costs per barrel:
Operating expenses	3.58			4.02			(0.44		)
Depreciation and amortization expense	1.64			1.48			0.16
Total operating costs per barrel	5.22			5.50			(0.28		)
Operating income per barrel	$	8.15		$	12.99		$	(4.84	)
North Atlantic:
Operating income	$	570		$	752		$	(182	)
Throughput volumes (thousand BPD)	459			428			31
Throughput margin per barrel (e)	$	7.93		$	9.24		$	(1.31	)
Operating costs per barrel:
Operating expenses	3.50			3.59			(0.09		)
Depreciation and amortization expense	1.03			0.85			0.18
Total operating costs per barrel	4.53			4.44			0.09
Operating income per barrel	$	3.40		$	4.80		$	(1.40	)
U.S. West Coast:
Operating income (loss)	$	(27	)	$	147		$	(174	)
Throughput volumes (thousand BPD)	265			267			(2		)
Throughput margin per barrel (e)	$	7.43		$	8.84		$	(1.41	)
Operating costs per barrel:
Operating expenses	5.35			5.09			0.26
Depreciation and amortization expense	2.35			2.25			0.10
Total operating costs per barrel	7.70			7.34			0.36
Operating income (loss) per barrel	$	(0.27	)	$	1.50		$	(1.77	)
Operating income for regions above	$	4,211		$	5,549		$	(1,338	)
Asset impairment loss applicable to refining (c)	—			(65		)	65
Total refining operating income	$	4,211		$	5,484		$	(1,273	)

________________

See note references on page 39.

37

Average Market Reference Prices and Differentials

(dollars per barrel, except as noted)

	Year Ended December 31,
	2013			2012			Change
Feedstocks:
Brent crude oil	$	108.74		$	111.70		$	(2.96	)
Brent less WTI crude oil	10.80			17.55			(6.75		)
Brent less ANS crude oil	1.00			1.08			(0.08		)
Brent less LLS crude oil	0.41			(0.91		)	1.32
Brent less Mars crude oil	5.52			3.97			1.55
Brent less Maya crude oil	11.31			12.06			(0.75		)
LLS crude oil	108.33			112.61			(4.28		)
LLS less Mars crude oil	5.11			4.88			0.23
LLS less Maya crude oil	10.90			12.97			(2.07		)
WTI crude oil	97.94			94.15			3.79
Natural gas (dollars per million British thermal units (MMBtu))	3.69			2.71			0.98
Products:
U.S. Gulf Coast:
CBOB gasoline less Brent	2.69			4.89			(2.20		)
Ultra-low-sulfur diesel less Brent	15.95			16.48			(0.53		)
Propylene less Brent	(2.72		)	(22.38		)	19.66
CBOB gasoline less LLS	3.10			3.98			(0.88		)
Ultra-low-sulfur diesel less LLS	16.36			15.57			0.79
Propylene less LLS	(2.31		)	(23.29		)	20.98
U.S. Mid-Continent:
CBOB gasoline less WTI (d)	16.77			25.40			(8.63		)
Ultra-low-sulfur diesel less WTI	28.33			34.96			(6.63		)
North Atlantic:
CBOB gasoline less Brent	8.50			10.66			(2.16		)
Ultra-low-sulfur diesel less Brent	17.84			19.06			(1.22		)
U.S. West Coast:
CARBOB 87 gasoline less ANS	12.69			15.39			(2.70		)
CARB diesel less ANS	18.83			19.93			(1.10		)
CARBOB 87 gasoline less WTI	22.49			31.86			(9.37		)
CARB diesel less WTI	28.63			36.40			(7.77		)
New York Harbor corn crush (dollars per gallon)	0.42			(0.15		)	0.57

________________

See note references on page 39.

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Ethanol and Retail Operating Highlights

(millions of dollars, except per gallon amounts)

	Year Ended December 31,
	2013		2012			Change
Ethanol:
Operating income (loss)	$	491	$	(47	)	$	538
Production (thousand gallons per day)	3,294		2,967			327
Gross margin per gallon of production (f)	$	0.77	$	0.30		$	0.47
Operating costs per gallon of production:
Operating expenses	0.32		0.30			0.02
Depreciation and amortization expense	0.04		0.04			—
Total operating costs per gallon of production	0.36		0.34			0.02
Operating income (loss) per gallon of production	$	0.41	$	(0.04	)	$	0.45
Retail:
Operating income (b) (d)	$	81	$	348		$	(267	)

________________

See note references on page 39.

The following notes relate to references on pages 35 through 39.

(a) In May 2014, we abandoned our Aruba Refinery, except for the associated crude oil and refined products terminal assets that we continue to operate. As a result, the refinery’s results of operations have been presented as discontinued operations and the operating highlights for the refining segment and the U.S. Gulf Coast region exclude the Aruba Refinery for all years presented.This transaction is more fully described in Note 2 of Notes to Consolidated Financial Statements.

(b) On May 1, 2013, we completed the separation of our retail business. As a result and effective May 1, 2013, our results of operations no longer include those of CST, our former retail business. 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. This transaction is more fully discussed in Note 3 of Notes to Consolidated Financial Statements.

(c) Asset impairment losses for the year ended December 31, 2012 include asset impairment losses of $65 million ($42 million after taxes) related to equipment associated with permanently cancelled capital project at several of our refineries and $21 million ($13 million after taxes) related to certain retail stores in 2012 that we owned prior to the separation of our retail business. The total asset impairment losses of $86 million are reflected in the operating income of the respective segments for the year ended December 31, 2012, but the asset impairment losses associated with the cancelled capital projects are excluded from the operating costs per barrel and operating income per barrel for the refining segment and the U.S. Gulf Coast region.

(d) U.S. Mid-Continent product specifications for gasoline changed on September 16, 2013 from Conventional 87 to CBOB gasoline. Therefore, average market reference prices for comparable products meeting the new specifications required in this region are now being provided for all years presented.

(e) 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.

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

(g) The regions reflected herein contain the following refineries: the U.S. Gulf Coast region includes Corpus Christi East, Corpus Christi West, Houston, Meraux, Port Arthur, St. Charles, Texas City, and Three Rivers Refineries;

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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 $319 million for the year ended December 31, 2013 compared to the year ended December 31, 2012 primarily as a result of lower average refined product prices between the two years related to our refining segment operations. In addition, operating income decreased $1.1 billion for the year ended December 31, 2013 compared to the year ended December 31, 2012 primarily due to a $1.3 billion decrease in refining segment operating income, a $267 million decrease in retail segment operating income, and a $60 million increase in general and administrative expenses, partially offset by a $538 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.

Refining

Refining segment operating income decreased $1.3 billion from $5.5 billion for the year ended December 31, 2012 to $4.2 billion for the year ended December 31, 2013. The decrease in refining segment operating income was primarily due to an $855 million decrease in refining margin, a $221 million increase in depreciation and amortization expense, and a $197 million increase in operating expenses.

Refining margin decreased $855 million (a $1.31 per barrel decrease) in 2013 compared to 2012, primarily due to the following:

• Decrease in gasoline margins - We experienced a decline in gasoline margins throughout all of our regions during 2013 compared to 2012. For example, the WTI-based benchmark reference margin for U.S. Mid-Continent CBOB gasoline was $16.77 per barrel during 2013 compared to $25.40 per barrel during 2012, representing an unfavorable decrease of $8.63 per barrel. We estimate that the decline in gasoline margins per barrel during 2013 compared to 2012 had a negative impact to our refining margin of approximately $790 million for all refining regions.

• Lower discounts on WTI-type crude oils in the U.S. Mid-Continent region - 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. In 2013, the discount in the price of WTI compared to the price of Brent crude oil narrowed compared to 2012. WTI crude oil sold at a discount of $10.80 per barrel to Brent crude oil in 2013 compared to a discount of $17.55 per barrel in 2012, representing an unfavorable decrease of $6.75 per barrel. Therefore, the lower discount on WTI-type crude oils that we processed negatively impacted our refining margin. We estimate that the decrease in the discounts for WTI-type crude oils that we processed during 2013 reduced our refining margin by approximately $640 million.

• Higher costs of biofuel credits - As more fully described in Note 21 of 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 $267 million from $250 million in 2012 to $517 million in 2013. This increase was due to an increase in the market price of RINs caused by an expectation in the market of a shortage in available RINs.

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• Increase in distillate margins - Despite lower distillate prices throughout all of our regions during 2013 compared to 2012, we experienced an increase in distillate margins during 2013 compared to 2012 as a result of increased production volumes of distillate between the years. This production volume increase of 75,000 barrels per day was primarily due to the start up of our new hydrocracker units at our Port Arthur and St. Charles Refineries, resulting in a $370 million increase in our refining margin in 2013.

• Higher discounts on medium sour crude oils - In 2013, the discount in the price of mediumsour crude oils compared to the price of Brent crude oil widened. For example, Mars crude oil, which is a medium sour crude oil, sold at a discount of $5.52 per barrel to Brent crude oil in 2013 compared to a discount of $3.97 per barrel during 2012, representing a favorable increase of $1.55 per barrel. Therefore, the higher discounts on the medium sour crude oils we processed favorably impacted our refining margin. We estimate that the increase in the discounts for medium sour crude oils that we processed during 2013 had a favorable impact to our refining margin of approximately $260 million.

The increase of $197 million in operating expenses was primarily due to a $185 million increase in energy costs related to higher natural gas costs and higher use of natural gas associated with our new hydrocracker units at our Port Arthur and St.Charles Refineries.

The increase of $221 million in depreciation and amortization expense was due to additional depreciation expense primarily associated with our new hydrocracker units at our Port Arthur and St. Charles Refineries that began operating in late 2012 and the third quarter of 2013, respectively, and an increase in refinery turnaround and catalyst amortization.

Retail

Retail segment operating income was $81 million for the year ended December 31, 2013 compared to $348 million for the year December 31, 2012. The $267 million decrease was primarily due to the separation of our retail business on May 1, 2013, which is more fully described in Note 3 of Notes to Consolidated Financial Statements. As a result of the separation, retail segment operating income for 2013 reflects the operations of our former retail business for only the first four months of 2013.

Ethanol

Ethanol segment operating income was $491 million for the year ended December 31, 2013 compared to an operating loss of $47 million for the year ended December 31, 2012. The $538 million increase in operating income was primarily due to a $596 million increase in gross margin, partially offset by a $55 million increase in operating expenses.

Ethanol gross margin per gallon increased $0.47 per gallon from $0.30 per gallon in 2012 to $0.77 per gallon in 2013 due to the following:

• Lower corn prices - Corn prices were lower in 2013 as many of the corn-producing regions of the U.S. Mid-Continent recovered from a drought that began in the second quarter of 2012. For example, the Chicago Board of Trade corn price was $5.80 per bushel in 2013 compared to $6.94 per bushel in 2012. The decrease in the price of corn that we processed during 2013 favorably impacted our ethanol margin by approximately $290 million.

• Higher ethanol prices - Ethanol prices were higher in 2013 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 ethanol gross margin per gallon, which was due to higher corn prices primarily caused by the drought in the corn-producing regions of the U.S. Mid-Continent

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described above. By mid-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. For example, the New York Harbor ethanol price was $2.53 per gallon in 2013 compared to $2.37 per gallon in 2012. The increase in the price of ethanol per gallon during 2013 had a favorable impact to our ethanol margin of approximately $160 million.

• Increased production volumes - Ethanol margin also improved due to increased production volumes between the years of 327,000 gallons per day in 2013 compared to 2012 in response to the improved ethanol gross margin per gallon. The increase in production volumes during 2013 had a favorable impact to our ethanol gross margin of approximately $85 million.

The $55 million increase in operating expenses during 2013 compared to 2012 was primarily due to a $40 million increase in energy costs compared to 2012 resulting from higher natural gas prices during 2013 and a $12 million year over year increase in chemical costs due to higher production.

Corporate Expenses and Other

General and administrative expenses increased $60 million from the year ended December 31, 2012 to the year ended December 31, 2013 primarily due to $52 million of environmental and legal reserve adjustments that were recorded during 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 an $11 million reduction in insurance reserves during 2013. The increase in corporate depreciation and amortization expense was primarily due to $20 million of losses incurred on the sale of certain corporate property.

During the year ended December 31, 2013, we recognized a nontaxable gain of $325 million, or $0.60 per share, related to the disposition of our retained interest in CST, which is more fully described in Notes 3 and 11 of Notes to Consolidated Financial Statements.

“Interest and debt expense, net of capitalized interest” for the year ended December 31, 2013 increased $51 million from the year ended December 31, 2012. This increase was primarily due to a $102 million decrease in capitalized interest due to completion of several large capital projects, including the new hydrocrackers at our Port Arthur and St. Charles Refineries, offset by a $44 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.

Income tax expense decreased $372 million from the year ended December 31, 2012 to the year ended December 31, 2013. The variation in the customary relationship between income tax expense and income from continuing operations before income tax expense for the year ended December 31, 2013 was primarily due to the nontaxable gain on the disposition of our retained interest in CST.

Loss from discontinued operations for the year ended December 31, 2012 represents the results of operations of the Aruba Refinery, which was abandoned in May 2014, including an asset impairment loss of $928 million as discussed in Note 2 of Notes to Consolidated Financial Statements.

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LIQUIDITY AND CAPITAL RESOURCES

Cash Flows for the Year Ended December 31, 2014

Net cash provided by operating activities for the year ended December 31, 2014 was $4.2 billion compared to $5.6 billion for the year ended December 31, 2013. The decrease in net cash provided by operating activities was due primarily to a $2.7 billion unfavorable effect from changes in working capital between the periods partially offset by the increase in income from continuing operations discussed above under “RESULTS OF OPERATIONS.” The changes in cash provided by or used for working capital during the years ended December 31, 2014 and 2013 are shown in Note 19 of Notes to Consolidated Financial Statements.

The net cash provided by operating activities during the year ended December 31, 2014, along with$603 million from available cash on hand, was used mainly to:

• fund $2.8 billion of capital expenditures and deferred turnaround and catalyst costs;

• make a scheduled long-term note repayment of $200 million;

• purchase common stock for treasury of $1.3 billion; and

• pay common stock dividends of $554 million.

Cash Flows for the Year Ended December 31, 2013

Net cash provided by operating activities for the year ended December 31, 2013 was $5.6 billion compared to $5.3 billion for the year ended December 31, 2012. Changes in cash provided by or used for working capital during the years ended December 31, 2013 and 2012 are shown in Note 19 of Notes to Consolidated Financial Statements.

The net cash generated from operating activities during the year ended December 31, 2013 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), and $525 million of proceeds on short-term debt related to the disposition of our retained interest in CST were used mainly to:

• fund $2.8 billion of capital expenditures and deferred turnaround and catalyst costs;

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

• make a short-term debt repayment of $58 million;

• purchase common stock for treasury of $928 million;

• pay common stock dividends of $462 million; and

• increase available cash on hand by $2.2 billion.

In addition, VLP completed its initial public offering of common units for net proceeds of $369 million. Because we consolidate VLP’s financial statements, the total cash reported by us also increased by these net proceeds; however, such proceeds can only be used by VLP for its purposes.

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.

43

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.

For 2015, we expect to incur approximately $1.95 billion for capital expenditures and approximately $700 million for deferred turnaround and catalyst costs. The capital expenditure estimate excludes expenditures related to potential strategic acquisitions and joint venture arrangements. We continuously evaluate our capital budget and make changes as conditions warrant.

We hold an option until January 2016 to purchase a 50 percent interest in the Diamond Pipeline project, a 440-mile, 20-inch crude oil pipeline that is projected to provide capacity of up to 200,000 BPD of domestic sweet crude oil from the Plains Cushing, Oklahoma terminal to our Memphis Refinery. The Diamond Pipeline project is currently being constructed by a third party for an estimated $900 million and is expected to be completed in 2017.

Contractual Obligations

Our contractual obligations as of December 31, 2014 are summarized below (in millions).

	Payments Due by Period
	2015		2016		2017		2018		2019		Thereafter		Total
Debt and capital lease obligations (including interest on capital lease obligations)	$	609	$	8	$	956	$	6	$	756	$	4,092	$	6,427
Operating lease obligations	314		229		159		131		75		275		1,183
Purchase obligations	17,929		2,475		1,205		769		366		4,269		27,013
Other long-term liabilities	—		159		144		145		139		1,352		1,939
Total	$	18,852	$	2,871	$	2,464	$	1,051	$	1,336	$	9,988	$	36,562

Debt and Capital Lease Obligations

In February 2015, we made a scheduled debt repayment of $400 million related to our 4.5% senior notes.

As of December 31, 2014, 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 December 2014, the actual availability under the facility fell below the facility borrowing capacity to $1.4 billion primarily due to a decline in eligible trade receivables as a result of a decrease in the latter part of 2014 in the market prices of the finished products that we produce. As of December 31, 2014, the amount of eligible receivables sold was $100 million. All amounts outstanding under this facility are reflected as debt.

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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 by the ratings agencies, 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 (stable 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.

Operating Lease Obligations

Our operating lease obligations include leases for land, office facilities and equipment, transportation equipment, time charters for ocean-going tankers and coastal vessels, dock facilities, and various facilities and equipment used in the storage, transportation, production, and sale of refinery feedstocks, refined products, and corn inventories. Operating lease obligations include all operating leases that have initial or remaining noncancelable terms in excess of one year, and are not reduced by minimum rentals to be received by us under subleases.

Purchase Obligations

A purchase obligation is an enforceable and legally binding agreement to purchase goods or services that specifies significant terms, including (i) fixed or minimum quantities to be purchased, (ii) fixed, minimum, or variable price provisions, and (iii) the approximate timing of the transaction. We have various purchase obligations including industrial gas and chemical supply arrangements (such as hydrogen supply arrangements), crude oil and other feedstock supply arrangements, and various throughput and terminalling agreements. We enter into these contracts to ensure an adequate supply of utilities and feedstock and adequate storage capacity to operate our refineries. Substantially all of our purchase obligations are based on market prices or adjustments based on market indices. Certain of these purchase obligations include fixed or minimum volume requirements, while others are based on our usage requirements. The purchase obligation amounts shown in the table above include both short- and long-term obligations and are based on (a) fixed or minimum quantities to be purchased and (b) fixed or estimated prices to be paid based on current market conditions. Purchase obligations decreased from 2013 to 2014 primarily because of a decline in crude oil and refined product prices.

Other Long-term Liabilities

Our other long-term liabilities are described in Note 10 of Notes to Consolidated Financial Statements. For purposes of reflecting amounts for other long-term liabilities in the table above, we made our best estimate of expected payments for each type of liability based on information available as of December 31, 2014.

45

Other Commercial Commitments

As of December 31, 2014, 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 2015	$	56
Revolver	$	3,000	November 2018	$	54
VLP Revolver	$	300	December 2018	$	—
Canadian Revolver	C$	50	November 2015	C$	10

As of December 31, 2014, we had no amounts borrowed under our revolving credit facilities. The letters of credit outstanding as of December 31, 2014 expire in 2015 through 2017.

Off-Balance Sheet Arrangements

We have not entered into any transactions, agreements, or other contractual arrangements that would result in off-balance sheet liabilities.

Other Matters Impacting Liquidity and Capital Resources

Stock Purchase Programs

As of December 31, 2014, we have approvals under our $3 billion common stock purchase program to purchase approximately $1.5 billion of our common stock, but we have no obligation to make purchases under this program. Year to date through February 20, 2015, we have purchased one million shares for $57 million under this stock purchase program.

Pension Plan Funding

We plan to contribute approximately $47 million to our pension plans and $20 million to our other postretirement benefit plans during 2015.

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 as previously discussed above in “OUTLOOK.” In addition, any major upgrades in any of our operating facilities could require material additional expenditures to comply with environmental laws and regulations. See Notes10 and 12 of Notes to Consolidated Financial Statements for a further discussion of our environmental matters.

Tax Matters

During the year ended December31, 2014, we paid $1.6 billion in income taxes, of which $400 million related to 2013 that was recorded in income taxes payable as of December 31, 2013. The payments made for the year ended December31, 2014 exceeded income taxes paid for 2013 by $800 million. The increase in income taxes paid in 2014 is due in part to higher income from continuing operations before income tax expense. Although the amount of cash required to pay our 2014 income taxes increased compared to recent years, we generated and expect to continue generating sufficient cash from operations to make our tax payments as they become due.

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The Internal Revenue Service (IRS) has ongoing tax audits related to our U.S. federal tax returns from 2004 through 2011, and we have received Revenue Agent Reports (RARs) in connection with the audits for tax years 2004 through 2009. We are vigorously contesting certain tax positions and assertions included in the RARs and continue to make significant progress in resolving certain of these matters with the IRS. During the year ended December 31, 2014, we settled the audit related to our 2002 and 2003 tax years and the audit related to a group of our subsidiaries for their 2004 and 2005 tax years consistent with the recorded amounts of uncertain tax position liabilities associated with those audits. In addition, we expect to settle our audits for tax years 2004 through 2007 within the next 12 months and we believe they will be settled for amounts that do not exceed the recorded amounts of uncertain tax position liabilities associated with those audits. As a result, we have classified a portion of our uncertain tax position liabilities as a current liability. As of December 31, 2014, the total amount of uncertain tax position liabilities, including related penalties and interest, was $484 million, with $168 million reflected as a current liability in income taxes payable and $316 million reflected in other long-term liabilities. 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, as further discussed in Note 16 of Notes to Consolidated Financial Statements. 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 December 31, 2014, $738 million of our cash and temporary cash investments was held by our international subsidiaries.

Emissions Allowances and Cap-and-Trade

The cost to implement certain provisions of the AB 32 cap-and-trade system and low carbon fuel standard in California and the Quebec cap-and-trade system may be significant; however, we expect to recover the majority of these costs from our customers.

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.

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NEW ACCOUNTING PRONOUNCEMENTS

As discussed in Note 1 of Notes to Consolidated Financial Statements, certain new financial accounting pronouncements will become effective for our financial statements in the future. The adoption of these pronouncements is not expected to have a material effect on our financial statements, except as otherwise disclosed.

CRITICAL ACCOUNTING POLICIES INVOLVING CRITICAL ACCOUNTING ESTIMATES

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 the financial statements and accompanying notes. Actual results could differ from those estimates. The following summary provides further information about our critical accounting policies that involve critical accounting estimates, and should be read in conjunction with Note 1 of Notes to Consolidated Financial Statements, which summarizes our significant accounting policies. The following accounting policies involve estimates that are considered critical due to the level of subjectivity and judgment involved, as well as the impact on our financial position and results of operations. We believe that all of our estimates are reasonable.

Property, Plant, and Equipment

Depreciation of property assets used in our refining segment is recorded on a straight-line basis over the estimated useful lives of these assets primarily using the composite method of depreciation. We maintain a separate composite group of property assets for each of our refineries. We estimate the useful life of each group based on an evaluation of the property assets comprising the group, and such evaluations consist of, but are not limited to, the physical inspection of the assets to determine their condition, consideration of the manner in which the assets are maintained, assessment of the need to replace assets, and evaluation of the manner in which improvements impact the useful life of the group. The estimated useful lives of our composite groups range primarily from 25 to 30 years.

Under the composite method of depreciation, the cost of an improvement is added to the composite group to which it relates and is depreciated over that group’s estimated useful life. We design improvements to our refineries in accordance with engineering specifications, design standards, and practices accepted in our industry, and these improvements have design lives consistent with our estimated useful lives. Therefore, we believe the use of the group life to depreciate the cost of improvements made to the group is reasonable because the estimated useful life of each improvement is consistent with that of the group. It should be noted, however, that factors such as competition, regulation, or environmental matters could cause us to change our estimates, thus impacting depreciation expense in the future.

Impairment of Assets

Long-lived assets (which include property, plant, and equipment, intangible assets, and deferred refinery turnaround and catalyst costs) and equity method investments are tested for recoverability whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. An impairment loss should be recognized if the carrying amount of the asset exceeds its fair value.

In order to test for recoverability, we must make estimates of projected cash flows related to the asset being evaluated, which include, but are not limited to, assumptions about the use or disposition of the asset, its estimated remaining life, and future expenditures necessary to maintain its existing service potential. In order to determine fair value, management must make certain estimates and assumptions including, among other things, an assessment of market conditions, projected cash flows, investment rates, interest/equity rates, and growth rates, that could significantly impact the fair value of the asset being tested for impairment. Our

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impairment evaluations are based on assumptions that we deem to be reasonable. Providing sensitivity analyses if other assumptions were used in performing the impairment evaluations is not practicable due to the significant number of assumptions involved in the estimates. See Notes 2 and 4 of Notes to Consolidated Financial Statements for a further discussion of our asset impairment analysis and certain losses resulting from those analyses.

Environmental Matters

Our operations are subject to extensive environmental regulations by governmental authorities relating primarily to the discharge of materials into the environment, waste management, and pollution prevention measures. Future legislative action and regulatory initiatives, as discussed in Note 12 of Notes to Consolidated Financial Statements could result in changes to required operating permits, additional remedial actions, or increased capital expenditures and operating costs that cannot be assessed with certainty at this time.

Accruals for environmental liabilities are based on best estimates of probable undiscounted future costs over a 20-year time period using currently available technology and applying current regulations, as well as our own internal environmental policies. However, environmental liabilities are difficult to assess and estimate due to uncertainties related to the magnitude of possible remediation, the timing of such remediation, and the determination of our obligation in proportion to other parties. Such estimates are subject to change due to many factors, including the identification of new sites requiring remediation, changes in environmental laws and regulations and their interpretation, additional information related to the extent and nature of remediation efforts, and potential improvements in remediation technologies. An estimate of the sensitivity to earnings for changes in those factors is not practicable due to the number of contingencies that must be assessed, the number of underlying assumptions, and the wide range of possible outcomes.

The amount of and changes in our accruals for environmental matters as of and for the years ended December 31, 2014, 2013, and 2012 is included in Note 10 of Notes to Consolidated Financial Statements.

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Pension and Other Postretirement Benefit Obligations

We have significant pension and other postretirement benefit liabilities and costs that are developed from actuarial valuations. Inherent in these valuations are key assumptions including discount rates, expected return on plan assets, future compensation increases, and health care cost trend rates, and these assumptions are disclosed and described in Note 14 of Notes to Consolidated Financial Statements. Changes in these assumptions are primarily influenced by factors outside of our control. For example, the discount rate assumption represents a yield curve comprised of various long-term bonds that have an average rating of double-A when averaging all available ratings by the recognized rating agencies, while the expected return on plan assets is based on a compounded return calculated assuming an asset allocation that is representative of the asset mix in our pension plans. To determine the expected return on plan assets, we utilized a forward-looking model of asset returns. The historical geometric average return over the 10 years prior to December 31, 2014 was 7.71 percent. The actual return on assets for the years ended December 31, 2014, 2013 and 2012 was 7.33 percent, 19.38 percent, and 11.84 percent, respectively. These assumptions can have a significant effect on the amounts reported in our financial statements. For example, a 0.25 percent decrease in the assumptions related to the discount rate or expected return on plan assets or a 0.25 percent increase in the assumptions related to the health care cost trend rate or rate of compensation increase would have the following effects on the projected benefit obligation as of December 31, 2014 and net periodic benefit cost for the year ending December 31, 2015 (in millions):

	Pension Benefits		Other Postretirement Benefits
Increase in projected benefit obligation resulting from:
Discount rate decrease	$	105	$	12
Compensation rate increase	7		n/a
Health care cost trend rate increase	n/a		1
Increase in expense resulting from:
Discount rate decrease	10		—
Expected return on plan assets decrease	5		n/a
Compensation rate increase	2		n/a
Health care cost trend rate increase	n/a		—

See Note 14 of Notes to Consolidated Financial Statements for a further discussion of our pension and other postretirement benefit obligations.

Tax Matters

We record tax liabilities based on our assessment of existing tax laws and regulations. A contingent loss related to an indirect tax (excise/duty, sales/use, gross receipts, and/or value-added tax) claim is recorded if the loss is both probable and estimable. The recording of our tax liabilities requires significant judgments and estimates. Actual tax liabilities can vary from our estimates for a variety of reasons, including different interpretations of tax laws and regulations and different assessments of the amount of tax due. In addition, in determining our income tax provision, we must assess the likelihood that our deferred tax assets, primarily consisting of net operating loss and tax credit carryforwards, will be recovered through future taxable income. Significant judgment is required in estimating the amount of valuation allowance, if any, that should be recorded against those deferred income tax assets. If our actual results of operations differ from such estimates

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or our estimates of future taxable income change, the valuation allowance may need to be revised. However, an estimate of the sensitivity to earnings that would result from changes in the assumptions and estimates used in determining our tax liabilities is not practicable due to the number of assumptions and tax laws involved, the various potential interpretations of the tax laws, and the wide range of possible outcomes. See Notes 12 and 16 of Notes to Consolidated Financial Statements for a further discussion of our tax liabilities.

Legal Matters

A variety of claims have been made against us in various lawsuits. We record a liability related to a loss contingency attributable to such legal matters if we determine that it is probable that a loss has been incurred and that the loss is reasonably estimable. The recording of such liabilities requires judgments and estimates, the results of which can vary significantly from actual litigation results due to differing interpretations of relevant law and differing opinions regarding the degree of potential liability and the assessment of reasonable damages. However, an estimate of the sensitivity to earnings if other assumptions were used in recording our legal liabilities is not practicable due to the number of contingencies that must be assessed and the wide range of reasonably possible outcomes, both in terms of the probability of loss and the estimates of such loss.

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ITEM 7A. 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
December 31, 2014:
Gain (loss) in fair value resulting from:
10% increase in underlying commodity prices	$	(127	)	$	(2	)
10% decrease in underlying commodity prices	126			7
December 31, 2013:
Gain (loss) in fair value resulting from:
10% increase in underlying commodity prices	(91		)	3
10% decrease in underlying commodity prices	91			(2		)

See Note 21 of Notes to Consolidated Financial Statements for notional volumes associated with these derivative contracts as of December 31, 2014.

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COMPLIANCE PROGRAM PRICE RISK

We are exposed to market risk related to the volatility in the price of biofuel 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 exception and do not record these contracts at their fair values. As of December 31, 2014, there was no gain or loss in the fair value of derivative instruments that would result from a 10 percent increase or decrease in the underlying price of the contracts. See Note 21 of Notes to Consolidated Financial Statements for a discussion about these compliance programs.

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 December 31, 2014 and 2013.

	December 31, 2014
	Expected Maturity Dates
	2015			2016			2017			2018			2019			There- after			Total			Fair Value
Debt:
Fixed rate	$	475		$	—		$	950		$	—		$	750		$	4,074		$	6,249		$	7,436
Average interest rate	5.2		%	—		%	6.4		%	—		%	9.4		%	6.9		%	7.0		%
Floating rate	$	126		$	—		$	—		$	—		$	—		$	—		$	126		$	126
Average interest rate	2.0		%	—		%	—		%	—		%	—		%	—		%	2.0		%

	December 31, 2013
	Expected Maturity Dates
	2014			2015			2016			2017			2018			There- after			Total			Fair Value
Debt:
Fixed rate	$	200		$	475		$	—		$	950		$	—		$	4,824		$	6,449		$	7,559
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		%

FOREIGN CURRENCY RISK

As of December 31, 2014, we had commitments to purchase $377 million of U.S. dollars. Our market risk was minimal on the contracts, as the majority of them matured on or before January 31, 2015, resulting in a gain of $12 million in the first quarter of 2015.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate “internal control over financial reporting” (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) for Valero. Our management evaluated the effectiveness of Valero’s internal control over financial reporting as of December 31, 2014. In its evaluation, management used the criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Management believes that as of December 31, 2014, our internal control over financial reporting was effective based on those criteria.

Our independent registered public accounting firm has issued an attestation report on the effectiveness of our internal control over financial reporting, which begins on page 56 of this report.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

Valero Energy Corporation and subsidiaries:

We have audited the accompanying consolidated balance sheets of Valero Energy Corporation and subsidiaries (the Company) as of December 31, 2014 and 2013, and the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the years in the three-year period ended December 31, 2014. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States) (the PCAOB). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Valero Energy Corporation and subsidiaries as of December 31, 2014 and 2013, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2014, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the PCAOB, the Company’s internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 26, 2015 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

/s/ KPMG LLP

San Antonio, Texas

February 26, 2015

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

Valero Energy Corporation and subsidiaries:

We have audited Valero Energy Corporation’s (the Company’s) internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States) (the PCAOB). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Valero Energy Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control – Integrated Framework (2013) issued by COSO.

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We also have audited, in accordance with the standards of the PCAOB, the consolidated balance sheets of Valero Energy Corporation and subsidiaries as of December 31, 2014 and 2013, and the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the years in the three-year period ended December 31, 2014, and our report dated February 26, 2015 expressed an unqualified opinion on those consolidated financial statements.

/s/ KPMG LLP

San Antonio, Texas

February 26, 2015

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VALERO ENERGY CORPORATION

CONSOLIDATED BALANCE SHEETS

(Millions of Dollars, Except Par Value)

	December 31,
	2014			2013
ASSETS
Current assets:
Cash and temporary cash investments	$	3,689		$	4,292
Receivables, net	5,879			8,751
Inventories	6,623			5,758
Income taxes receivable	97			72
Deferred income taxes	162			266
Prepaid expenses and other	164			138
Total current assets	16,614			19,277
Property, plant, and equipment, at cost	35,933			33,933
Accumulated depreciation	(9,198		)	(8,226		)
Property, plant, and equipment, net	26,735			25,707
Deferred charges and other assets, net	2,201			2,276
Total assets	$	45,550		$	47,260
LIABILITIES AND EQUITY
Current liabilities:
Current portion of debt and capital lease obligations	$	606		$	303
Accounts payable	6,760			9,931
Accrued expenses	596			522
Taxes other than income taxes	1,209			1,345
Income taxes payable	433			773
Deferred income taxes	376			249
Total current liabilities	9,980			13,123
Debt and capital lease obligations, less current portion	5,780			6,261
Deferred income taxes	6,607			6,601
Other long-term liabilities	1,939			1,329
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	7,116			7,187
Treasury stock, at cost; 159,202,872 and 137,932,138 common shares	(8,125		)	(7,054		)
Retained earnings	22,046			18,970
Accumulated other comprehensive income (loss)	(367		)	350
Total Valero Energy Corporation stockholders’ equity	20,677			19,460
Noncontrolling interests	567			486
Total equity	21,244			19,946
Total liabilities and equity	$	45,550		$	47,260

See Notes to Consolidated Financial Statements.

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VALERO ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Millions of Dollars, Except per Share Amounts)

	Year Ended December 31,
	2014			2013			2012
Operating revenues	$	130,844		$	138,074		$	138,393
Costs and expenses:
Cost of sales	118,141			127,316			126,485
Operating expenses:
Refining	3,900			3,710			3,513
Retail	—			226			686
Ethanol	487			387			332
General and administrative expenses	724			758			698
Depreciation and amortization expense	1,690			1,720			1,549
Asset impairment losses	—			—			86
Total costs and expenses	124,942			134,117			133,349
Operating income	5,902			3,957			5,044
Gain on disposition of retained interest in CST Brands, Inc.	—			325			—
Other income, net	47			59			10
Interest and debt expense, net of capitalized interest	(397		)	(365		)	(314		)
Income from continuing operations before income tax expense	5,552			3,976			4,740
Income tax expense	1,777			1,254			1,626
Income from continuing operations	3,775			2,722			3,114
Income (loss) from discontinued operations	(64		)	6			(1,034		)
Net income	3,711			2,728			2,080
Less: Net income (loss) attributable to noncontrolling interests	81			8			(3		)
Net income attributable to Valero Energy Corporation stockholders	$	3,630		$	2,720		$	2,083
Net income attributable to Valero Energy Corporation stockholders:
Continuing operations	$	3,694		$	2,714		$	3,117
Discontinued operations	(64		)	6			(1,034		)
Total	$	3,630		$	2,720		$	2,083
Earnings per common share:
Continuing operations	$	7.00		$	4.98		$	5.64
Discontinued operations	(0.12		)	0.01			(1.87		)
Total	$	6.88		$	4.99		$	3.77
Weighted-average common shares outstanding (in millions)	526			542			550
Earnings per common share – assuming dilution:
Continuing operations	$	6.97		$	4.96		$	5.61
Discontinued operations	(0.12		)	0.01			(1.86		)
Total	$	6.85		$	4.97		$	3.75
Weighted-average common shares outstanding – assuming dilution (in millions)	530			548			556
Dividends per common share	$	1.05		$	0.85		$	0.65

See Notes to Consolidated Financial Statements.

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VALERO ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Millions of Dollars)

	Year Ended December 31,
	2014			2013			2012
Net income	$	3,711		$	2,728		$	2,080
Other comprehensive income (loss):
Foreign currency translation adjustment	(407		)	(98		)	164
Net gain (loss) on pension and other postretirement benefits	(475		)	763			(211		)
Net gain (loss) on derivative instruments designated and qualifying as cash flow hedges	1			(2		)	(28		)
Other comprehensive income (loss) before income tax expense (benefit)	(881		)	663			(75		)
Income tax expense (benefit) related to items of other comprehensive income (loss)	(164		)	262			(87		)
Other comprehensive income (loss)	(717		)	401			12
Comprehensive income	2,994			3,129			2,092
Less: Comprehensive income (loss) attributable to noncontrolling interests	81			8			(3		)
Comprehensive income attributable to Valero Energy Corporation stockholders	$	2,913		$	3,121		$	2,095

See Notes to Consolidated Financial Statements.

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VALERO ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY

(Millions of Dollars)

	Valero Energy Corporation Stockholders’ Equity
	Common Stock		Additional Paid-in Capital			Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total			Non- controlling Interests			Total Equity
Balance as of December 31, 2011	$	7	$	7,486		$	(6,475	)	$	15,309		$	96		$	16,423		$	22		$	16,445
Net income (loss)	—		—			—			2,083			—			2,083			(3		)	2,080
Dividends on common stock	—		—			—			(360		)	—			(360		)	—			(360		)
Stock-based compensation expense	—		57			—			—			—			57			—			57
Tax deduction in excess of stock- based compensation expense	—		29			—			—			—			29			—			29
Transactions in connection with stock-based compensation plans:
Stock issuances	—		(260		)	319			—			—			59			—			59
Stock repurchases	—		10			(163		)	—			—			(153		)	—			(153		)
Stock repurchases under buyback program	—		—			(118		)	—			—			(118		)	—			(118		)
Contributions from noncontrolling interest	—		—			—			—			—			—			44			44
Other comprehensive income	—		—			—			—			12			12			—			12
Balance as of December 31, 2012	7		7,322			(6,437		)	17,032			108			18,032			63			18,095
Net income	—		—			—			2,720			—			2,720			8			2,728
Dividends on common stock	—		—			—			(462		)	—			(462		)	—			(462		)
Stock-based compensation expense	—		64			—			—			—			64			—			64
Tax deduction in excess of stock- based compensation expense	—		47			—			—			—			47			—			47
Transactions in connection with stock-based compensation plans:
Stock issuances	—		(243		)	302			—			—			59			—			59
Stock repurchases	—		—			(236		)	—			—			(236		)	—			(236		)
Stock repurchases under buyback program	—		—			(692		)	—			—			(692		)	—			(692		)
Separation of retail business	—		(9		)	9			(320		)	(159		)	(479		)	—			(479		)
Net proceeds from initial public offering of common units of Valero Energy Partners LP	—		—			—			—			—			—			369			369
Contributions from noncontrolling interests	—		—			—			—			—			—			46			46
Other	—		6			—			—			—			6			—			6
Other comprehensive income	—		—			—			—			401			401			—			401
Balance as of December 31, 2013	7		7,187			(7,054		)	18,970			350			19,460			486			19,946
Net income	—		—			—			3,630			—			3,630			81			3,711
Dividends on common stock	—		—			—			(554		)	—			(554		)	—			(554		)
Stock-based compensation expense	—		60			—			—			—			60			—			60
Tax deduction in excess of stock- based compensation expense	—		47			—			—			—			47			—			47
Transactions in connection with stock-based compensation plans:
Stock issuances	—		(178		)	225			—			—			47			—			47
Stock repurchases	—		—			(128		)	—			—			(128		)	—			(128		)
Stock repurchases under buyback program	—		—			(1,168		)	—			—			(1,168		)	—			(1,168		)
Contributions from noncontrolling interests	—		—			—			—			—			—			12			12
Distributions to public unitholders of Valero Energy Partners LP	—		—			—			—			—			—			(12		)	(12		)
Other comprehensive loss	—		—			—			—			(717		)	(717		)	—			(717		)
Balance as of December 31, 2014	$	7	$	7,116		$	(8,125	)	$	22,046		$	(367	)	$	20,677		$	567		$	21,244

See Notes to Consolidated Financial Statements.

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VALERO ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Millions of Dollars)

	Year Ended December 31,
	2014			2013			2012
Cash flows from operating activities:
Net income	$	3,711		$	2,728		$	2,080
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	1,690			1,720			1,574
Aruba Refinery asset retirement expense and other	63			—			—
Gain on disposition of retained interest in CST Brands, Inc.	—			(325		)	—
Asset impairment losses	—			—			1,014
Stock-based compensation expense	60			64			58
Deferred income tax expense	445			501			963
Changes in current assets and current liabilities	(1,810		)	922			(302		)
Changes in deferred charges and credits and other operating activities, net	82			(46		)	(117		)
Net cash provided by operating activities	4,241			5,564			5,270
Cash flows from investing activities:
Capital expenditures	(2,153		)	(2,121		)	(2,931		)
Deferred turnaround and catalyst costs	(649		)	(634		)	(479		)
Proceeds from the sale of the Paulsboro Refinery	—			—			160
Other investing activities, net	(42		)	(57		)	(101		)
Net cash used in investing activities	(2,844		)	(2,812		)	(3,351		)
Cash flows from financing activities:
Proceeds from debt borrowings	28			—			2,900
Repayments of debt	(200		)	(480		)	(3,612		)
Proceeds from the exercise of stock options	47			59			59
Purchase of common stock for treasury	(1,296		)	(928		)	(281		)
Common stock dividends	(554		)	(462		)	(360		)
Net proceeds from initial public offering of common units of Valero Energy Partners LP	—			369			—
Contributions from noncontrolling interests	12			45			44
Distributions to public unitholders of Valero Energy Partners LP	(12		)	—			—
Disposition of retail business:
Proceeds from short-term debt in anticipation of separation	—			550			—
Cash distributed to Valero by CST Brands, Inc.	—			500			—
Cash held and retained by CST Brands, Inc. upon separation	—			(315		)	—
Proceeds from short-term debt related to disposition of retained interest	—			525			—
Repayments of short-term debt related to disposition of retained interest	—			(58		)	—
Other financing activities, net	45			32			17
Net cash used in financing activities	(1,930		)	(163		)	(1,233		)
Effect of foreign exchange rate changes on cash	(70		)	(20		)	13
Net increase (decrease) in cash and temporary cash investments	(603		)	2,569			699
Cash and temporary cash investments at beginning of year	4,292			1,723			1,024
Cash and temporary cash investments at end of year	$	3,689		$	4,292		$	1,723

See Notes to Consolidated Financial Statements.

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VALERO ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

General

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. We are an independent petroleum refining and marketing company and own 15 refineries with a combined throughput capacity of approximately 2.9 million barrels per day as of December 31, 2014. We market branded and unbranded refined products on a wholesale basis in the United States (U.S.), Canada, the Caribbean, the United Kingdom (U.K.), and Ireland through an extensive bulk and rack marketing network and through approximately 7,400 outlets that carry the Valero^®, Shamrock^®, Ultramar^®, Beacon^®, and Texaco^® brand names. We also own 11 ethanol plants in the U.S. that primarily produce ethanol with a combined production capacity of approximately1.3 billion gallons per year as of December 31, 2014. Our operations are affected by:

• company-specific factors, primarily refinery utilization rates and refinery maintenance turnarounds;

• seasonal factors, such as the demand for refined products during the summer driving season and heating oil during the winter season; and

• industry factors, such as movements in and the level of crude oil prices including the effect of quality differentials between grades of crude oil, the demand for and prices of refined products, industry supply capacity, and competitor refinery maintenance turnarounds.

Reclassifications

Certain amounts reported as of and for the year ended December 31, 2013 have been reclassified to conform to the 2014 presentation. As discussed in Note 2, in May 2014, we abandoned the Aruba Refinery. As a result, the refinery’s results of operations have been presented as discontinued operations in the consolidated statements of income for all years presented.

Significant Accounting Policies

Principles of Consolidation

These financial statements include the accounts of Valero, and subsidiaries and entities in which Valero has a controlling financial interest. The ownership of noncontrolling investors are recorded as noncontrolling interests. Intercompany balances and transactions have been eliminated in consolidation. Investments in significant noncontrolled entities are accounted for using the equity method.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (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.

Cash and Temporary Cash Investments

Our temporary cash investments are highly liquid, low-risk debt instruments that have a maturity of three months or less when acquired.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Receivables

Trade receivables are carried at original invoice amount. We maintain an allowance for doubtful accounts, which is adjusted based on management’s assessment of our customers’ historical collection experience, known credit risks, and industry and economic conditions.

Inventories

Inventories are carried at the lower of cost or market. The cost of refinery feedstocks purchased for processing, refined products, and grain and ethanol inventories are determined under the last-in, first-out (LIFO) method using the dollar-value LIFO method, with any increments valued based on average purchase prices during the year. The cost of feedstocks and products purchased for resale and the cost of materials and supplies are determined principally under the weighted-average cost method.

Property, Plant, and Equipment

The cost of property, plant, and equipment (property assets) purchased or constructed, including betterments of property assets, is capitalized. However, the cost of repairs to and normal maintenance of property assets is expensed as incurred. Betterments of property assets are those that extend the useful life, increase the capacity or improve the operating efficiency of the asset, or improve the safety of our operations. The cost of property assets constructed includes interest and certain overhead costs allocable to the construction activities.

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 continuously improved. Improvements consist of the addition of new Units and betterments of existing Units. We plan for these improvements by developing a multi-year capital program that is updated and revised based on changing internal and external factors.

Depreciation of property assets used in our refining segment is recorded on a straight-line basis over the estimated useful lives of these assets primarily using the composite method of depreciation. We maintain a separate composite group of property assets for each of our refineries. We estimate the useful life of each group based on an evaluation of the property assets comprising the group, and such evaluations consist of, but are not limited to, the physical inspection of the assets to determine their condition, consideration of the manner in which the assets are maintained, assessment of the need to replace assets, and evaluation of the manner in which improvements impact the useful life of the group. The estimated useful lives of our composite groups range primarily from 25 to 30 years.

Under the composite method of depreciation, the cost of an improvement is added to the composite group to which it relates and is depreciated over that group’s estimated useful life. We design improvements to our refineries in accordance with engineering specifications, design standards and practices accepted in our industry, and these improvements have design lives consistent with our estimated useful lives. Therefore, we believe the use of the group life to depreciate the cost of improvements made to the group is reasonable because the estimated useful life of each improvement is consistent with that of the group. It should be noted, however, that factors such as competition, regulation, or environmental matters could cause us to change our estimates, thus impacting depreciation expense in the future.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Also under the composite method of depreciation, the historical cost of a minor property asset (net of salvage value) that is retired or replaced is charged to accumulated depreciation and no gain or loss is recognized in income. However, a gain or loss is recognized in income for a major property asset that is retired, replaced, or sold and for an abnormal disposition of a property asset (primarily involuntary conversions). Gains and losses are reflected in depreciation and amortization expense, unless such amounts are reported separately due to materiality.

Depreciation of property assets used in our ethanol segment and our former retail segment (see Note 3) is recorded on a straight-line basis over the estimated useful lives of the related assets. Leasehold improvements are amortized on a straight-line basis over the shorter of the lease term or the estimated useful life of the related asset. Assets acquired under capital leases are amortized on a straight-line basis over (i) the lease term if transfer of ownership does not occur at the end of the lease term or (ii) the estimated useful life of the asset if transfer of ownership does occur at the end of the lease term.

Deferred Charges and Other Assets

“Deferred charges and other assets, net” include the following:

• turnaround costs, which are incurred in connection with planned major maintenance activities at our refineries and ethanol plants and which are deferred when incurred and amortized on a straight-line basis over the period of time estimated to lapse until the next turnaround occurs;

• fixed-bed catalyst costs, representing the cost of catalyst that is changed out at periodic intervals when the quality of the catalyst has deteriorated beyond its prescribed function, which are deferred when incurred and amortized on a straight-line basis over the estimated useful life of the specific catalyst;

• intangible assets;

• investments in entities that we do not control; and

• other noncurrent assets such as investments of certain benefit plans (related primarily to certain U.S. nonqualified defined benefit plans whose plan assets are not protected from our creditors and therefore cannot be reflected as a reduction from our obligations under those pension plans), debt issuance costs, and various other costs.

Impairment of Assets

Long-lived assets, which include property, plant, and equipment, intangible assets, and deferred refinery turnaround and catalysts costs, are tested for recoverability whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. A long-lived asset is not recoverable if its carrying amount exceeds the sum of the undiscounted cash flows expected to result from its use and eventual disposition. If a long-lived asset is not recoverable, an impairment loss is recognized for the amount by which the carrying amount of the long-lived asset exceeds its fair value, with fair value determined based on discounted estimated net cash flows or other appropriate methods. See Notes 2 and 4 for our impairment analysis of our long-lived assets.

We evaluate our equity method investments for impairment when there is evidence that we may not be able to recover the carrying amount of our investments or the investee is unable to sustain an earnings capacity that justifies the carrying amount. A loss in the value of an investment that is other than a temporary decline is recognized currently in income, and is based on the difference between the estimated current fair value of the investment and its carrying amount.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Environmental Matters

Liabilities for future remediation costs are recorded when environmental assessments and/or remedial efforts are probable and the costs can be reasonably estimated. Other than for assessments, the timing and magnitude of these accruals generally are based on the completion of investigations or other studies or a commitment to a formal plan of action. Amounts recorded for environmental liabilities have not been reduced by possible recoveries from third parties and have not been measured on a discounted basis.

Asset Retirement Obligations

We record a liability, which is referred to as an asset retirement obligation, at fair value for the estimated cost to retire a tangible long-lived asset at the time we incur that liability, which is generally when the asset is purchased, constructed, or leased. We record the liability when we have a legal obligation to incur costs to retire the asset and when a reasonable estimate of the fair value of the liability can be made. If a reasonable estimate cannot be made at the time the liability is incurred, we record the liability when sufficient information is available to estimate the liability’s fair value.

Foreign Currency Translation

The functional currency of each of our international operations is generally the respective local currency, which includes the Canadian dollar, the Aruban florin, the pound sterling, and the euro. Balance sheet accounts are translated into U.S. dollars using exchange rates in effect as of the balance sheet date. Revenue and expense accounts are translated using the weighted-average exchange rates during the year presented. Foreign currency translation adjustments are recorded as a component of accumulated other comprehensive income.

Revenue Recognition

Revenues for products sold by the refining and ethanol segments and our former retail segment (see Note 3) are recorded upon delivery of the products to our customers, which is the point at which title to the products is transferred, and when payment has either been received or collection is reasonably assured.

Excise taxes on sales by our U.S. retail system were presented on a gross basis. All other excise taxes are presented on a net basis.

We enter into certain purchase and sale arrangements with the same counterparty that are deemed to be made in contemplation of one another. We combine these transactions and, as a result, revenues and cost of sales are not recognized in connection with these arrangements. We also enter into refined product exchange transactions to fulfill sales contracts with our customers by accessing refined products in markets where we do not operate our own refineries. These refined product exchanges are accounted for as exchanges of non-monetary assets, and no revenues are recorded on these transactions.

Product Shipping and Handling Costs

Costs incurred for shipping and handling of products are included in cost of sales.

Cost of Biofuel Credits

We purchase biofuel credits (primarily Renewable Identification Numbers (RINs) in the U.S.) to comply with government regulations that require us to blend a certain percentage of biofuels into the products we produce, as further described in Note 21 under “Compliance Program Price Risk.” To the degree that we are unable to blend biofuels at the required percentage, we must purchase biofuel credits in the open market to

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

meet our obligation. The cost of purchased biofuel credits is charged to cost of sales as such credits are needed to satisfy our obligation. To the extent we have not purchased enough biofuel credits to satisfy our obligation as of the balance sheet date, we charge cost of sales for such deficiency based on the market price of the biofuel credits as of the balance sheet date, and we record a liability for our obligation to purchase those credits. See Note 20 for disclosure of our fair value liability.

Stock-Based Compensation

Compensation expense for our share-based compensation plans is based on the fair value of the awards granted and is recognized in income on a straight-line basis over the shorter of (a) the requisite service period of each award or (b) the period from the grant date to the date retirement eligibility is achieved if that date is expected to occur during the nominal vesting period.

Income Taxes

Income taxes are accounted for under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred amounts are measured using enacted tax rates expected to apply to taxable income in the year those temporary differences are expected to be recovered or settled. Deferred tax assets are reduced by unrecognized tax benefits, if such items may be available to offset the unrecognized tax benefit.

We have elected to classify any interest expense and penalties related to the underpayment of income taxes in income tax expense.

Earnings per Common Share

Earnings per common share is computed by dividing net income by the weighted-average number of common shares outstanding for the year. Participating share-based payment awards, including shares of restricted stock granted under certain of our stock-based compensation plans, are included in the computation of basic earnings per share using the two-class method. Earnings per common share – assuming dilution reflects the potential dilution arising from our outstanding stock options and nonvested shares granted to employees in connection with our stock-based compensation plans. Potentially dilutive securities are excluded from the computation of earnings per common share – assuming dilution when the effect of including such shares would be antidilutive.

Financial Instruments

Our financial instruments include cash and temporary cash investments, receivables, payables, debt, capital lease obligations, commodity derivative contracts, and foreign currency derivative contracts. The estimated fair values of these financial instruments approximate their carrying amounts, except for certain debt as discussed in Note 20.

Derivatives and Hedging

All derivative instruments are recorded in the balance sheet as either assets or liabilities measured at their fair values. 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, are recognized currently in income in the same period. The effective portion of the gain or

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 in 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 hedging relationships (derivative instruments not designated as fair value or cash flow hedges) and for derivative instruments entered into 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 the statements of cash flows.

New Accounting Pronouncements

In April 2014, the provisions of Accounting Standards Codification (ASC) Topic 205, “Presentation of Financial Statements,” and ASC Topic 360, “Property, Plant, and Equipment,” were amended to change the criteria for reporting discontinued operations. The provisions of these amendments modify the definition of discontinued operations by limiting discontinued operations reporting to disposals of components of an entity that represent strategic shifts that have or will have a major effect on an entity’s operations and financial results. These amendments require additional disclosures about discontinued operations and new disclosures for other disposals of individually material components of an organization that do not meet the definition of a discontinued operation. In addition, the guidance allows companies to have significant continuing involvement and continuing cash flows with the discontinued operation. These provisions are effective prospectively for annual reporting periods beginning on or after December 15, 2014, and interim periods within those annual periods, with early adoption permitted. The adoption of this guidance effective January 1, 2015 will not affect our financial position or results of operations; however, it may result in changes to the manner in which future dispositions of operations or assets, if any, are presented in our financial statements, or it may require additional disclosures.

In May 2014, the Financial Accounting Standards Board (FASB) amended the ASC and issued a new accounting standard, Topic 606, “Revenue from Contracts with Customers,” to clarify the principles for recognizing revenue. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard also requires improved interim and annual disclosures that enable the users of financial statements to better understand the nature, amount, timing, and uncertainty of revenues and cash flows arising from contracts with customers. The new standard is effective for annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period, and can be adopted either retrospectively to each prior reporting period presented using a practical expedient, as allowed by the new standard, or retrospectively with a cumulative effect adjustment to retained earnings as of the date of initial application. Early adoption is not permitted. We are currently evaluating the effect that adopting this new standard will have on our financial statements and related disclosures.

In January 2015, the provisions of ASC Subtopic 225-20, “Income Statement–Extraordinary and Unusual Items” were amended to eliminate the concept of extraordinary items from U.S. GAAP as part of the FASB’s simplification initiative. The guidance eliminates the separate presentation of extraordinary items on the income statement, net of tax and the related earnings per share, but does not affect the requirement to disclose material items that are unusual in nature or infrequently occurring or to exclude those items from the estimated annual effective tax rate for interim reporting purposes. These provisions may be applied prospectively or

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

retrospectively and are effective for annual reporting periods beginning after December 15, 2015, and interim periods within those annual periods, with early adoption permitted. The adoption of this guidance effective January 1, 2016 will not affect our financial position or results of operations; however, it may affect the manner in which future extraordinary or unusual items, if any, are presented in our financial statements.

In February 2015, the provisions of ASC Topic 810, “Consolidation” were amended to improve consolidation guidance for certain types of legal entities. The guidance modifies the evaluation of whether limited partnerships and similar legal entities are variable interest entities (VIEs) or voting interest entities, eliminates the presumption that a general partner should consolidate a limited partnership, affects the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships, and provides a scope exception from consolidation guidance for certain money market funds. These provisions are effective for annual reporting periods beginning after December 15, 2015, and interim periods within those annual periods, with early adoption permitted. These provisions may also be adopted retrospectively in previously issued financial statements for one or more years with a cumulative-effect adjustment to retained earnings as of the beginning of the first year restated. We are currently evaluating the effect that adopting this new accounting standard will have on our consolidated financial statements and related disclosures.

2. DISCONTINUED OPERATIONS

In May 2014, we abandoned our Aruba Refinery, except for the associated crude oil and refined products terminal assets that we continue to operate. As a result, the refinery’s results of operations have been presented in this report as discontinued operations for all years presented.

We had suspended operations of the refinery in 2012 and at that time we wrote off the entire carrying value of the refinery’s idled crude oil processing units and related infrastructure (refining assets) and supplies inventories that supported the refining operations; as a result, we recognized an asset impairment loss of $928 million. In addition, we terminated the employees who supported the refining operations and incurred severance costs of $41 million at that time. Even though we suspended refining operations in 2012, we continued to maintain the refining assets to allow them to be restarted and did not abandon them until our recent decision to no longer pursue options to restart refining operations.

The Aruba Refinery resides on land leased from the Government of Aruba (GOA) and our agreements with the GOA require us to dismantle our leasehold improvements under certain conditions. Because of our May 2014 decision to abandon the refining assets, we believe the GOA will require us to dismantle those assets. As a result, we recognized an asset retirement obligation of $59 million, which was charged to expense during the second quarter of 2014 and is reflected in discontinued operations. We had not recognized an asset retirement obligation previously due to our belief that we would not be required to dismantle the assets as long as we intended to operate them. During the second quarter of 2014, we also recognized liabilities of $4 million relating to obligations under certain contracts, including a liability for the remaining lease payments for the land on which the refining assets reside.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Selected results of operations of the Aruba Refinery are shown below (in millions).

	Year Ended December 31,
	2014			2013		2012
Operating revenues	$	—		$	—	$	857
Income (loss) before income taxes	(64		)	6		(1,034		)

There was no tax benefit recognized for the loss from discontinued operations for the years ended December 31, 2014 and 2012 as we do not expect to realize this tax benefit.

3. 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. 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.

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 11 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. We also incurred $30 million in costs during the three months ended June 30, 2013 to effect the separation, which were included in general and administrative expenses.

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.

On November 14, 2013, we disposed of our 20 percent retained interest in CST by transferring all remaining shares of CST common stock owned by us to a third-party financial institution in exchange for $467 million of our short-term debt and recognized a $325 million nontaxable gain, as further described in Note 11.

Selected historical results of operations of our retail business prior to the separation are disclosed in Note 18. Subsequent to May 1, 2013 and through November 14, 2013, our share of CST’s results of operations was reflected in “other income, net.” Our share of income taxes incurred directly by CST during this period was reported in the equity in earnings from CST, and as such was not included in income taxes in our statements of income.

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VALERO ENERGY CORPORATION

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 were excluded from our consolidated balance sheet as of December 31, 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	191
Total assets	$	2,174
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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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4. IMPAIRMENTS

Cancelled Capital Projects

During 2012, we wrote down the carrying value of equipment associated with permanently cancelled capital projects at several of our refineries and recognized asset impairment losses of $65 million.

Retail Stores

During 2012, we evaluated certain of our convenience stores operated by our former retail segment for potential impairment and concluded that they were impaired, and we wrote down the carrying values of these stores to their estimated fair values and recognized asset impairment losses of $21 million.

5. VALERO ENERGY PARTNERS LP

In July 2013, we formed VLP, a master limited partnership, to own, operate, develop, and acquire crude oil and refined petroleum products pipelines, terminals, and other transportation and logistics assets. On December 16, 2013, VLP completed its initial public offering (the Offering) of 17,250,000 common units at a price of $23.00 per unit. VLP received $369 millionin net proceeds from the sale of the units, after deducting underwriting fees, structuring fees, and other offering costs. As of December 31, 2014, VLP’s assets included crude oil and refined petroleum products pipeline and terminal systems in the U.S. Gulf Coast and U.S. Mid-Continent regions that are integral to the operations of our Ardmore, McKee, Memphis, Port Arthur, and Three Rivers Refineries.

As of December 31, 2014 and 2013, we owned a 68.6 percent limited partner interest and a 2 percent general partner interest in VLP, and the public owned a 29.4 percent limited partner interest. VLP’s cash and temporary cash investments were $237 million and $375 million as of December 31, 2014 and 2013, respectively. Valero consolidates the financial statements of VLP into its financial statements and as such, VLP’s cash and temporary cash investments are included in Valero’s consolidated cash and temporary cash investments. However, VLP’s cash and temporary cash investments can be used to settle only its obligations. In addition, VLP’s partnership capital attributable to the public’s ownership interest in VLP of $375 million and $370 million as of December 31, 2014 and 2013, respectively, is reflected in noncontrolling interests.

We have agreements with VLP that establish fees for certain general and administrative services and operational and maintenance services provided by us. In addition, we have a master transportation services agreement and a master terminal services agreement with VLP under which VLP provides commercial transportation and terminaling services to us. These transactions are eliminated in consolidation.

On July 1, 2014, we sold our Texas Crude Systems Business to VLP. That business is engaged in transporting, terminaling, and storing crude oil and refined petroleum products through various pipeline and terminal systems that compose the McKee Crude System, the Three Rivers Crude System, and the Wynnewood Products System. We sold the Texas Crude Systems Business for total cash consideration of $154 million. Because we consolidate the financial statements of VLP into our financial statements, this transaction was eliminated in consolidation and did not impact our consolidated financial position or cash flows.

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6. RECEIVABLES

Receivables consisted of the following (in millions):

	December 31,
	2014			2013
Accounts receivable	$	5,509		$	8,582
Commodity derivative and foreign currency contract receivables	151			98
Other receivables	256			117
	5,916			8,797
Allowance for doubtful accounts	(37		)	(46		)
Receivables, net	$	5,879		$	8,751

Changes in the allowance for doubtful accounts consisted of the following (in millions):

	Year Ended December 31,
	2014			2013			2012
Balance as of beginning of year	$	46		$	56		$	48
Increase in allowance charged to expense	7			13			21
Accounts charged against the allowance, net of recoveries	(15		)	(23		)	(13		)
Foreign currency translation	(1		)	—			—
Balance as of end of year	$	37		$	46		$	56

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VALERO ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7. INVENTORIES

Inventories consisted of the following (in millions):

	December 31,
	2014		2013
Refinery feedstocks	$	2,269	$	2,135
Refined products and blendstocks	3,926		3,231
Ethanol feedstocks and products	195		166
Materials and supplies	233		226
Inventories	$	6,623	$	5,758

As of December 31, 2014, the volumes of our refinery feedstocks and refined products and blendstocks held as inventory increased, which resulted in a LIFO increment. During the years ended December 31, 2013 and 2012, we had net liquidations of LIFO inventory layers that decreased cost of sales in each of those years by $17 million and $134 million, respectively.

As of December 31, 2014 and 2013, the replacement cost (market value) of LIFO inventories exceeded their LIFO carrying amounts by approximately $857 million and $6.9 billion, respectively. As of December 31, 2014 and 2013, our non-LIFO inventories accounted for $906 million and $681 million, respectively, of our total inventories.

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8. PROPERTY, PLANT, AND EQUIPMENT

Major classes of property, plant, and equipment, which include capital lease assets, consisted of the following (in millions):

	December 31,
	2014			2013
Land	$	396		$	404
Crude oil processing facilities	28,054			27,260
Pipeline and terminal facilities	1,955			1,513
Grain processing equipment	779			719
Administrative buildings	800			800
Other	2,596			2,109
Construction in progress	1,353			1,128
Property, plant, and equipment, at cost	35,933			33,933
Accumulated depreciation	(9,198		)	(8,226		)
Property, plant, and equipment, net	$	26,735		$	25,707

We have various assets under capital leases that primarily support our refining operations totaling $72 million and $74 million as of December 31, 2014 and 2013, respectively. Accumulated amortization on assets under capital leases was $40 million and $35 million as of December 31, 2014 and 2013, respectively.

Depreciation expense for the years ended December 31, 2014, 2013, and 2012 was $1.2 billion, $1.2 billion, and $1.1 billion, respectively.

9. DEFERRED CHARGES AND OTHER ASSETS

“Deferred charges and other assets, net” primarily includes turnaround and catalyst costs, which are deferred and amortized as discussed in Note 1. Amortization expense for deferred refinery turnaround and catalyst costs and other assets was $489 million, $498 million, and $447 million for the years ended December 31, 2014, 2013, and 2012, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10. ACCRUED EXPENSES AND OTHER LONG-TERM LIABILITIES

Accrued expenses and other long-term liabilities consisted of the following (in millions):

	Accrued Expenses				Other Long- Term Liabilities
	December 31,
	2014		2013		2014		2013
Defined benefit plan liabilities (see Note 14)	$	48	$	30	$	792	$	507
Wage and other employee-related liabilities	294		257		104		97
Uncertain income tax position liabilities, including related penalties and interest (see Note 16) (a)	—		—		316		205
Environmental liabilities	26		24		269		277
Accrued interest expense	88		90		—		—
Derivative liabilities	—		13		—		—
Asset retirement obligations	20		5		71		26
Other accrued liabilities	120		103		387		217
Accrued expenses and other long-term liabilities	$	596	$	522	$	1,939	$	1,329

^{___________________________} 

^(a) As of December 31, 2014, our total liability for uncertain tax positions, including related penalties and interest, was $484 million, with $168 million classified as a current liability and reflected in “Income taxes payable” and the remaining $316 million classified as a long-term liability and reflected in “Other long-term liabilities” as detailed in this table. As of December 31, 2013, our total liability for uncertain tax positions, including related penalties and interest, was $443 million, with $238 million classified as a current liability and reflected in “Income taxes payable” and the remaining $205 million classified as a long-term liability and reflected in “Other long-term liabilities” as detailed in this table.

Environmental Liabilities

Changes in our environmental liabilities were as follows (in millions):

	Year Ended December 31,
	2014			2013			2012
Balance as of beginning of year	$	301		$	269		$	274
Additions to liability	26			67			23
Reductions to liability	—			(1		)	(1		)
Payments, net of third-party recoveries	(27		)	(28		)	(29		)
Separation of retail business	—			(4		)	—
Foreign currency translation	(5		)	(2		)	2
Balance as of end of year	$	295		$	301		$	269

See Note 12 for further information regarding environmental matters.

Asset Retirement Obligations

We have asset retirement obligations with respect to certain of our refinery assets due to various legal obligations to clean and/or dispose of various component parts of each refinery at the time they are retired.

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However, these component parts can be used for extended and indeterminate periods of time as long as they are properly maintained and/or upgraded. It is our practice and current intent to maintain our refinery assets and continue making improvements to those assets based on technological advances. As a result, we believe that our refineries have indeterminate lives for purposes of estimating asset retirement obligations because dates or ranges of dates upon which we would retire refinery assets cannot reasonably be estimated at this time. When a date or range of dates can reasonably be estimated for the retirement of any component part of a refinery, we estimate the cost of performing the retirement activities and record a liability for the fair value of that cost using established present value techniques.

Prior to the separation of our retail business, we also had asset retirement obligations for the removal of underground storage tanks (USTs) at owned and leased retail sites. There is no legal obligation to remove USTs while they remain in service. However, environmental laws in the U.S. and Canada require that unused USTs be removed within certain periods of time after the USTs are no longer in service, usually one to two years depending on the jurisdiction in which the USTs are located. We had previously estimated that USTs at our formerly owned retail sites would remain in service approximately 20 years and that we would then have an obligation to remove those USTs. For our formerly leased retail sites, our lease agreements generally required that we remove certain improvements, primarily USTs and signage, upon termination of the lease. All of the USTs and the related asset retirement obligations were retained by CST after the separation from us. Therefore, we have no asset retirement obligations in connection with the USTs subsequent to the separation of our retail business on May 1, 2013.

Changes in our asset retirement obligations were as follows (in millions).

	Year Ended December 31,
	2014			2013			2012
Balance as of beginning of year	$	31		$	108		$	87
Additions to accrual	60			2			14
Revisions in estimated cash flows	—			—			13
Accretion expense	1			2			5
Settlements	(1		)	(1		)	(11		)
Separation of retail business	—			(80		)	—
Balance as of end of year	$	91		$	31		$	108

See Note 2 for further information regarding the 2014 additions to accrual related to our Aruba Refinery.

There are no assets that are legally restricted for purposes of settling our asset retirement obligations.

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11. DEBT AND CAPITAL LEASE OBLIGATIONS

Debt, at stated values, and capital lease obligations consisted of the following (in millions):

	Final Maturity	December 31,
		2014			2013
Bank credit facilities	Various	$	—		$	—
Senior Notes:
4.5%	2015	400			400
4.75%	2014	—			200
6.125%	2017	750			750
6.125%	2020	850			850
6.625%	2037	1,500			1,500
6.75%	2037	24			24
7.2%	2017	200			200
7.45%	2097	100			100
7.5%	2032	750			750
8.75%	2030	200			200
9.375%	2019	750			750
10.5%	2039	250			250
Debentures:
7.65%	2026	100			100
8.75%	2015	75			75
Gulf Opportunity Zone Revenue Bonds, Series 2010, 4.0%	2040	300			300
Accounts receivable sales facility	2015	100			100
Other debt	2015	26			—
Net unamortized discount, including fair value adjustments		(21		)	(24		)
Total debt		6,354			6,525
Capital lease obligations, including unamortized fair value adjustments		32			39
Total debt and capital lease obligations		6,386			6,564
Less current portion		(606		)	(303		)
Debt and capital lease obligations, less current portion		$	5,780		$	6,261

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Credit Facilities

Revolver

We have a $3 billion revolving credit facility (the Revolver) with a group of financial institution lenders that has a maturity date of November 2018. We have the option to increase the aggregate commitments under the Revolver to $4.5 billion, subject to, among other things, the consent of the existing lenders whose commitments will be increased or any additional lenders providing such additional capacity. We may request additional one-year extensions, subject to certain conditions, including the consent of the lenders holding the majority of the commitments and each lender extending its individual commitment. The Revolver includes sub-facilities for swingline loans and letters of credit.

Outstanding borrowings under the Revolver bear interest, at our option, at either (a) the adjusted LIBO rate (as defined in the Revolver) for the applicable interest period in effect from time to time plus the applicable margin or (b) the alternate base rate (as defined in the Revolver) plus the applicable margin. The interest rate and fees under the Revolver are subject to adjustment based upon the credit ratings assigned to our senior unsecured debt. We are also charged various fees and expenses in connection with the Revolver, including facility fees and letter of credit fees. The Revolver has certain restrictive covenants, including a maximum debt-to-capitalization ratio of 60 percent. Our debt-to-capitalization ratio, calculated in accordance with the terms of the Revolver, was 12 percent as of December 31, 2014 and 2013.

VLP Revolver

VLP has a $300 million senior unsecured revolving credit facility agreement (the VLP Revolver) with a group of lenders that has a maturity date of December 2018. The VLP Revolver is available only to the operations of VLP, and creditors of VLP do not have recourse against Valero. VLP has the option to increase the aggregate commitments under the VLP Revolver to $500 million, subject to, among other things, the consent of the existing lenders whose commitments will be increased or any additional lenders providing such additional capacity. VLP may request two additional one-year extensions, subject to certain conditions. VLP may terminate the VLP Revolver with notice to the lenders of at least three business days prior to termination. The VLP Revolver includes sub-facilities for swingline loans and letters of credit. VLP’s obligations under the VLP Revolver will be jointly and severally guaranteed by all of VLP’s directly owned material subsidiaries. As of December 31, 2014, the only guarantor under the VLP Revolver was Valero Partners Operating Co. LLC.

Outstanding borrowings under the VLP Revolver bear interest, at VLP’s option, at either (a) the adjusted LIBO rate (as defined in the VLP Revolver) for the applicable interest period in effect from time to time plus the applicable margin or (b) the alternate base rate (as defined in the VLP Revolver) plus the applicable margin. The VLP Revolver also provides for customary fees, including administrative agent fees, participation fees, and commitment fees. The VLP Revolver contains certain restrictive covenants, including a ratio of total debt to EBITDA (as defined in the VLP Revolver) for the prior four fiscal quarters of not greater than 5.0 to 1.0 as of the last day of each fiscal quarter, and limitations on VLP’s ability to pay distributions to its unitholders.

Canadian Revolver

One of our Canadian subsidiaries has a C$50 million committed revolving credit facility (the Canadian Revolver) under which it may borrow and obtain letters of credit that has a maturity date of November 2015.

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Activities Under Our Credit Facilities

During the years ended December 31, 2014 and 2013, we had no borrowings or repayments under the Revolver, the VLP Revolver, or the Canadian Revolver. During the year ended December 31, 2012, we borrowed and repaid $1.1 billion under the Revolver and had no borrowings or repayments under the Canadian Revolver.

Letters of Credit

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

				Amounts Outstanding
	Borrowing Capacity		Expiration	December 31,
				2014		2013
Letter of credit facilities	$	550	June 2015	$	56	$	278
Revolver	$	3,000	November 2018	$	54	$	59
VLP Revolver	$	300	December 2018	$	—	$	—
Canadian Revolver	C$	50	November 2015	C$	10	C$	10

We also have various other uncommitted short-term bank credit facilities. As of December 31, 2014 and 2013, we had no borrowings outstanding under our uncommitted short-term bank credit facilities; however, there were letters of credit outstanding under such facilities of $80 million and $189 million, respectively, for which we are charged letter of credit issuance fees. The uncommitted credit facilities have no commitment fees or compensating balance requirements.

Bank Debt

On March 20, 2013, in anticipation of the separation of our retail business as described in Note 3, CST entered into an $800 million senior secured credit agreement. This credit agreement was 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.

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.

On October 24, 2013, we borrowed $525 million under a short-term debt agreement with a third-party financial institution in anticipation of liquidating our retained interest in CST. This liquidation was completed on November 14, 2013 by transferring all remaining shares of CST common stock owned by us to the financial institution in exchange for $467 million of our short-term debt, and we paid the remaining $58 million of short-term debt in cash. After paying $19 million of fees, we recognized a $325 million nontaxable gain.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Non-Bank Debt

In February 2015, we made a scheduled debt repayment of $400 million related to our 4.5% senior notes.

During the year ended December 31, 2014, we made a scheduled debt repayment of $200 million related to our 4.75% senior notes.

During the year ended December 31, 2013, we made scheduled debt repayments of $180 million related to our 6.7% senior notes and $300 million related to our 4.75% senior notes.

During the year ended December 31, 2012,

• we redeemed 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, or 100% of their outstanding stated values;

• 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

• we received proceeds of $300 million from the remarketing of 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.

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 2014, we amended this facility to extend the maturity date to July 2015. 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.

As of December 31, 2014 and 2013, $1.7 billion and $3.3 billion, respectively, of our accounts receivable composed the designated pool of accounts receivable included in the program. All amounts outstanding under the accounts receivable sales facility are reflected as debt on our balance sheets and proceeds and repayments are reflected as cash flows from financing activities on the statements of cash flows. Changes in the amounts outstanding under our accounts receivable sales facility were as follows (in millions):

	Year Ended December 31,
	2014		2013		2012
Balance as of beginning of year	$	100	$	100	$	250
Proceeds from the sale of receivables	—		—		1,500
Repayments	—		—		(1,650		)
Balance as of end of year	$	100	$	100	$	100

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Capitalized Interest

For the years ended December 31, 2014, 2013, and 2012, capitalized interest was $70 million, $118 million, and $220 million, respectively.

Other Disclosures

In addition to the maximum debt-to-capitalization ratio applicable to the Revolver discussed above under “Credit Facilities,” our bank credit facilities and other debt arrangements contain various customary restrictive covenants, including cross-default and cross-acceleration clauses.

Principal payments on our debt obligations and future minimum rentals on capital lease obligations as of December 31, 2014 were as follows (in millions):

	Debt			Capital Lease Obligations
2015	$	601		$	8
2016	—			8
2017	950			6
2018	—			6
2019	750			6
Thereafter	4,074			18
Net unamortized discount and fair value adjustments	(21		)	1
Less interest expense	—			(21		)
Total	$	6,354		$	32

12. COMMITMENTS AND CONTINGENCIES

Operating Leases

We have long-term operating lease commitments for land, office facilities and equipment, transportation equipment, time charters for ocean-going tankers and coastal vessels, dock facilities, and various facilities and equipment used in the storage, transportation, production, and sale of refinery feedstock, refined product and corn inventories.

Certain leases for processing equipment and feedstock and refined product storage facilities provide for various contingent payments based on, among other things, throughput volumes in excess of a base amount. Certain leases for vessels contain renewal options and escalation clauses, which vary by charter, and provisions for the payment of chartering fees, which either vary based on usage or provide for payments, in addition to established minimums, that are contingent on usage. In most cases, we expect that in the normal course of business, our leases will be renewed or replaced by other leases.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of December 31, 2014, our future minimum rentals and minimum rentals to be received under subleases for leases having initial or remaining noncancelable lease terms in excess of one year were as follows (in millions):

2015	$	314
2016	229
2017	159
2018	131
2019	75
Thereafter	275
Total minimum rental payments	$	1,183
Minimum rentals to be received under subleases	$	14

Rental expense was as follows (in millions):

	Year Ended December 31,
	2014		2013		2012
Minimum rental expense	$	618	$	588	$	512
Contingent rental expense	43		47		67
Total rental expense	661		635		579
Less sublease rental income	—		—		(2		)
Net rental expense	$	661	$	635	$	577

Purchase Obligations

We have various purchase obligations under certain industrial gas and chemical supply arrangements (such as hydrogen supply arrangements), crude oil and other feedstock supply arrangements, and various throughput and terminalling agreements. We enter into these contracts to ensure an adequate supply of utilities and feedstock and adequate storage capacity to operate our refineries. Substantially all of our purchase obligations are based on market prices or adjustments based on market indices. Certain of these purchase obligations include fixed or minimum volume requirements, while others are based on our usage requirements. None of these obligations are associated with suppliers’ financing arrangements. These purchase obligations are not reflected as liabilities.

Environmental Matters

Hartford Matters

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. We have been conducting initial mitigation and cleanup with other companies pursuant to an administrative order issued by the U.S. Environmental Protection Agency (EPA). The U.S. EPA is seeking further cleanup obligations from us and other potentially responsible parties (PRPs) for the Village. In parallel with the Village cleanup, we are in litigation with the Illinois EPA and other PRPs 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 responsible parties. We have accrued for our own expected contribution obligations. However,

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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.

Regulation of Greenhouse Gases

The U.S. EPA began regulating greenhouse gases (GHG) on January 2, 2011, under the Clean Air Act Amendments of 1990 (Clean Air Act). The U.S. EPA is developing refinery-specific GHG regulations and performance standards that are expected to impose GHG emission limits and/or technology requirements on new and modified operations. These control requirements may affect a wide range of refinery operations but have not yet been delineated. Any such controls, however, could result in material increased compliance costs, additional operating restrictions for our business, and an increase in the cost of the products we produce, which could have a material adverse effect on our financial position, results of operations, and liquidity.

Certain states and foreign governments have pursued regulation of GHG independent of the U.S. EPA. For example, the California Global Warming Solutions Act, also known as AB 32, directs the California Air Resources Board (CARB) to develop and issue regulations to reduce GHG emissions in California to 1990 levels by 2020. CARB has issued a variety of regulations aimed at reaching this goal, including a Low Carbon Fuel Standard (LCFS) as well as a statewide cap-and-trade program. The cap-and-trade program costs are expected to increase significantly beginning in 2015 with the inclusion of transportation fuels in the program. Complying with AB 32, including the LCFS and the cap-and-trade program, could result in material increased compliance costs for us, increased capital expenditures, increased operating costs, and additional operating restrictions for our business, resulting in an increase in the cost of, and decreases in the demand for, the products we produce. To the degree we are unable to recover these increased compliance costs, these matters could have a material adverse effect on our financial position, results of operations, and liquidity.

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, results of operations, or liquidity.

Tax Matters

General

We are subject to extensive tax liabilities imposed by multiple jurisdictions, including income taxes, indirect taxes (excise/duty, sales/use, gross receipts, and value-added taxes), payroll taxes, franchise taxes, withholding taxes, and ad valorem taxes. New tax laws and regulations and changes in existing tax laws and regulations are continuously being enacted or proposed that could result in increased expenditures for tax liabilities in the future. Many of these liabilities are subject to periodic audits by the respective taxing authority. Subsequent changes to our tax liabilities as a result of these audits may subject us to interest and penalties.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

IRS Audits

As of December 31, 2014, the Internal Revenue Service (IRS) has ongoing tax audits related to our U.S. federal tax returns from 2004 through 2011, as discussed in Note 16. We have received Revenue Agent Reports on our tax years for 2004 through 2009 and we are vigorously contesting many of the tax positions and assertions from the IRS. We are continuing to work with the IRS to resolve these matters and we believe that they will be resolved for amounts consistent with the recorded amounts of unrecognized tax benefits associated with these matters. During the year ended December 31, 2014, we settled the audit related to our 2002 and 2003 tax years and the audit related to a group of our subsidiaries for their 2004 and 2005 tax years consistent with the recorded amounts of uncertain tax position liabilities associated with those audits.

Self-Insurance

We are self-insured for certain medical and dental, workers’ compensation, automobile liability, general liability, and property liability claims up to applicable retention limits. Liabilities are accrued for self-insured claims, or when estimated losses exceed coverage limits, and when sufficient information is available to reasonably estimate the amount of the loss. These liabilities are included in accrued expenses and other long-term liabilities.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. EQUITY

Share Activity

For the years ended December 31, 2014, 2013, and 2012, activity in the number of shares of common stock and treasury stock was as follows (in millions):

	Common Stock	Treasury Stock
Balance as of December 31, 2011	673	(117	)
Transactions in connection with stock-based compensation plans:
Stock issuances	—	6
Stock repurchases	—	(6	)
Stock repurchases under buyback program	—	(4	)
Balance as of December 31, 2012	673	(121	)
Transactions in connection with stock-based compensation plans:
Stock issuances	—	6
Stock repurchases	—	(6	)
Stock repurchases under buyback program	—	(17	)
Balance as of December 31, 2013	673	(138	)
Transactions in connection with stock-based compensation plans:
Stock issuances	—	4
Stock repurchases	—	(2	)
Stock repurchases under buyback program	—	(23	)
Balance as of December 31, 2014	673	(159	)

Preferred Stock

We have 20 million shares of preferred stock authorized with a par value of $0.01 per share. No shares of preferred stock were outstanding as of December 31, 2014 or 2013.

Treasury Stock

We purchase shares of our common stock in open market transactions to meet our obligations under employee stock-based compensation plans. We also purchase shares of our common stock 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.

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VALERO ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

On February 28, 2008, our board of directors approved a $3 billion common stock purchase program, which was in addition to a $6 billion program previously authorized. This additional $3 billion program has no expiration date. During 2013, we completed the $6 billion program. During the years ended December 31, 2014, 2013, and 2012, we purchased $1.2 billion, $692 million, and $118 million, respectively, of our common stock under our programs. As of December 31, 2014, we have approvals under the $3 billion program to purchase approximately $1.5 billion of our common stock. Year to date through February 20, 2015, we have purchased one million shares for $57 million.

Common Stock Dividends

On January 23, 2015, our board of directors declared a quarterly cash dividend of $0.40 per common share payable March 3, 2015 to holders of record at the close of business on February 11, 2015.

Income Tax Effects Related to Components of Other Comprehensive Income (Loss)

The following table reflects the tax effects allocated to each component of other comprehensive income (loss) for the years ended December 31, 2014, 2013, and 2012 (in millions):

	Before-Tax  Amount			Tax Expense (Benefit)			Net Amount
Year Ended December 31, 2014:
Foreign currency translation adjustment	$	(407	)	$	—		$	(407	)
Pension and other postretirement benefits:
Loss arising during the year related to:
Net actuarial loss	(471		)	(162		)	(309		)
Prior service cost	(1		)	(1		)	—
(Gain) loss reclassified into income related to:
Net actuarial loss	34			12			22
Prior service credit	(40		)	(14		)	(26		)
Curtailment and settlement	3			—			3
Net loss on pension and other postretirement benefits	(475		)	(165		)	(310		)
Derivative instruments designated and qualifying as cash flow hedges:
Net loss arising during the year	(1		)	—			(1		)
Net loss reclassified into income	2			1			1
Net gain on cash flow hedges	1			1			—
Other comprehensive loss	$	(881	)	$	(164	)	$	(717	)

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VALERO ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

	Before-Tax Amount			Tax Expense (Benefit)			Net Amount
Year Ended December 31, 2013:
Foreign currency translation adjustment	$	(98	)	$	—		$	(98	)
Pension and other postretirement benefits:
Gain arising during the year related to:
Net actuarial gain	367			125			242
Plan amendments	371			130			241
(Gain) loss reclassified into income related to:
Net actuarial loss	57			20			37
Prior service credit	(33		)	(12		)	(21		)
Settlement	1			—			1
Net gain on pension and other postretirement benefits	763			263			500
Derivative instruments designated and qualifying as cash flow hedges:
Net loss arising during the year	(4		)	(2		)	(2		)
Net loss reclassified into income	2			1			1
Net loss on cash flow hedges	(2		)	(1		)	(1		)
Other comprehensive income	$	663		$	262		$	401

Year Ended December 31, 2012:
Foreign currency translation adjustment	$	164		$	—		$	164
Pension and other postretirement benefits:
Loss arising during the year related to:
Net actuarial loss	(228		)	(79		)	(149		)
Prior service cost	(9		)	(3		)	(6		)
(Gain) loss reclassified into income related to:
Net actuarial loss	34			12			22
Prior service credit	(20		)	(7		)	(13		)
Settlement	12			—			12
Net loss on pension and other postretirement benefits	(211		)	(77		)	(134		)
Derivative instruments designated and qualifying as cash flow hedges:
Net gain arising during the year	45			16			29
Net gain reclassified into income	(73		)	(26		)	(47		)
Net loss on cash flow hedges	(28		)	(10		)	(18		)
Other comprehensive income (loss)	$	(75	)	$	(87	)	$	12

88

VALERO ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss) by component, net of tax, were as follows (in millions):

	Foreign Currency Translation Adjustment			Defined Benefit Plan Items			Gains and (Losses) on Cash Flow Hedges			Total
Balance as of December 31, 2011	$	501		$	(424	)	$	19		$	96
Other comprehensive income (loss)	164			(134		)	(18		)	12
Balance as of December 31, 2012	665			(558		)	1			108
Other comprehensive income (loss) before reclassifications	(98		)	483			(2		)	383
Amounts reclassified from accumulated other comprehensive income (loss)	—			17			1			18
Net other comprehensive income (loss)	(98		)	500			(1		)	401
Separation of retail business	(159		)	—			—			(159		)
Balance as of December 31, 2013	408			(58		)	—			350
Other comprehensive loss before reclassifications	(407		)	(309		)	(1		)	(717		)
Amounts reclassified from accumulated other comprehensive income (loss)	—			(1		)	1			—
Net other comprehensive loss	(407		)	(310		)	—			(717		)
Balance as of December 31, 2014	$	1		$	(368	)	$	—		$	(367	)

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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							Affected Line Item in the Statement of Income
	Year Ended December 31,
	2014			2013
Amortization of items related to defined benefit pension plans:
Net actuarial loss	$	(34	)	$	(57	)	(a)
Prior service credit	40			33			(a)
Curtailment and settlement	(3		)	(1		)	(a)
	3			(25		)	Total before tax
	(2		)	8			Tax (expense) benefit
	$	1		$	(17	)	Net of tax
Losses on cash flow hedges:
Commodity contracts	$	(2	)	$	(2	)	Cost of sales
	(2		)	(2		)	Total before tax
	1			1			Tax benefit
	$	(1	)	$	(1	)	Net of tax
Total reclassifications for the year	$	—		$	(18	)	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 14. Net periodic benefit cost is reflected in operating expenses and general and administrative expenses.

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VALERO ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

14. EMPLOYEE BENEFIT PLANS

Defined Benefit Plans

We have defined benefit pension plans, some of which are subject to collective bargaining agreements, that cover most of our employees. These plans provide eligible employees with retirement income based primarily on years of service and compensation during specific periods under final average pay and cash balance formulas. We fund our pension plans as required by local regulations. In the U.S., all qualified pension plans are subject to the Employee Retirement Income Security Act (ERISA) minimum funding standard. We typically do not fund or fully fund U.S. nonqualified and certain international pension plans that are not subject to funding requirements because contributions to these pension plans may be less economic and investment returns may be less attractive than our other investment alternatives.

In February 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 changed from a final average pay formula to a cash balance formula with staged effective dates that commenced either on July 1, 2013 or January 1, 2015 depending on the age and service of the affected employees. All final average pay benefits were 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 year ended December 31, 2013. The benefit of this remeasurement will be amortized into income through 2025.

We also provide health care and life insurance benefits for certain retired employees through our postretirement benefit plans. Most of our employees become eligible for these benefits if, while still working for us, they reach normal retirement age or take early retirement. These plans are unfunded, and retired employees share the cost with us. Individuals who became our employees as a result of an acquisition became eligible for other postretirement benefits under our plans as determined by the terms of the relevant acquisition agreement.

In October 2013, we announced changes to our U.S. retiree health care plans to utilize more efficient insurance products for Medicare eligible retirees. These plan changes resulted in a $43 million decrease to our benefit obligations for other postretirement benefit plans and a related increase to other comprehensive income during the year ended December 31, 2013.

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VALERO ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The changes in benefit obligation related to all of our defined benefit plans, the changes in fair value of plan assets^(a), and the funded status of our defined benefit plans as of and for the years ended were as follows (in millions):

	Pension Plans						Other Postretirement Benefit Plans
	December 31,						December 31,
	2014			2013			2014			2013
Changes in benefit obligation:
Benefit obligation as of beginning of year	$	1,914		$	2,307		$	324		$	436
Service cost	120			137			7			12
Interest cost	91			86			15			18
Participant contributions	—			—			7			15
Plan amendments	2			(274		)	—			(43		)
Curtailment gain	—			(6		)	—			—
Benefits paid	(109		)	(170		)	(30		)	(37		)
Actuarial (gain) loss	440			(169		)	37			(77		)
Other	(8		)	3			1			—
Benefit obligation as of end of year	$	2,450		$	1,914		$	361		$	324
Changes in plan assets(a):
Fair value of plan assets as of beginning of year	$	1,909		$	1,729		$	—		$	—
Actual return on plan assets	139			306			—			—
Valero contributions	46			41			20			19
Participant contributions	—			—			7			15
Benefits paid	(109		)	(170		)	(30		)	(37		)
Other	(7		)	3			3			3
Fair value of plan assets as of end of year	$	1,978		$	1,909		$	—		$	—
Reconciliation of funded status(a):
Fair value of plan assets as of end of year	$	1,978		$	1,909		$	—		$	—
Less benefit obligation as of end of year	2,450			1,914			361			324
Funded status as of end of year	$	(472	)	$	(5	)	$	(361	)	$	(324	)
Accumulated benefit obligation	$	2,354		$	1,811		n/a			n/a

^{___________________________} 

^(a)  Plan assets include only the assets associated with pension plans subject to legal minimum funding standards. Plan assets associated with U.S. nonqualified pension plans are not included here because they are not protected from our creditors and therefore cannot be reflected as a reduction from our obligations under the pension plans. As a result, the reconciliation of funded status does not reflect the effect of plan assets that exist for all of our defined benefit plans. See Note 20 for the assets associated with certain U.S. nonqualified pension plans.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the year ended December 31, 2014, the funded status of our pension and other postretirement benefit plans were negatively impacted by a combined actuarial loss of $477 million primarily due to approximately $300 million related to the change in the discount rates of our pension plans to 4.10% from 4.92% and our other postretirement benefit plans to 4.13% from 4.88% as of December 31, 2014 and 2013, respectively, and approximately $100 million related to our adoption of the updated mortality table that reflects longer life expectancies.

Amounts recognized in our balance sheet for our pension and other postretirement benefits plans as of December 31, 2014 and 2013 include (in millions):

	Pension Plans						Other Postretirement Benefit Plans
	2014			2013			2014			2013
Deferred charges and other assets, net	$	7		$	208		$	—		$	—
Accrued expenses	(28		)	(11		)	(20		)	(19		)
Other long-term liabilities	(451		)	(202		)	(341		)	(305		)
	$	(472	)	$	(5	)	$	(361	)	$	(324	)

The accumulated benefit obligations for certain of our pension plans exceed the fair values of the assets of those plans. For those plans, the table below presents the total projected benefit obligation, accumulated benefit obligation, and fair value of the plan assets (in millions).

	December 31,
	2014		2013
Projected benefit obligation	$	2,288	$	215
Accumulated benefit obligation	2,217		168
Fair value of plan assets	1,812		3

Benefit payments that we expect to pay, including amounts related to expected future services, and the anticipated Medicare subsidies that we expect to receive are as follows for the years ending December 31 (in millions):

	Pension Benefits		Other Postretirement Benefits
2015	$	131	$	20
2016	127		20
2017	132		21
2018	142		21
2019	189		21
2020-2024	845		108

We plan to contribute approximately $47 million to our pension plans and $20 million to our other postretirement benefit plans during 2015.

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VALERO ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

	Pension Plans									Other Postretirement Benefit Plans
	Year Ended December 31,									Year Ended December 31,
	2014			2013			2012			2014			2013			2012
Components of net periodic benefit cost:
Service cost	$	120		$	137		$	140		$	7		$	12		$	12
Interest cost	91			86			93			15			18			21
Expected return on plan assets	(133		)	(131		)	(125		)	—			—			—
Amortization of:
Prior service cost (credit)	(22		)	(19		)	3			(18		)	(14		)	(23		)
Net actuarial (gain) loss	35			57			33			(1		)	—			1
Special charges (credits)	3			(5		)	(3		)	—			—			—
Net periodic benefit cost	$	94		$	125		$	141		$	3		$	16		$	11

Amortization of prior service cost (credit) shown in the above table was based on a straight-line amortization of the cost over the average remaining service period of employees expected to receive benefits under each respective plan. Amortization of the net actuarial loss shown in the above table was based on the straight-line amortization of the excess of the unrecognized loss over 10 percent of the greater of the projected benefit obligation or market-related value of plan assets (smoothed asset value) over the average remaining service period of active employees expected to receive benefits under each respective plan.

Pre-tax amounts recognized in other comprehensive income were as follows (in millions):

	Pension Plans									Other Postretirement Benefit Plans
	Year Ended December 31,									Year Ended December 31,
	2014			2013			2012			2014			2013			2012
Net gain (loss) arising during the year:
Net actuarial gain (loss)	$	(434	)	$	290		$	(245	)	$	(37	)	$	77		$	17
Prior service cost	(1		)	—			(9		)	—			—			—
Remeasurement due to plan amendments	—			328			—			—			43			—
Net (gain) loss reclassified into income:
Net actuarial (gain) loss	35			57			33			(1		)	—			1
Prior service cost (credit)	(22		)	(19		)	3			(18		)	(14		)	(23		)
Curtailment and settlement loss	3			1			12			—			—			—
Total changes in other comprehensive income (loss)	$	(419	)	$	657		$	(206	)	$	(56	)	$	106		$	(5	)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The pre-tax amounts in accumulated other comprehensive income as of December 31, 2014 and 2013 that have not yet been recognized as components of net periodic benefit cost were as follows (in millions):

	Pension Plans						Other Postretirement Benefit Plans
	2014			2013			2014			2013
Prior service credit	$	(210	)	$	(233	)	$	(92	)	$	(110	)
Net actuarial (gain) loss	876			479			(6		)	(44		)
Total	$	666		$	246		$	(98	)	$	(154	)

The following pre-tax amounts included in accumulated other comprehensive income as of December 31, 2014 are expected to be recognized as components of net periodic benefit cost during the year ending December 31, 2015 (in millions):

	Pension Plans			Other Postretirement Benefit Plans
Amortization of prior service credit	$	(22	)	$	(18	)
Amortization of net actuarial loss	63			—
Total	$	41		$	(18	)

The weighted-average assumptions used to determine the benefit obligations as of December 31, 2014 and 2013 were as follows:

	Pension Plans				Other Postretirement Benefit Plans
	2014		2013		2014		2013
Discount rate	4.10	%	4.92	%	4.13	%	4.88	%
Rate of compensation increase	3.78	%	3.81	%	—	%	—	%

The discount rate assumption used to determine the benefit obligations as of December 31, 2014 and 2013 for the majority of our pension plans and other postretirement benefit plans was based on the Aon Hewitt AA Only Above Median yield curve and considered the timing of the projected cash outflows under our plans. This curve was designed by Aon Hewitt to provide a means for plan sponsors to value the liabilities of their pension plans or postretirement benefit plans. It is a hypothetical double-A yield curve represented by a series of annualized individual discount rates with maturities from one-half year to 99 years. Each bond issue underlying the curve is required to have an average rating of double-A when averaging all available ratings by Moody’s Investor Services, Standard and Poor’s Ratings Service, and Fitch Ratings. Only the bonds representing the 50 percent highest yielding issuances among those with average ratings of double-A are included in this yield curve.

We based our December 31, 2014, 2013, and 2012 discount rate assumption on the Aon Hewitt AA Only Above Median yield curve because we believe it is representative of the types of bonds we would use to settle our pension and other postretirement benefit plan liabilities as of those dates. We believe that the yields associated with the bonds used to develop this yield curve reflect the current level of interest rates.

95

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The weighted-average assumptions used to determine the net periodic benefit cost for the years ended December 31, 2014, 2013, and 2012 were as follows:

	Pension Plans						Other Postretirement Benefit Plans
	2014		2013		2012		2014		2013		2012
Discount rate	4.92	%	4.33	%	5.08	%	4.88	%	4.19	%	4.97	%
Expected long-term rate of return on plan assets	7.61	%	7.62	%	7.67	%	—	%	—	%	—	%
Rate of compensation increase	3.81	%	3.73	%	3.68	%	—	%	—	%	—	%

The assumed health care cost trend rates as of December 31, 2014 and 2013 were as follows:

	2014		2013
Health care cost trend rate assumed for the next year	7.36	%	7.39	%
Rate to which the cost trend rate was assumed to decline (the ultimate trend rate)	5.00	%	5.00	%
Year that the rate reaches the ultimate trend rate	2020		2020

Assumed health care cost trend rates impact the amounts reported for retiree health care plans. A one percentage-point change in assumed health care cost trend rates would have the following effects on other postretirement benefits (in millions):

	1% Increase		1% Decrease
Effect on total of service and interest cost components	$	—	$	—
Effect on accumulated postretirement benefit obligation	5		(4		)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The tables below present the fair values of the assets of our pension plans (in millions) as of December 31, 2014 and 2013 by level of the fair value hierarchy. Assets categorized in Level 1 of the hierarchy are measured at fair value using a market approach based on quotations from national securities exchanges. Assets categorized in Level 2 of the hierarchy are measured at net asset value as a practical expedient for fair value. As previously noted, we do not fund or fully fund U.S. nonqualified and certain international pension plans that are not subject to funding requirements, and we do not fund our other postretirement benefit plans.

	Fair Value Measurements Using						Total as of December 31, 2014
	Level 1		Level 2		Level 3
Equity securities:
U.S. companies(a)	$	541	$	—	$	—	$	541
International companies	144		—		—		144
Preferred stock	1		1		—		2
Mutual funds:
International growth	119		—		—		119
Index funds(b)	199		—		—		199
Corporate debt instruments	—		263		—		263
Government securities:
U.S. Treasury securities	71		—		—		71
Other government securities	—		100		—		100
Common collective trusts	—		379		—		379
Private fund	—		40		—		40
Insurance contracts	—		18		—		18
Interest and dividends receivable	5		—		—		5
Cash and cash equivalents	75		22		—		97
Total	$	1,155	$	823	$	—	$	1,978

______________________

See notes on page 98.

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VALERO ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

	Fair Value Measurements Using						Total as of December 31, 2013
	Level 1		Level 2		Level 3
Equity securities:
U.S. companies(a)	$	529	$	—	$	—	$	529
International companies	155		—		—		155
Preferred stock	2		1		—		3
Mutual funds:
International growth	131		—		—		131
Index funds(b)	160		—		—		160
Corporate debt instruments	—		260		—		260
Government securities:
U.S. Treasury securities	81		—		—		81
Other government securities	—		79		—		79
Common collective trusts	—		373		—		373
Private fund	—		38		—		38
Insurance contracts	—		17		—		17
Interest and dividends receivable	5		—		—		5
Cash and cash equivalents	72		6		—		78
Total	$	1,135	$	774	$	—	$	1,909

^{__________________________________} 

^(a)  Equity securities are held in a wide range of industrial sectors, including consumer goods, information technology, healthcare, industrials, and financial services.

^(b)  This class includes primarily investments in approximately 60 percent equities and 40 percent bonds.

The investment policies and strategies for the assets of our pension plans incorporate a well-diversified approach that is expected to earn long-term returns from capital appreciation and a growing stream of current income. This approach recognizes that assets are exposed to risk and the market value of the pension plans’ assets may fluctuate from year to year. Risk tolerance is determined based on our financial ability to withstand risk within the investment program and the willingness to accept return volatility. In line with the investment return objective and risk parameters, the pension plans’ mix of assets includes a diversified portfolio of equity and fixed-income investments. As of December 31, 2014, the target allocations for plan assets are 70 percent equity securities and 30 percent fixed income investments. Equity securities include international stocks and a blend of U.S. growth and value stocks of various sizes of capitalization. Fixed income securities include bonds and notes issued by the U.S. government and its agencies, corporate bonds, and mortgage-backed securities. The aggregate asset allocation is reviewed on an annual basis.

The expected long-term rate of return on plan assets is based on a forward-looking expected asset return model. This model derives an expected rate of return based on the target asset allocation of a plan’s assets. The underlying assumptions regarding expected rates of return for each asset class reflect Aon Hewitt’s best expectations for these asset classes. The model reflects the positive effect of periodic rebalancing among diversified asset classes. We select an expected asset return that is supported by this model.

98

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Defined Contribution Plans

We have defined contribution plans that cover most of our employees. Our contributions to these plans are based on employees’ compensation and/or a partial match of employee contributions to the plans. Our contributions to these defined contribution plans were $61 million, $62 million, and $61 million for the years ended December 31, 2014, 2013, and 2012, respectively.

15. STOCK-BASED COMPENSATION

Under our 2011 Omnibus Stock Incentive Plan (the OSIP), various stock and stock-based awards may be granted to employees and non-employee directors. Awards available under the OSIP include options to purchase shares of common stock, performance awards that vest upon the achievement of an objective performance goal, stock appreciation rights, restricted stock that vests over a period determined by our compensation committee, and dividend equivalent rights (DERs). The OSIP was approved by our stockholders on April 28, 2011. As of December 31, 2014, 13,536,081 shares of our common stock remained available to be awarded under the OSIP.

We also maintain other stock-based compensation plans under which previously granted equity awards remain outstanding. No additional grants may be awarded under these plans.

The following table reflects activity related to our stock-based compensation arrangements (in millions):

	Year Ended December 31,
	2014		2013		2012
Stock-based compensation expense	$	60	$	64	$	58
Tax benefit recognized on stock-based compensation expense	21		22		20
Tax benefit realized for tax deductions resulting from exercises and vestings	64		66		45
Effect of tax deductions in excess of recognized stock-based compensation expense reported as a financing cash flow	47		47		27

Each of our stock-based compensation arrangements is discussed below.

Stock Options

Under the terms of our various stock-based compensation plans, the exercise price of options granted is not less than the fair market value of our common stock on the date of grant. Stock options become exercisable pursuant to the individual written agreements between the participants and us, usually in three equal annual installments beginning one year after the date of grant, with unexercised options generally expiring seven or ten years from the date of grant.

The fair value of stock options granted during 2014, 2013, and 2012 were estimated using the Monte Carlo simulation model, as these options contain both a service condition and a market condition in order to be exercised. The expected life of options granted is the period of time from the grant date to the date of expected exercise or other expected settlement. The expected life for each of the years in the table below was calculated using the safe harbor provisions of SEC Staff Accounting Bulletin No. 107 and No. 110 related to share‑based

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

payments. Because the stock options granted in 2012 and later contain a market condition, historical exercise patterns did not provide a reasonable basis for estimating the expected life. Expected volatility is based on closing prices of our common stock for periods corresponding to the expected life of options granted. Expected dividend yield is based on annualized dividends at the date of grant. The risk-free interest rate used is the implied yield currently available from the U.S. Treasury zero‑coupon issues with a remaining term equal to the expected life of the options at the grant date.

A summary of the weighted-average assumptions used in our fair value measurements is presented in the table below.

	Year Ended December 31,
	2014		2013		2012
Expected life in years	6.0		6.0		6.0
Expected volatility	43.21	%	49.63	%	49.11	%
Expected dividend yield	2.27	%	2.27	%	2.39	%
Risk-free interest rate	1.74	%	1.77	%	0.85	%

A summary of the status of our stock option awards is presented in the table below.

	Number of Stock Options		Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
					(in years)	(in millions)
Outstanding as of January 1, 2014	8,558,093		$	27.88
Granted	126,095		48.57
Exercised	(2,564,125	)	18.64
Expired	(1,449,986	)	66.67
Forfeited	(856	)	17.68
Outstanding as of December 31, 2014	4,669,221		21.48		4.5	$	131
Exercisable as of December 31, 2014	4,315,414		19.99		4.2	127

The following table reflects activity related to our stock options granted (in millions, except per share data):

	Year Ended December 31,
	2014		2013		2012
Weighted average grant-date fair value price per share	$	17.31	$	15.83	$	10.98
Intrinsic value of stock options exercised	85		101		78
Cash received from stock option exercises	47		59		59

100

VALERO ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of December 31, 2014, there was $1 million of unrecognized compensation cost related to outstanding unvested stock option awards, which is expected to be recognized over a weighted-average period of approximately two years.

Restricted Stock

Restricted stock is granted to employees and non-employee directors. Restricted stock granted to employees vests in accordance with individual written agreements between the participants and us, usually in equal annual installments over a period of three years beginning one year after the date of grant. Restricted stock granted to our non-employee directors generally vests in three years following the date of grant. A summary of the status of our restricted stock awards is presented in the table below.

	Number of Shares		Weighted- Average Grant-Date Fair Value Per Share
Nonvested shares as of January 1, 2014	2,205,314		$	32.23
Granted	969,671		49.40
Vested	(1,402,753	)	31.90
Forfeited	(14,082	)	32.56
Nonvested shares as of December 31, 2014	1,758,150		41.96

As of December 31, 2014, there was $45 million of unrecognized compensation cost related to outstanding unvested restricted stock awards, which is expected to be recognized over a weighted-average period of approximately two years. The total fair value of restricted stock that vested during the years ended December 31, 2014, 2013, and 2012 was $60 million, $74 million, and $47 million, respectively.

Performance Awards

Performance awards are issued to certain of our key employees and represent rights to receive shares of our common stock upon the achievement by us of an objective performance measure. The objective performance measure is our total shareholder return, which is ranked among the total shareholder returns of a defined peer group of companies. Our ranking determines the rate at which the performance awards convert into our common shares. Conversion rates can range from zero to 200 percent.

Performance awards vest in equal one-third increments (tranches) on an annual basis. Our compensation committee establishes the peer group of companies for each tranche of awards at the beginning of the one year vesting period for that tranche. Therefore, performance awards are not considered to be granted for accounting purposes until our compensation committee establishes the peer group of companies for each tranche of awards. The fair value of each tranche of awards is determined at the time the awards are considered to be granted and is based on the expected conversion rate for those awards and the fair value per share. The fair value per share for awards granted during 2014 is equal to the market price of our common stock on the grant date as these grants include DERs. The fair value per share for awards granted prior to 2014 was equal to the market price of our common stock on the grant date reduced by expected dividends over that tranche’s vesting period as these grants did not include DERs.

101

VALERO ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

A summary of the status of our performance awards considered granted is presented below.

	Nonvested Awards		Vested Awards
Awards outstanding as of January 1, 2014	947,165		—
Granted	225,829		—
Vested	(534,028	)	534,028
Converted	—		(534,028	)
Forfeited	(24,576	)	—
Awards outstanding as of December 31, 2014	614,390		—

There were three tranches of performance awards granted during the year ended December 31, 2014 as follows:

	Awards Granted	Expected Conversion Rate	Fair Value Per Share
Third tranche of 2012 awards	99,023	100%	$	47.47
Second tranche of 2013 awards	76,232	100%	47.47
First tranche of 2014 awards	50,574	100%	48.57
Total	225,829

As of December 31, 2014, there was $11 million of unrecognized compensation cost related to outstanding unvested performance awards, which will be recognized during 2015. The total fair value of performance awards that vested during the years ended December 31, 2014, 2013, and 2012 was $15 million, $12 million, and $3 million, respectively.

Performance awards converted during the year ended December 31, 2014 were as follows:

	Vested Awards Converted	Actual Conversion Rate	Number of Shares Issued
2010 awards	201,422	100%	201,422
2011 awards	227,571	200%	455,142
2012 awards	102,855	200%	205,710
2013 awards	2,180	200%	4,360
Total	534,028		866,634

102

VALERO ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

16. INCOME TAXES

Income Tax Expense

Income from continuing operations before income tax expense was as follows (in millions):

	Year Ended December 31,
	2014		2013		2012
U.S. operations	$	4,677	$	3,531	$	4,015
International operations	875		445		725
Income from continuing operations before income tax expense	$	5,552	$	3,976	$	4,740

The following is a reconciliation of income tax expense computed by applying the U.S. federal statutory income tax rate (35 percent for all years presented) to actual income tax expense related to continuing operations (in millions):

	Year Ended December 31,
	2014			2013			2012
Federal income tax expense at the U.S. federal statutory rate	$	1,943		$	1,392		$	1,659
U.S. state income tax expense, net of U.S. federal income tax effect	62			62			64
U.S. manufacturing deduction	(74		)	(36		)	(33		)
International operations	(88		)	(69		)	(96		)
Permanent differences	(16		)	(104		)	20
Change in tax law	—			(32		)	—
Other, net	(50		)	41			12
Income tax expense	$	1,777		$	1,254		$	1,626

The variation in the customary relationship between income tax expense and income from continuing operations before income tax expense for the year ended December 31, 2014 was primarily due to an increase in income from continuing operations from our international operations that was taxed at statutory rates that are lower than in the U.S. and an increase in our U.S. manufacturing deduction. The variation in the customary relationship between income tax expense and income from continuing operations before income tax expense for the year ended December 31, 2013 was primarily due to the $325 million nontaxable gain on the disposition of our retained interest in CST as described in Notes 3 and 11.

There was no income tax expense or benefit related to discontinued operations for the years ended December 31, 2014, 2013, and 2012.

103

VALERO ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Components of income tax expense related to continuing operations were as follows (in millions):

	Year Ended December 31,
	2014		2013			2012
Current:
U.S. federal	$	1,196	$	635		$	515
U.S. state	59		36			22
International	77		82			126
Total current	1,332		753			663
Deferred:
U.S. federal	268		459			854
U.S. state	36		59			77
International	141		(17		)	32
Total deferred	445		501			963
Income tax expense	$	1,777	$	1,254		$	1,626

104

VALERO ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Deferred Income Tax Assets and Liabilities

The tax effects of significant temporary differences representing deferred income tax assets and liabilities were as follows (in millions):

	December 31,
	2014			2013
Deferred income tax assets:
Tax credit carryforwards	$	37		$	48
Net operating losses (NOLs)	436			338
Inventories	160			264
Property, plant, and equipment	—			8
Compensation and employee benefit liabilities	358			178
Environmental liabilities	92			92
Other	178			187
Total deferred income tax assets	1,261			1,115
Less: Valuation allowance	(393		)	(347		)
Net deferred income tax assets	868			768
Deferred income tax liabilities:
Property, plant, and equipment	6,682			6,536
Deferred turnaround costs	356			331
Inventories	426			310
Investments	152			94
Other	73			81
Total deferred income tax liabilities	7,689			7,352
Net deferred income tax liabilities	$	6,821		$	6,584

We had the following income tax credit and loss carryforwards as of December 31, 2014 (in millions):

	Amount		Expiration
U.S. state income tax credits	$	53	2015 through 2027
U.S. state NOLs (gross amount)	6,574		2015 through 2034
International NOLs	1,630		Unlimited

We have recorded a valuation allowance as of December 31, 2014 and 2013 due to uncertainties related to our ability to utilize some of our deferred income tax assets, primarily consisting of certain U.S. state income tax credits and NOLs, and international NOLs, before they expire. The valuation allowance is based on our estimates of taxable income in the various jurisdictions in which we operate and the period over which deferred income tax assets will be recoverable. During 2014, the valuation allowance increased by $46 million, primarily due to increases in U.S. state NOLs. The realization of net deferred income tax assets recorded as of December 31, 2014 is primarily dependent upon our ability to generate future taxable income in certain U.S. states and international jurisdictions.

105

VALERO ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Should we ultimately recognize tax benefits related to the valuation allowance for deferred income tax assets as of December 31, 2014, such amounts will be allocated as follows (in millions):

Income tax benefit	$	386
Additional paid-in capital	7
Total	$	393

Deferred income taxes have not been provided on the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and the respective tax bases of our international subsidiaries based on the determination that such differences are essentially permanent in duration in that the earnings of these subsidiaries are expected to be indefinitely reinvested in the international operations. As of December 31, 2014, the cumulative undistributed earnings of these subsidiaries were approximately $2.9 billion. If those earnings were not considered indefinitely reinvested, deferred income taxes would have been recorded after consideration of U.S. foreign tax credits. It is not practicable to estimate the amount of additional tax that might be payable on those earnings, if distributed.

Unrecognized Tax Benefits

The following is a reconciliation of the change in unrecognized tax benefits, excluding related penalties, interest (net of the U.S. federal and state income tax effects), and the U.S. federal income tax effect of state unrecognized tax benefits (in millions):

	Year Ended December 31,
	2014			2013			2012
Balance as of beginning of year	$	950		$	341		$	326
Additions based on tax positions related to the current year	35			64			11
Additions for tax positions related to prior years	118			576			40
Reductions for tax positions related to prior years	(67		)	(26		)	(36		)
Reductions for tax positions related to the lapse of applicable statute of limitations	(1		)	(4		)	—
Settlements	(46		)	(1		)	—
Balance as of end of year	$	989		$	950		$	341

The reconciliation of the change in unrecognized tax benefits for the year ended December 31, 2013 includes $556 million of additions for tax positions primarily related to prior years for tax refunds that we intend to claim by amending our income tax returns for 2005 through 2012. We intend to propose that incentive payments received from the U.S. federal government for blending biofuels into refined products be excluded from taxable income during these periods. However, due to the complexity of this matter and uncertainties with respect to the interpretation of the Internal Revenue Code, we concluded that the refund claims included in the reconciliation below cannot be recognized in our financial statements. As a result, these amounts are not included in our uncertain tax position liabilities as of December 31, 2014 and 2013, even though they are reflected in the table above.

106

VALERO ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following is a reconciliation of unrecognized tax benefits reflected in the table above to our uncertain tax position liabilities as of December 31, 2014 and 2013 that are reflected in Note 10 (in millions):

	December 31,
	2014			2013
Unrecognized tax benefits	$	989		$	950
Tax refund claim not recognized in our financial statements	(554		)	(556		)
Penalties, interest (net of U.S. federal and state income tax effect), and the U.S. federal income tax effect of state unrecognized tax benefits	49			49
Uncertain tax position liabilities	$	484		$	443

As of December 31, 2014 and 2013, there were $768 million and $763 million, respectively, of unrecognized tax benefits that if recognized would affect our annual effective tax rate. During the next 12 months, it is reasonably possible that tax audit resolutions could reduce unrecognized tax benefits, excluding interest, by $133 million, either because the tax positions are sustained on audit or because we agree to their disallowance. We do not expect these reductions to have a significant impact on our financial statements because such reductions would not significantly affect our annual effective rate.

Penalties and interest, which are reflected within income tax expense, were immaterial for the year ended December 31, 2014. During the years ended December 31, 2013 and 2012, we recognized $12 million and $23 million, respectively, in penalties and interest. Accrued penalties and interest totaled $141 million and $145 million as of December 31, 2014 and 2013, respectively, excluding the U.S. federal and state income tax effects related to interest.

Tax Returns Under Audit

As of December 31, 2014,our tax years for 2004 through 2011 were under audit by the IRS. The IRS has proposed adjustments to our taxable income for certain open years. We are protesting the proposed adjustments and do not expect that the ultimate disposition of these adjustments will result in a material change to our financial position, results of operations, or liquidity. We are continuing to work with the IRS to resolve these matters and we believe that they will be resolved for amounts consistent with recorded amounts of unrecognized tax benefits associated with these matters.

In December 2014, we paid the final IRS assessment for our tax years 2002 and 2003 and closed the audit related to all proposed adjustments. The amount paid was consistent with the recorded amount of unrecognized tax benefits associated with that audit.

107

VALERO ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

17. EARNINGS PER COMMON SHARE

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

	Year Ended December 31,
	2014				2013				2012
	Restricted Stock		Common Stock		Restricted Stock		Common Stock		Restricted Stock		Common Stock
Earnings per common share from continuing operations:
Net income attributable to Valero stockholders from continuing operations			$	3,694			$	2,714			$	3,117
Less dividends paid:
Common stock			552				460				358
Nonvested restricted stock			2				2				2
Undistributed earnings			$	3,140			$	2,252			$	2,757
Weighted-average common shares outstanding	2		526		3		542		3		550
Earnings per common share from continuing operations:
Distributed earnings	$	1.05	$	1.05	$	0.85	$	0.85	$	0.65	$	0.65
Undistributed earnings	5.95		5.95		4.13		4.13		4.99		4.99
Total earnings per common share from continuing operations	$	7.00	$	7.00	$	4.98	$	4.98	$	5.64	$	5.64
Earnings per common share from continuing operations – assuming dilution:
Net income attributable to Valero stockholders from continuing operations			$	3,694			$	2,714			$	3,117
Weighted-average common shares outstanding			526				542				550
Common equivalent shares:
Stock options			2				4				4
Performance awards and nonvested restricted stock			2				2				2
Weighted-average common shares outstanding – assuming dilution			530				548				556
Earnings per common share from continuing operations – assuming dilution			$	6.97			$	4.96			$	5.61

108

VALERO ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

18. SEGMENT INFORMATION

We have two reportable segments, refining and ethanol, as of December 31, 2014. Prior to May 1, 2013, we also had a retail segment. As discussed in Note 3, we completed the separation of our retail business, CST, 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, which were eliminated in consolidation prior to the separation, are reported as refining segment operating revenues from external customers after May 1, 2013.

Our refining segment includes refining operations, wholesale marketing, product supply and distribution, and transportation operations in the U.S., Canada, the U.K., Aruba, and Ireland. Our ethanol segment primarily includes sales of internally produced ethanol and distillers grains. The retail segment included company-operated convenience stores in the U.S. and Canada; filling stations, truckstop facilities, cardlock facilities, and home heating oil operations in Canada; and credit card operations in the U.S. Operations that are not included in any of the reportable segments are included in the corporate category.

The reportable segments are strategic business units that offer different products and services. They are managed separately as each business requires unique technology and marketing strategies. Performance is evaluated based on operating income. Intersegment sales are generally derived from transactions made at prevailing market rates.

109

VALERO ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table reflects activity related to continuing operations (in millions):

	Refining		Ethanol			Retail		Corporate			Total
Year ended December 31, 2014:
Operating revenues from external customers	$	126,004	$	4,840		$	—	$	—		$	130,844
Intersegment revenues	—		100			—		—			100
Depreciation and amortization expense	1,597		49			—		44			1,690
Operating income (loss)	5,884		786			—		(768		)	5,902
Total expenditures for long-lived assets	2,750		42			—		30			2,822
Year ended December 31, 2013:
Operating revenues from external customers	129,064		5,114			3,896		—			138,074
Intersegment revenues	2,876		128			—		—			3,004
Depreciation and amortization expense	1,566		45			41		68			1,720
Operating income (loss)	4,211		491			81		(826		)	3,957
Total expenditures for long-lived assets	2,597		33			62		65			2,757
Year ended December 31, 2012:
Operating revenues from external customers	122,068		4,317			12,008		—			138,393
Intersegment revenues	8,946		115			—		—			9,061
Depreciation and amortization expense	1,345		42			119		43			1,549
Operating income (loss)	5,484		(47		)	348		(741		)	5,044
Total expenditures for long-lived assets	3,147		36			164		66			3,413

110

VALERO ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Our principal products include conventional and CARB gasolines, RBOB (reformulated gasoline blendstock for oxygenate blending), ultra-low-sulfur diesel, and gasoline blendstocks. We also produce a substantial slate of middle distillates, jet fuel, and petrochemicals, in addition to lube oils and asphalt. Other product revenues include such products as gas oils, No. 6 fuel oil, and petroleum coke. Operating revenues from external customers for our principal products were as follows (in millions):

	Year Ended December 31,
	2014		2013		2012
Refining:
Gasolines and blendstocks	$	56,846	$	57,806	$	55,647
Distillates	57,521		56,921		51,095
Petrochemicals	3,759		4,281		3,908
Lubes and asphalts	1,397		1,643		2,033
Other product revenues	6,481		8,413		9,385
Total refining operating revenues	126,004		129,064		122,068
Ethanol:
Ethanol	4,192		4,245		3,545
Distillers grains	648		869		772
Total ethanol operating revenues	4,840		5,114		4,317
Retail:
Fuel sales (gasoline and diesel)	—		3,226		10,045
Merchandise sales and other	—		524		1,649
Home heating oil	—		146		314
Total retail operating revenues	—		3,896		12,008
Total operating revenues	$	130,844	$	138,074	$	138,393

Operating revenues by geographic area are shown in the table below (in millions). The geographic area is based on location of customer and no customer accounted for 10 percent or more of our operating revenues.

	Year Ended December 31,
	2014		2013		2012
U.S.	$	91,499	$	100,418	$	99,879
Canada	10,410		9,974		10,376
U.K. and Ireland	14,182		13,675		12,818
Other countries	14,753		14,007		15,320
Total operating revenues	$	130,844	$	138,074	$	138,393

111

VALERO ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Long-lived assets include property, plant, and equipment and certain long-lived assets included in “deferred charges and other assets, net.” Geographic information by country for long-lived assets consisted of the following (in millions):

	December 31,
	2014		2013
U.S.	$	24,710	$	23,572
Canada	2,250		2,260
U.K.	1,206		1,148
Aruba	59		53
Ireland	22		26
Total long-lived assets	$	28,247	$	27,059

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

	December 31,
	2014		2013
Refining	$	40,103	$	41,227
Ethanol	954		889
Corporate	4,493		5,144
Total assets	$	45,550	$	47,260

In March 2014, we purchased an idled corn ethanol plant in Mount Vernon, Indiana for $34 million from a wholly owned subsidiary of Aventine Renewable Energy Holdings, Inc. We resumed production at that plant during the third quarter of 2014. In the fourth quarter of 2014, an independent appraisal of the assets acquired and liabilities assumed and certain other evaluations of the fair values related to the Mount Vernon plant were completed and finalized. The purchase price of the Mount Vernon plant was allocated based on the fair values of the assets acquired and the liabilities assumed at the date of acquisition resulting from this final appraisal and other evaluations. There were no significant adjustments made to the preliminary purchase price allocation.

112

VALERO ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

19. 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):

	Year Ended December 31,
	2014			2013			2012
Decrease (increase) in current assets:
Receivables, net	$	2,753		$	(753	)	$	437
Inventories	(1,014		)	(13		)	(282		)
Income taxes receivable	(23		)	10			51
Prepaid expenses and other	(32		)	2			(28		)
Increase (decrease) in current liabilities:
Accounts payable	(3,149		)	977			(113		)
Accrued expenses	38			53			13
Taxes other than income taxes	(64		)	337			(260		)
Income taxes payable	(319		)	309			(120		)
Changes in current assets and current liabilities	$	(1,810	)	$	922		$	(302	)

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 year ended December 31, 2013 exclude the change in current assets and current liabilities resulting from the separation of our retail business as described in Note 3;

• 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 years ended December 31, 2014, 2013 and 2012.

Noncash financing activities for the year ended December 31, 2013 included the exchange of CST’s senior unsecured bonds and the exchange of all of our remaining shares of CST common stock with third-party financial institutions in satisfaction of our short-term debt agreements as described in Note 11. There were no significant noncash financing activities for the years ended December 31, 2014 and 2012.

113

VALERO ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

	Year Ended December 31,
	2014		2013		2012
Interest paid in excess of amount capitalized	$	392	$	361	$	302
Income taxes paid, net	1,624		387		705

Cash flows related to the discontinued operations of the Aruba Refinery were immaterial for the years ended December 31, 2014, 2013, and 2012.

20. FAIR VALUE MEASUREMENTS

General

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

U.S. 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.”

U.S. 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.

114

VALERO ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 December 31, 2014 and 2013.

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.

	December 31, 2014
							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	$	3,096	$	36	$	—	$	3,132	$	(2,907	)	$	(99	)	$	126	$	—
Physical purchase contracts	—		1		—		1		n/a			n/a			1		n/a
Investments of certain benefit plans	97		—		11		108		n/a			n/a			108		n/a
Total	$	3,193	$	37	$	11	$	3,241	$	(2,907	)	$	(99	)	$	235
Liabilities:
Commodity derivative contracts	$	2,886	$	34	$	—	$	2,920	$	(2,907	)	$	(13	)	$	—	$	(25	)
Biofuels blending obligation	—		14		—		14		n/a			n/a			14		n/a
Physical purchase contracts	—		5		—		5		n/a			n/a			5		n/a
Total	$	2,886	$	53	$	—	$	2,939	$	(2,907	)	$	(13	)	$	19

115

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

	December 31, 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	$	499	$	38	$	—	$	537	$	(505	)	$	(7	)	$	25	$	—
Investments of certain benefit plans	98		—		11		109		n/a			n/a			109		n/a
Total	$	597	$	38	$	11	$	646	$	(505	)	$	(7	)	$	134
Liabilities:
Commodity derivative contracts	$	492	$	24	$	—	$	516	$	(505	)	$	(6	)	$	5	$	(76	)
Biofuels blending obligation	—		11		—		11		n/a			n/a			11		n/a
Physical purchase contracts	—		5		—		5		n/a			n/a			5		n/a
Foreign currency contracts	8		—		—		8		n/a			n/a			8		n/a
Total	$	500	$	40	$	—	$	540	$	(505	)	$	(6	)	$	29

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 21, 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 21, 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.

• 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 for our international operations to manage our exposure to exchange rate fluctuations on transactions

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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 21 under “Compliance Program Price 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 December 31, 2014 and 2013 that were measured at fair value on a recurring basis.

There was no activity during the years ended December 31, 2014, 2013, and 2012 related to the fair value amounts categorized in Level 3 as of December 31, 2014, 2013, and 2012.

Nonrecurring Fair Value Measurements

There were no assets or liabilities that were measured at fair value on a nonrecurring basis as of December 31, 2014 and 2013.

Other Financial Instruments

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

	December 31, 2014				December 31, 2013
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Cash and temporary cash investments	$	3,689	$	3,689	$	4,292	$	4,292
Financial liabilities:
Debt (excluding capital leases)	6,354		7,562		6,525		7,659

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 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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21. PRICE RISK MANAGEMENT ACTIVITIES

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 20), 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 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.

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• 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 December 31, 2014, we had no outstanding commodity derivative instruments that were entered into as fair value hedges.

• 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 December 31, 2014, we had no outstanding commodity derivative instruments that were entered into as cash flow hedges.

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• 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) feedstock and refined product inventories, (ii) forecasted feedstock and product purchases, and product sales, and (iii) fixed-price 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 December 31, 2014, we had the following outstanding commodity derivative instruments that were used as economic hedges, as well as 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	2015	2016
Crude oil and refined products:
Swaps – long	7,532	—
Swaps – short	5,676	—
Futures – long	46,886	—
Futures – short	67,600	—
Natural gas:
Options – long	1,250	—
Corn:
Futures – long	20,815	80
Futures – short	46,585	1,155
Physical contracts – long	25,327	1,081
Soybean oil:
Futures – long	94,920	—
Futures – short	178,920	—

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

As of December 31, 2014, we had the following outstanding commodity 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).

	Notional Contract Volumes by Year of Maturity
Derivative Instrument	2015	2016
Crude oil and refined products:
Swaps – long	645	—
Swaps – short	645	—
Futures – long	95,709	5,116
Futures – short	96,897	4,341
Options – long	1,900	—
Options – short	1,200	—
Natural gas:
Futures – long	6,200	—
Futures – short	4,200	—

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 December 31, 2014 and 2013, or during the years ended December 31, 2014, 2013, or 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 these 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 December 31, 2014, we had commitments to purchase $377 million of U.S. dollars. These commitments matured on or before January 31, 2015 resulting in a gain of $12 million in the first quarter of 2015.

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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. For the years ended December 31, 2014, 2013, and 2012, the cost of meeting our obligations under these compliance programs was $372 million, $517 million, and $250 million, 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 December 31, 2014 and 2013 (in millions) and the line items in the balance sheets in which the fair values are reflected. See Note 20 for additional information related to the fair values of our derivative instruments.

As indicated in Note 20, 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	December 31, 2014
		Asset Derivatives		Liability Derivatives
Derivatives not designated as hedging instruments
Commodity contracts:
Futures	Receivables, net	$	3,096	$	2,886
Swaps	Receivables, net	34		31
Options	Receivables, net	2		3
Physical purchase contracts	Inventories	1		5
Total		$	3,133	$	2,925

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

	Balance Sheet Location	December 31, 2013
		Asset Derivatives		Liability Derivatives
Derivatives designated as hedging instruments
Commodity contracts:
Futures	Receivables, net	$	25	$	36
Derivatives not designated as hedging instruments
Commodity contracts:
Futures	Receivables, net	$	474	$	455
Swaps	Receivables, net	33		18
Swaps	Prepaid expenses and other	3		—
Swaps	Accrued expenses	—		5
Options	Receivables, net	2		2
Physical purchase contracts	Inventories	—		5
Foreign currency contracts	Accrued expenses	—		8
Total		$	512	$	493
Total derivatives		$	537	$	529

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. 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.

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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 (OCI) 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	Year Ended December 31,
		2014			2013			2012
Commodity contracts:
Loss recognized in income on derivatives	Cost of sales	$	(42	)	$	(12	)	$	(250	)
Gain recognized in income on hedged item	Cost of sales	42			18			183
Gain (loss) recognized in income on derivatives (ineffective portion)	Cost of sales	—			6			(67		)

For fair value hedges, no component of the derivative instruments’ gains or losses was excluded from the assessment of hedge effectiveness for the years ended December 31, 2014, 2013, and 2012. There were no amounts recognized in income for hedged firm commitments that no longer qualified as fair value hedges during the years ended December 31, 2014and 2013; however, a gain of $28 million was recognized in income during the year ended December 31, 2012 for hedged firm commitments that no longer qualified as fair value hedges.

Derivatives in Cash Flow Hedging Relationships	Location of Gain (Loss) Recognized in Income on Derivatives	Year Ended December 31,
		2014			2013			2012
Commodity contracts:
Gain (loss) recognized in OCI on derivatives (effective portion)		$	(1	)	$	(4	)	$	45
Gain (loss) reclassified from accumulated OCI into income (effective portion)	Cost of sales	(2		)	(2		)	73
Gain (loss) recognized in income on derivatives (ineffective portion)	Cost of sales	(1		)	21			48

For cash flow hedges, no component of the derivative instruments’ gains or losses was excluded from the assessment of hedge effectiveness for the years ended December 31, 2014, 2013, and 2012. For the year ended December 31, 2014, cash flow hedges primarily related to forward purchases of crude oil, with nocumulative after-tax gains or losses on cash flow hedges remaining in accumulated other comprehensive income. For the years ended December 31, 2014, 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Derivatives Designated as Economic Hedges and Other Derivative Instruments	Location of Gain (Loss) Recognized in Income on Derivatives	Year Ended December 31,
		2014		2013		2012
Commodity contracts	Cost of sales	$	693	$	193	$	1
Foreign currency contracts	Cost of sales	40		14		(38		)

Trading Derivatives	Location of Gain (Loss) Recognized in Income on Derivatives	Year Ended December 31,
		2014		2013			2012
Commodity contracts	Cost of sales	$	38	$	21		$	(16	)
RINs fixed-price contracts	Cost of sales	—		(20		)	—

125

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

22. QUARTERLY FINANCIAL DATA (Unaudited)

The following table summarizes quarterly financial data for the years ended December 31, 2014 and 2013 (in millions, except per share amounts). The amounts shown below differ from those previously reported in our quarterly reports on Form 10-Q for the quarters ended March 31, 2013 and 2014 due to the abandonment of the Aruba Refinery in May 2014 as discussed in Note 2. The results of operations of the Aruba Refinery have been presented as discontinued operations for all periods presented.

	2014 Quarter Ended
	March 31		June 30		September 30		December 31
Operating revenues	$	33,663	$	34,914	$	34,408	$	27,859
Operating income	1,351		1,085		1,670		1,796
Net income	836		593		1,062		1,220
Net income attributable to Valero Energy Corporation stockholders	828		588		1,059		1,155
Earnings per common share	1.55		1.11		2.01		2.22
Earnings per common share – assuming dilution	1.54		1.10		2.00		2.22
	2013 Quarter Ended
	March 31		June 30 (a)		September 30		December 31
Operating revenues	33,474		34,034		36,137		34,429
Operating income	1,058		805		532		1,562
Net income	652		465		324		1,287
Net income attributable to Valero Energy Corporation stockholders	654		466		312		1,288
Earnings per common share	1.18		0.86		0.58		2.39
Earnings per common share – assuming dilution	1.18		0.85		0.57		2.38

^{____________________} 

(a) The separation of our retail business was completed on May 1, 2013.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

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 December 31, 2014.

Internal Control over Financial Reporting.

(a) Management’s Report on Internal Control over Financial Reporting.

The management report on Valero’s internal control over financial reporting required by Item 9A appears in Item 8 on page 54 of this report, and is incorporated herein by reference.

(b) Attestation Report of the Independent Registered Public Accounting Firm.

KPMG LLP’s report on Valero’s internal control over financial reporting appears in Item 8 beginning on page 56 of this report, and is incorporated herein by reference.

(c) 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.

ITEM 9B. OTHER INFORMATION

None.

127

PART III

ITEMS 10-14.

The information required by Items 10 through 14 of Form 10-K is incorporated herein by reference to the definitive proxy statement for our 2015 annual meeting of stockholders. We will file the proxy statement with the SEC before March 31, 2015.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)1. Financial Statements. The following consolidated financial statements of Valero Energy Corporation and its subsidiaries are included in Part II, Item 8 of this Form 10-K:

	Page
Management’s report on internal control over financial reporting	54
Reports of independent registered public accounting firm	55
Consolidated balance sheets as of December 31, 2014 and 2013	58
Consolidated statements of income for the years ended December 31, 2014, 2013, and 2012	59
Consolidated statements of comprehensive income for the years ended December 31, 2014, 2013, and 2012	60
Consolidated statements of equity for the years ended December 31, 2014, 2013, and 2012	61
Consolidated statements of cash flows for the years ended December 31, 2014, 2013, and 2012	62
Notes to consolidated financial statements	63

2. Financial Statement Schedules and Other Financial Information. No financial statement schedules are submitted because either they are inapplicable or because the required information is included in the consolidated financial statements or notes thereto.

3. Exhibits. Filed as part of this Form 10-K are the following exhibits:

3.01	--	Amended and Restated Certificate of Incorporation of Valero Energy Corporation, formerly known as Valero Refining and Marketing Company - incorporated by reference to Exhibit 3.1 to Valero’s Registration Statement on Form S-1 (SEC File No. 333-27013) filed May 13, 1997.
3.02	--	Certificate of Amendment (July 31, 1997) to Restated Certificate of Incorporation of Valero Energy Corporation - incorporated by reference to Exhibit 3.02 to Valero’s Annual Report on Form 10-K for the year ended December 31, 2003 (SEC File No. 1-13175).
3.03	--	Certificate of Merger of Ultramar Diamond Shamrock Corporation with and into Valero Energy Corporation dated December 31, 2001 - incorporated by reference to Exhibit 3.03 to Valero’s Annual Report on Form 10-K for the year ended December 31, 2003 (SEC File No. 1-13175).
3.04	--	Amendment (effective December 31, 2001) to Restated Certificate of Incorporation of Valero Energy Corporation - incorporated by reference to Exhibit 3.1 to Valero’s Current Report on Form 8-K dated December 31, 2001, and filed January 11, 2002 (SEC File No. 1-13175).
3.05	--	Second Certificate of Amendment (effective September 17, 2004) to Restated Certificate of Incorporation of Valero Energy Corporation - incorporated by reference to Exhibit 3.04 to Valero’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004 (SEC File No. 1-13175).

128

3.06	--	Certificate of Merger of Premcor Inc. with and into Valero Energy Corporation effective September1, 2005 - incorporated by reference to Exhibit 2.01 to Valero’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005 (SEC File No. 1-13175).
3.07	--	Third Certificate of Amendment (effective December 2, 2005) to Restated Certificate of Incorporation of Valero Energy Corporation - incorporated by reference to Exhibit 3.07 to Valero’s Annual Report on Form 10-K for the year ended December31, 2005 (SEC File No. 1-13175).
3.08	--	Fourth Certificate of Amendment (effective May 24, 2011) to Restated Certificate of Incorporation of Valero Energy Corporation - incorporated by reference to Exhibit 4.8 to Valero’s Current Report on Form 8-K dated and filed May24, 2011 (SEC File No. 1-13175).
3.09	--	Amended and Restated Bylaws of Valero Energy Corporation - incorporated by reference to Exhibit 3.01 to Valero’s Current Report on Form 8-K dated January 23, 2015 and filed January 30, 2015 (SEC File No. 1-13175).
4.01	--	Indenture dated as of December 12, 1997 between Valero Energy Corporation and The Bank of New York - incorporated by reference to Exhibit 3.4 to Valero’s Registration Statement on Form S-3 (SEC File No. 333-56599) filed June 11, 1998.
4.02	--	First Supplemental Indenture dated as of June 28, 2000 between Valero Energy Corporation and The Bank of New York (including Form of 7 3/4% Senior Deferrable Note due 2005) - incorporated by reference to Exhibit 4.6 to Valero’s Current Report on Form 8-K dated June 28, 2000, and filed June 30, 2000 (SEC File No. 1-13175).
4.03	--	Indenture (Senior Indenture) dated as of June 18, 2004 between Valero Energy Corporation and Bank of New York - incorporated by reference to Exhibit 4.7 to Valero’s Registration Statement on Form S-3 (SEC File No. 333-116668) filed June21, 2004.
4.04	--	Form of Indenture related to subordinated debt securities - incorporated by reference to Exhibit 4.8 to Valero’s Registration Statement on Form S-3 (SEC File No. 333-116668) filed June 21, 2004.
4.05	--	Specimen Certificate of Common Stock - incorporated by reference to Exhibit 4.1 to Valero’s Registration Statement on Form S-3 (SEC File No. 333-116668) filed June 21, 2004.
+10.01	--	Valero Energy Corporation Annual Bonus Plan, amended and restated as of July 29, 2009 - incorporated by reference to Exhibit 10.01 to Valero’s Current Report on Form 8-K dated July 29, 2009, and filed August 4, 2009 (SEC File No. 1-13175).
+10.02	--	Valero Energy Corporation Annual Incentive Plan for Named Executive Officers - incorporated by reference to Exhibit 10.01 to Valero’s Current Report on Form 8-K dated February22, 2012, and filed February27, 2012 (SEC File No. 1-13175).
+10.03	--	Valero Energy Corporation 2005 Omnibus Stock Incentive Plan, amended and restated as of October1, 2005 - incorporated by reference to Exhibit 10.02 to Valero’s Annual Report on Form 10-K for the year ended December31, 2009 (SEC File No. 1-13175).
+10.04	--	Valero Energy Corporation 2011 Omnibus Stock Incentive Plan - incorporated by reference to Appendix A to Valero’s Definitive Proxy Statement on Schedule 14A for the 2011 annual meeting of stockholders, filed March18, 2011 (SEC File No. 1-13175).
+10.05	--	Valero Energy Corporation Deferred Compensation Plan, amended and restated as of January 1, 2008 - incorporated by reference to Exhibit 10.04 to Valero’s Annual Report on Form 10-K for the year ended December31, 2008 (SEC File No. 1-13175).
*+10.06	--	Form of Elective Deferral Agreement pursuant to the Valero Energy Corporation Deferred Compensation Plan.
*+10.07	--	Form of Investment Election Form pursuant to the Valero Energy Corporation Deferred Compensation Plan.
*+10.08	--	Form of Distribution Election Form pursuant to the Valero Energy Corporation Deferred Compensation Plan.

129

+10.09	--	Valero Energy Corporation Amended and Restated Supplemental Executive Retirement Plan, amended and restated as of November10, 2008 - incorporated by reference to Exhibit 10.08 to Valero’s Annual Report on Form 10-K for the year ended December31, 2008 (SEC File No. 1-13175).
+10.10	--	Valero Energy Corporation Excess Pension Plan, as amended and restated effective December31, 2011 - incorporated by reference to Exhibit 10.10 to Valero’s Annual Report on Form 10-K for the year ended December31, 2011 (SEC File No. 1-13175).
+10.11	--	Form of Indemnity Agreement between Valero Energy Corporation (formerly known as Valero Refining and Marketing Company) and certain officers and directors - incorporated by reference to Exhibit 10.8 to Valero’s Registration Statement on Form S-1 (SEC File No. 333-27013) filed May 13, 1997.
*+10.12	--	Schedule of Indemnity Agreements.
+10.13	--	Form of Change of Control Severance Agreement (Tier I) between Valero Energy Corporation and executive officer - incorporated by reference to Exhibit 10.15 to Valero’s Annual Report on Form 10-K for the year ended December 31, 2011 (SEC File No. 1-13175).
*+10.14	--	Schedule of Change of Control Severance Agreements (Tier I).
+10.15	--	Form of Change of Control Severance Agreement (Tier II) between Valero Energy Corporation and executive officer - incorporated by reference to Exhibit 10.16 to Valero’s Annual Report on Form 10-K for the year ended December 31, 2013 (SEC File No. 1-13175).
*+10.16	--	Schedule of Change of Control Severance Agreements (Tier II).
+10.17	--	Form of Amendment to Change of Control Severance Agreements (to eliminate excise tax gross-up benefit) - incorporated by reference to Exhibit 10.17 to Valero’s Annual Report on Form 10-K for the year ended December 31, 2012 (SEC File No. 1-13175).
*+10.18	--	Schedule of Amendments to Change of Control Severance Agreements.
+10.19	--	Form of Performance Share Award Agreement pursuant to the Valero Energy Corporation 2011 Omnibus Stock Incentive Plan - incorporated by reference to Exhibit 10.19 to Valero’s Annual Report on Form 10-K for the year ended December 31, 2013 (SEC File No. 1-13175).
*+10.20	--	Form of Performance Share Award Agreement (with Dividend Equivalent Award) pursuant to the Valero Energy Corporation 2011 Omnibus Stock Incentive Plan.
+10.21	--	Form of Stock Option Agreement pursuant to the Valero Energy Corporation 2011 Omnibus Stock Incentive Plan - incorporated by reference to Exhibit 10.21 to Valero’s Annual Report on Form 10-K for the year ended December 31, 2011 (SEC File No. 1-13175).
+10.22	--	Form of Performance Stock Option Agreement pursuant to the Valero Energy Corporation 2011 Omnibus Stock Incentive Plan - incorporated by reference to Exhibit 10.21 to Valero’s Annual Report on Form 10-K for the year ended December 31, 2012 (SEC File No. 1-13175).
+10.23	--	Form of Stock Option Agreement pursuant to the Valero Energy Corporation Non-Employee Director Stock Option Plan - incorporated by reference to Exhibit 10.04 to Valero’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2006 (SEC File No. 1-13175).
+10.24	--	Form of Restricted Stock Agreement (with acceleration feature) pursuant to the Valero Energy Corporation 2011 Omnibus Stock Incentive Plan - incorporated by reference to Exhibit 10.24 to Valero’s Annual Report on Form 10-K for the year ended December 31, 2011 (SEC File No. 1-13175).
+10.25	--	Form of Restricted Stock Agreement (without acceleration feature) pursuant to the Valero Energy Corporation 2011 Omnibus Stock Incentive Plan - incorporated by reference to Exhibit 10.25 to Valero’s Annual Report on Form 10-K for the year ended December 31, 2012 (SEC File No. 1-13175).
10.26	--	$3,000,000,000 5-Year Second Amended and Restated Revolving Credit Agreement, dated as of November 22, 2013, among Valero Energy Corporation, as Borrower; JPMorgan Chase Bank, N.A., as Administrative Agent; and the lenders named therein - incorporated by reference to Exhibit 10.27 to Valero’s Annual Report on Form 10-K for the year ended December 31, 2013 (SEC File No. 1-13175).
*12.01	--	Statements of Computations of Ratios of Earnings to Fixed Charges.

130

14.01	--	Code of Ethics for Senior Financial Officers - incorporated by reference to Exhibit 14.01 to Valero’s Annual Report on Form 10-K for the year ended December31, 2003 (SEC File No. 1-13175).
*21.01	--	Valero Energy Corporation subsidiaries.
*23.01	--	Consent of KPMG LLP dated February 26, 2015.
*24.01	--	Power of Attorney dated February 26, 2015 (on the signature page of this Form 10-K).
*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 (under Section 906 of the Sarbanes-Oxley Act of 2002).
*99.01	--	Audit Committee Pre-Approval Policy.
***101	--	Interactive Data Files

______________

* Filed herewith.

** Furnished herewith.

*** Submitted electronically herewith.

+ Identifies management contracts or compensatory plans or arrangements required to be filed as an exhibit hereto.

Pursuant to paragraph 601(b)(4)(iii)(A) of Regulation S-K, the registrant has omitted from the foregoing listing of exhibits, and hereby agrees to furnish to the SEC upon its request, copies of certain instruments, each relating to debt not exceeding 10 percent of the total assets of the registrant and its subsidiaries on a consolidated basis.

131

SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) 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/ Joseph W. Gorder
	(Joseph W. Gorder)
	Chairman of the Board, President, and Chief Executive Officer

Date: February 26, 2015

132

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Joseph W. Gorder, Michael S. Ciskowski, and Jay D. Browning, or any of them, each with power to act without the other, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any or all subsequent amendments and supplements to this Annual Report on Form 10-K, and to file the same, or cause to be filed the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto each said attorney-in-fact and agent full power to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby qualifying and confirming all that said attorney-in-fact and agent or his substitute or substitutes may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Joseph W. Gorder	Chairman of the Board, President, and Chief Executive Officer (Principal Executive Officer)	February 26, 2015
(Joseph W. Gorder)
/s/ Michael S. Ciskowski	Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)	February 26, 2015
(Michael S. Ciskowski)
/s/ Jerry D. Choate	Director	February 26, 2015
(Jerry D. Choate)
/s/ Deborah P. Majoras	Director	February 26, 2015
(Deborah P. Majoras)
/s/ Donald L. Nickles	Director	February 26, 2015
(Donald L. Nickles)
/s/ Philip J. Pfeiffer	Director	February 26, 2015
(Philip J. Pfeiffer)
/s/ Robert A. Profusek	Director	February 26, 2015
(Robert A. Profusek)
/s/ Susan Kaufman Purcell	Director	February 26, 2015
(Susan Kaufman Purcell)
/s/ Stephen M. Waters	Director	February 26, 2015
(Stephen M. Waters)
/s/ Randall J. Weisenburger	Director	February 26, 2015
(Randall J. Weisenburger)
/s/ Rayford Wilkins, Jr.	Director	February 26, 2015
(Rayford Wilkins, Jr.)

133

EX-10.06

Exhibit 10.06

2015 ELECTIVE DEFERRAL AGREEMENT

Valero Energy Corporation Deferred Compensation Plan

Pursuant to the Valero Energy Corporation Deferred Compensation Plan (the “Plan”):

¨I elect not to participate in the Plan during 2015.

¨ I hereby elect to defer a portion of my compensation for the period commencing January 1, 2015 and ending December 31, 2015 (the “Plan Year”) as follows:

Salary(elect either 1 or 2)

1.    ________% (in even 1% increments not to exceed 30%) of the regular salary to which I may become entitled during the Plan Year;

2.    $_________ per pay period of the regular salary to which I may become entitled with respect to (check either (a) or (b) below):

(a)    ________ all pay periods during the Plan Year

(b)    ________ the following pay periods (specify):

____________________________________________

____________________________________________

Bonus(elect either 3 or 4 for bonus earned in 2015 and possibly payable in 2016)

3.    ________% (in even 1% increments not to exceed 50%) of any cash bonuses to which I may become entitled;

4.    $_________ of any cash bonuses to which I may become entitled.

NOTE: In order to be effective, this form must be completed, signed, and returned to Financial Benefits (San Antonio/Mailstation E1L or fax 210/345-3063) on or beforeDecember 1, 2014. If your form is not timely submitted, you will not be eligible to participate in the Plan for the 2015 Plan Year.

The Company has taken measures to design the Plan in a manner that conforms to current tax law. However, it is possible that new legislation could affect your deferral elections. Your 2015 Plan Year deferral elections are irrevocable and are governed by the terms and conditions of the Plan as well as any modifications made to the Plan in order to conform to legal requirements.

ACKNOWLEDGED AND AGREED:

I hereby authorize the above amounts to be deducted and deferred through payroll deduction/reduction by the Company.

Participant's Signature	Date
Participant's Name	Participant's Employee ID Number

EX-10.07

Exhibit 10.07

2015 INVESTMENT ELECTION FORM

Valero Energy Corporation Deferred Compensation Plan

Direction of Investments

The undersigned Participant hereby directs that the measurement of the Participant’s account be determined as if it were invested in the fund options as indicated below.

DEFERRALS OF SALARY AND/OR BONUSES BEGINNING 1/1/2015

WILL BE TREATED AS IF INVESTED AS INDICATED BELOW.

Enter your investment elections: 5% minimum/increments of 5%.

The total of the percentages must equal 100%.

You may invest in any one or more (including all) of the fund options.

_ _ _ _ _%Dreyfus Appreciation (DGAGX)

_ _ _ _ _%Fidelity Intermediate Government (FSTGX)

_ _ _ _ _%Janus Worldwide (JAWWX)

_ _ _ _ _%Milestone Funds Treasury Obligations Portfolio (MTIXX)

_ _ _ _ _%Oakmark I (OAKMX)

_ _ _ _ _%Price Mid-Cap Growth (RPMGX)

_ _ _ _ _%Columbia Income Z (SRINX)

_ _ _ _ _%Vanguard Balanced Index (VBINX)

_ _ _ _ _%Vanguard Index Extended Market (VEXMX)

_ _ _ _ _%Vanguard Index 500 (VFINX)

_ _ _ _ _%Vanguard Growth and Income (VQNPX)

________

100  %

I understand that the elections I have chosen on this form shall remain in effect until I make a directive to change.

Participant's Signature	Date
Participant's Name	Participant's Employee ID Number

EX-10.08

Exhibit 10.08

2015 DISTRIBUTION ELECTION FORM

Valero Energy Corporation Deferred Compensation Plan

Payment Election Upon Retirement

DEFAULT PAYMENT IF NO ELECTION IS MADE: Fifteen annual installments commencing at date of retirement

I elect that, upon retirement, the value of my Plan account related to deferrals made for the 2015 Plan Year will be paid at the time and in the manner elected below: Payment Commencement (choose one): ¨As soon as administratively possible following retirement (this is the default if no election is made) ¨January 1 after the year of retirement AND Form of Distribution (choose one): ¨Lump sum payment ¨Annual installments for _______ years (choose 2 - 15 years)

Payment Election Upon Other Separation

DEFAULT PAYMENT IF NO ELECTION IS MADE: Immediate lump sum payable upon separation

I elect that, upon my separation from employment for a reason other than retirement, the value of my Plan account related to deferrals made for the 2015 Plan Year will be paid at the time and in the manner elected below: Payment Commencement (choose one): ¨As soon as administratively possible following separation (this is the default if no election is made) ¨January 1 after the year of separation AND Form of Distribution (choose one): ¨Lump sum (this is the default payment if no election is made) ¨Five annual installments

Distribution on Specified Date
In accordance with Section 6.4 of the Plan, I hereby elect to receive in one lump sum payment my Account derived from deferrals made during the 2015 Plan Year on the date or dates specified below, or the balance of the Account, if less. Any amounts distributed pursuant to this election shall immediately reduce my Account accordingly. (The earliest date that can be elected to receive 2015 deferrals is January 1, 2019.)
	Specified Date	Amount of Elective Deferral or Total Amount of the Account (Whichever is Less)

NOTE: In order to be effective, this form must be completed, signed, and returned to Financial Benefits (San Antonio/Mailstation E1L) on or before December 1, 2014. If your form is not timely submitted, your Plan deferral will be subject to the default distributions noted above.

The Company has taken measures to design the Plan in a manner that conforms to current tax law. However, it is possible that new legislation could affect your distribution elections, including delaying your distributions, in order to comply with legal requirements. Distribution elections submitted pursuant to the Plan will be governed by the terms and conditions of the Plan and governing law, and your elections will be subject to modifications made to the Plan in order to conform to legal requirements.

ACKNOWLEDGED AND AGREED:

Participant's Signature	Date
Participant's Name	Participant's Employee ID Number

EX-10.12

EXHIBIT 10.12

SCHEDULE OF INDEMNITY AGREEMENTS

The following have executed Indemnity Agreements substantially in the form of the agreement attached as Exhibit 10.8 to Valero’s Registration Statement on Form S-1 (SEC File No. 333-27013) filed May 13, 1997.

Susan Kaufman Purcell

EX-10.14

EXHIBIT 10.14

SCHEDULE OF CHANGE OF CONTROL AGREEMENTS (Tier I)

The following have executed Change of Control Agreements substantially in the form of the agreement attached as Exhibit 10.15 to Valero’s Annual Report on Form 10-K for the year ended December 31, 2011 (SEC File No. 1-13175).

Michael S. Ciskowski

Joseph W. Gorder

EX-10.16

EXHIBIT 10.16

SCHEDULE OF CHANGE OF CONTROL AGREEMENTS (Tier II)

The following have executed Change of Control Agreements substantially in the form of the agreement attached as Exhibit 10.16 to Valero’s Annual Report on Form 10-K for the year ended December 31, 2013 (SEC File No. 1-13175).

Jay D. Browning

R. Michael Crownover

EX-10.18

Exhibit 10.18

SCHEDULE OF AMENDMENTS TO CHANGE OF CONTROL SEVERANCE AGREEMENTS

The following have executed Amendments to Change of Control Severance Agreements substantially in the form of the amendment attached as Exhibit 10.17 to Valero’s Annual Report on Form 10-K for the year ended December 31, 2012 (SEC File No. 1-13175).

Jay D. Browning

Michael S. Ciskowski

R. Michael Crownover

Joseph W. Gorder

EX-10.20

Exhibit 10.20

PERFORMANCE SHARE AGREEMENT

(with Dividend Equivalent Award)

This Performance Share Agreement (the “Agreement”) is entered into as of October 23, 2014, by and between Valero Energy Corporation, a Delaware corporation (“Valero”), and _____________, a participant (the “Participant”) in Valero’s 2011 Omnibus Stock Incentive Plan (as may be amended, the “Plan”), pursuant to and subject to the provisions of the Plan.

1. Grant of Performance Shares. Valero hereby grants to Participant 20,790 Performance Shares pursuant to Section 6.7 of the Plan. The Performance Shares represent rights to receive shares of Common Stock of Valero, subject to the terms and conditions of this Agreement and the Plan.

2. Vesting and Delivery of Shares.

A. Vesting. The Performance Shares granted hereunder shall vest over a period of three years in equal, one-third increments with the first increment vesting on the date of the regularly scheduled meeting of the Board’s Compensation Committee in January 2016, and the second and third increments vesting on the Committee’s meeting dates in January 2017 and January 2018, respectively (each of these three vesting dates is referred to as a “Normal Vesting Date”); any award(s) of shares of Common Stock resulting in connection with such vesting shall be subject to verification of attainment of the Performance Objectives described in Section 4 below by the Compensation Committee. If the Committee is unable to meet in January of a given year, then the Normal Vesting Date for that year will be the date not later than March 31 of that year as selected by the Compensation Committee.

B. Rights. Until shares of Common Stock are actually issued to Participant (or his or her estate) in settlement of the Performance Shares, neither Participant nor any person claiming by, through or under Participant shall have any rights as a stockholder of Valero (including, without limitation, voting rights or any right to receive dividends or other distributions) with respect to such shares.

C. Distribution. Any shares of Common Stock to be distributed under the terms of this Agreement shall be distributed as soon as administratively practicable after Performance Objectives described in Section 4 below have been verified by the Compensation Committee, but not later than two-and-one-half months following the end of the year in which such verification occurred.

3. Performance Period. Except as provided below with respect to a Change of Control (as defined in the Plan), the “Performance Period” for any Performance Shares eligible to vest on any given Normal Vesting Date shall be as follows:

A. First Segment. The Performance Period for the first one-third vesting of Performance Shares (those vesting on the Normal Vesting Date in January 2016) shall be the calendar year ending on December 31, 2015.

B. Second Segment. The Performance Period for the second one-third vesting of Performance Shares (those vesting on the Normal Vesting Date in January 2017) shall be the two calendar years ending December 31, 2016.

C. Third Segment. The Performance Period for the final one-third vesting of Performance Shares (those vesting on the Normal Vesting Date in January 2018) shall be the three calendar years ending December 31, 2017.

Page 1

4. Performance Objectives.

A. Total Shareholder Return. Total Shareholder Return (“TSR”) will be compiled for a peer group of companies (the “Target Group”) for the Performance Period immediately preceding each Normal Vesting Date. TSR for each such company is measured by dividing (A) the sum of (i) the dividends on the common stock of such company during the Performance Period, assuming dividend reinvestment, and (ii) the difference between the average closing price of a share of such company’s common stock for the 30 days of December 2 to December 31 at the end of the Performance Period and the average closing price of such shares for the 30 days of December 2 to December 31 immediately prior to the beginning of the Performance Period (appropriately adjusted for any stock dividend, stock split, spin-off, merger or other similar corporate events), by (B) the average closing price of a share of such company’s common stock for the 30 days of December 2 to December 31 immediately prior to the beginning of the Performance Period.

B. Target Group. The applicable Target Group shall be selected by the Compensation Committee, acting in its sole discretion, each year not later than 90 days after the commencement of the calendar year preceding each Normal Vesting Date. The same Target Group shall be used to measure TSR with regard to all Performance Shares vesting under all Performance Award Agreements of Valero having a similar Normal Vesting Date.

C. Performance Ranking and Award of Common Shares. For each Performance Period, the TSR for Valero and each company in the Target Group shall be arranged by rank from best performer to worst performer according to the TSR achieved by each company. Shares of Common Stock will be awarded to Participant in accordance with Valero’s percentile ranking within the Target Group. The number of shares of Common Stock, if any, that Participant will be entitled to receive in settlement of the vested Performance Shares will be determined on each Normal Vesting Date and, subject to the provisions of the Plan and this Agreement, on such Normal Vesting Date, the following percentage of the vested Performance Shares will be awarded as shares of Common Stock to the Participant when Valero’s TSR during the Performance Period falls within the following percentiles (“Percentiles”), with awards of Common Stock to be interpolated between the “25th Percentile” and “50th Percentile” and between the “50th Percentile” and “75th Percentile”:

Valero Performance	Percent of vested Performance Shares to be awarded as Shares of Common Stock
75th Percentile or Higher	200%
50th Percentile (to 74.99%)	100% (to 199%)
25th Percentile (to 49.99%)	25% (to 99%)
Below 25th Percentile	0%

D. Unearned Shares. Any Performance Shares not awarded as shares of Common Stock on a Normal Vesting Date will expire and be forfeited; such Performance Shares may not be carried forward for any additional Performance Period.

5. Dividend Equivalent Award. In addition to the Performance Shares granted in Section 1, the Participant is granted a Dividend Equivalent Award payable in shares of Common Stock, as

Page 2

provided herein. On each Normal Vesting Date, the amount of dividends paid to holders of Common Stock during the applicable Performance Period shall be determined with respect to the Participant’s Performance Shares that are vesting on that Normal Vesting Date – calculated as if the Performance Shares were outstanding shares of Common Stock (the resulting value being hereafter referred to as the “Target Dividend Equivalent Value”). The Target Dividend Equivalent Value shall then be subject to further calculation according to Valero’s TSR ranking during the Performance Period as prescribed in Section 4.C. above (i.e., payout from 0% to 200% depending on Valero’s TSR ranking). The number of shares of Common Stock payable to Participant with respect to the Dividend Equivalent Award is equal to (x) the Target Dividend Equivalent Value multiplied by the Performance Period’s payout percentage calculated per Section 4.C., divided by (y) the Fair Market Value of the Common Stock on the Normal Vesting Date (the resulting number being rounded up to the nearest whole number of shares). See Exhibit A for an example of this calculation.

6. Termination of Employment.

A. Voluntary Termination, Termination for “Cause,” and Early Retirement. If Participant’s employment is

(i) voluntarily terminated by the Participant (other than through normal retirement, death or disability), including termination in connection with Participant’s voluntary early retirement (i.e., prior to age 62),

(ii) terminated by Valero for “cause” (as defined pursuant to the Plan),

then those Performance Shares that are outstanding and have not vested as of the effective date of termination shall thereupon be forfeited.

B. Retirement. If a Participant’s employment is terminated through his or her normal retirement (i.e., age 62+ retirement), then any Performance Shares that (i) have not theretofore vested or been forfeited, and (ii) were granted at least one year prior to the Participant’s effective date of retirement, shall continue to remain outstanding and shall vest on the Normal Vesting Dates according to their original vesting schedule.

But any outstanding Performance Shares that were granted within one year of the Participant’s effective date of retirement shall be prorated as follows. The outstanding Performance Shares shall be prorated based on the number of months worked from the date of grant to the Participant’s retirement date (rounding upward), and the prorated number of Performance Shares shall thereafter vest on the Normal Vesting Dates according to their original vesting schedule. Example:

• 20,790 Performance Shares granted on October 23, 2014,

• normal retirement date of Participant is effective April 1, 2015,

• working period is calculated as 6 months (5 full months plus partial month rounding upward to 6 months),

• original grant is adjusted by 6/12ths (50%) resulting in 10,395 Performance Shares to vest according to their original vesting schedule.

C. Death, Disability, Involuntary Termination Other Than for “Cause,” and Change of Control. If a Participant’s employment is terminated (i) through death or disability, or (ii) by Valero other than for cause (as determined pursuant to the Plan), or (iii) as a result of a Change of Control (as described in the Plan) (each of the foregoing is hereafter referred to as a “Trigger Date”), then each Performance Period with respect to any Performance Shares

Page 3

that have not vested or been forfeited shall be terminated effective as of such Trigger Date; the TSR for Valero and for each company in the Target Group shall be determined for each such shortened Performance Period and the percentage of Performance Shares to be awarded as shares of Common Stock for each such shortened Performance Period shall be determined in accordance with Section 4 and shall be distributed as soon as administratively practicable thereafter.

(i) or purposes of determining the number of Performance Shares to be received as of any Trigger Date, the Target Group as most recently determined by the Compensation Committee prior to the Trigger Date shall be used.

(ii) If the Trigger Date is the result of a Change of Control, then the number of shares of Common Stock to be awarded to the Participant shall be prorated commensurate with the length of service of the Participant during each Performance Period. See Exhibit B for an example of this calculation.

7. Plan Incorporated by Reference. The Plan is incorporated into this Agreement by this reference and is made a part hereof for all purposes. Capitalized terms not otherwise defined in this Agreement shall have the meaning specified in the Plan.

8. No Assignment. This Agreement and the Participant’s interest in the Performance Shares granted by this Agreement are of a personal nature, and, except as expressly permitted under the Plan, Participant’s rights with respect thereto may not be sold, mortgaged, pledged, assigned, transferred, conveyed or disposed of in any manner by Participant, except by an executor or beneficiary pursuant to a will or pursuant to the laws of descent and distribution. Any such attempted sale, mortgage, pledge, assignment, transfer, conveyance or disposition is void, and Valero will not be bound thereby.

9. Integration. This Agreement constitutes the entire agreement of the parties relating to the transactions contemplated hereby, and supersedes all provisions and concepts contained in all prior contracts or agreements between the Participant and Valero, including that certain Change of Control Severance Agreement (“COC Agreement”) between Participant and Valero. For avoidance of doubt, Participant acknowledges that in the context of a Change of Control of Valero, the terms of this Agreement shall prevail over the terms of the COC Agreement with respect to the vesting of the Performance Shares granted under this Agreement.

10. Successors. This Agreement shall be binding upon any successors of Valero and upon the beneficiaries, legatees, heirs, administrators, executors, legal representatives, successors and permitted assigns of Participant.

11. Code Section 409A. This Agreement is intended to comply, and shall be administered consistently in all respects, with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations and additional guidance promulgated thereunder to the extent applicable. Accordingly, Valero shall have the authority to take any action, or refrain from taking any action, with respect to this Agreement that is reasonably necessary to ensure compliance with Code Section 409A (provided that Valero shall choose the action that best preserves the value of payments and benefits provided to Participant under this Agreement that is consistent with Code Section 409A), and the parties agree that this Agreement shall be interpreted in a manner that is consistent with Code Section 409A. In furtherance, but not in limitation of the foregoing:

Page 4

(a) in no event may Participant designate, directly or indirectly, the calendar year of any payment to be made hereunder;

(b) to the extent the Participant is a “specified employee” within the meaning of Code Section 409A, payments, if any, that constitute a “deferral of compensation” under Code Section 409A and that would otherwise become due during the first six months following Participant’s termination of employment shall be delayed and all such delayed payments shall be paid in full in the seventh month after such termination date, provided that the above delay shall not apply to any payment that is excepted from coverage by Code Section 409A, such as a payment covered by the short-term deferral exception described in Treasury Regulations Section 1.409A-1(b)(4);

(c) notwithstanding any other provision of this Agreement, a termination, resignation or retirement of Participant’s employment hereunder shall mean and be interpreted consistent with a “separation from service” within the meaning of Code Section 409A.

Executed effective as of the date first written above.

VALERO ENERGY CORPORATION

by: ______________________________________

R. Michael Crownover, Executive Vice President

and Chief Administrative Officer

______________________________________

Participant

Page 5

Exhibit A
Example of Potential Payout of Dividend Equivalent Award in Shares of Common Stock
(per Section 5 of the Agreement)
Assumptions and Calculations (for illustration purposes only):
1.	The number of Performance Shares granted to Participant on October 23, 2014 was:								20,790
2.	The Normal Vesting Date for the second segment of Performance Shares is January 18, 2017. These
	Performance Shares are vesting with respect to the two-year Performance Period ending Dec. 31, 2016.
	The number of Performance Shares vesting on this date is:
		20,790
		divided by 3
		6,930
3.	The cumulative amount of dividends paid to holders of Common Stock during the Performance Period is:
		dividends per share paid:		1Q15	$0.275	1Q16	$0.29
				2Q15	$0.275	2Q16	$0.29
				3Q15	$0.275	3Q16	$0.29
				4Q15	$0.275	4Q16	$0.29
					$1.10	plus	$1.16	$2.26
4.	The "Target Dividend Equivalent Value" is calculated to be:
		6,930	Performance Shares vesting
		$2.26	times accumulated dividends per share
		$15,661.80	Target Dividend Equivalent Value
5.	Valero's TSR ranking for the Performance Period is determined (per Section 4.C.) to generate a
	payout of 150%.
6.	The Fair Market Value of the Common Stock on the vesting date is $49.50.
7.	Based on the foregoing, the total number of shares of Common Stock earned by the Participant on the
	vesting date is calculated as follows:
	Section 4.C.	6,930	Performance Shares vesting
		x 150%	TSR ranking payout percentage
		10,395	common shares earned for Performance Shares
	Section 5	$15,661.80	Target Dividend Equivalent Value
		x 150%	TSR ranking payout percentage
		$23,492.70	dividend equivalent based on segment performance
		divided by $49.50	FMV per share
		475	common shares earned for Dividend Equivalent Award
		10,870	total common shares earned on vesting date

Exhibit A

Exhibit B
Example of Potential Payout in a Change of Control Context
(per Section 6.C.(ii) of the Agreement)
Assumptions and Calculations (for illustration purposes only):
1.	The number of Performance Shares granted to Participant on October 23, 2014 was:						20,790
2.	The Participant's employment is terminated on June 30, 2015 as a result of a Change of Control.
3.	Per Section 6.C. of the Agreement, all Performance Periods for all segments (First Segment,
	Second Segment, Third Segment (See Section 3)) are shortened to end June 30, 2015.
4.	As a result of the TSR calculations of Section 4.C., Valero is ranked in the "75th percentile or
	higher" for each shortened Performance Period, resulting in a 200% payout of common shares
	in each instance.
5.	Payout of common shares to the Participant is prorated based on the Participant's length of service
	during the original Performance Periods.
	First Segment calculation.
	20,790	divided by 3 =	6,930	performance shares
		6 months of service in the 12-month Performance Period
			6,930	performance shares
			x 200%	payout
			13,860	common shares	x 6 / 12 =	6,930	common shares
	Second Segment calculation.
	20,790	divided by 3 =	6,930	performance shares
		6 months of service in the 24-month Performance Period
			6,930	performance shares
			x 200%	payout
			13,860	common shares	x 6 / 24 =	3,465	common shares
	Third Segment calculation.
	20,790	divided by 3 =	6,930	performance shares
		6 months of service in the 36-month Performance Period
			6,930	performance shares
			x 200%	payout
			13,860	common shares	x 6 / 36 =	2,310	common shares
				Total payout		12,705	common shares

Exhibit B

EX-12.01

Exhibit 12.01

VALERO ENERGY CORPORATION

STATEMENTS OF COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

(Millions of Dollars)

	Year Ended December 31, (a)
	2014				2013				2012				2011				2010
Earnings:
Income from continuing operations before income tax expense, excluding income from equity investees	$	5,538			$	3,951			$	4,736			$	3,562			$	1,736
Add:
Fixed charges	687				695				727				732				746
Amortization of capitalized interest	35				31				24				22				19
Distributions from equity investees	6				3				1				—				10
Less:
Interest capitalized	(70		)		(118		)		(220		)		(144		)		(84		)
Total earnings	$	6,196			$	4,562			$	5,268			$	4,172			$	2,427
Fixed charges:
Interest and debt expense, net of capitalized interest	$	397			$	365			$	314			$	409			$	495
Interest capitalized	70				118				220				144				84
Rental expense interest factor (b)	220				212				193				179				167
Total fixed charges	$	687			$	695			$	727			$	732			$	746
Ratio of earnings to fixed charges	9.0			x	6.6			x	7.2			x	5.7			x	3.3			x

__________

(a) The results of operations of the Aruba Refinery have been reported as discontinued operations for all years presented.

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

EX-21.01

Exhibit 21.01

Valero Energy Corporation and Subsidiaries

as of February 4, 2015

Name of Entity	State of Incorporation/Organization
CANADIAN ULTRAMAR COMPANY	Nova Scotia
COLONNADE VERMONT INSURANCE COMPANY	Vermont
DIAMOND ALTERNATIVE ENERGY, LLC	Delaware
DIAMOND ALTERNATIVE ENERGY OF CANADA INC.	Canada
DIAMOND GREEN DIESEL HOLDINGS LLC	Delaware
DIAMOND GREEN DIESEL LLC	Delaware
DIAMOND K RANCH LLC	Texas
DIAMOND OMEGA COMPANY, L.L.C.	Delaware
DIAMOND SHAMROCK REFINING COMPANY, L.P.	Delaware
DIAMOND UNIT INVESTMENTS, L.L.C.	Delaware
DSRM NATIONAL BANK	U.S.A.
EASTVIEW FUEL OILS LIMITED	Ontario
ENTERPRISE CLAIMS MANAGEMENT, INC.	Texas
GOLDEN EAGLE ASSURANCE LIMITED	British Columbia
HUNTWAY REFINING COMPANY	Delaware
MAINLINE PIPELINES LIMITED	England and Wales
MICHIGAN REDEVELOPMENT GP, LLC	Delaware
MICHIGAN REDEVELOPMENT, L.P.	Delaware
MRP PROPERTIES COMPANY, LLC	Michigan
NECHES RIVER HOLDING CORP.	Delaware
OCEANIC TANKERS AGENCY LIMITED	Quebec
PI DOCK FACILITIES LLC	Delaware
PORT ARTHUR COKER COMPANY L.P.	Delaware
PREMCOR USA INC.	Delaware
PROPERTY RESTORATION, L.P.	Delaware
SABINE RIVER HOLDING CORP.	Delaware
SABINE RIVER LLC	Delaware
SUNBELT REFINING COMPANY, L.P.	Delaware
THE PREMCOR PIPELINE CO.	Delaware
THE PREMCOR REFINING GROUP INC.	Delaware
THE SHAMROCK PIPE LINE CORPORATION	Delaware
TRANSPORT MARITIME ST. LAURENT INC.	Quebec
ULTRAMAR ACCEPTANCE INC.	Canada
ULTRAMAR ENERGY INC.	Delaware
ULTRAMAR INC.	Nevada
VALERO ARUBA ACQUISITION COMPANY I, LTD.	Virgin Islands (U.K.)
VALERO ARUBA FINANCE INTERNATIONAL, LTD.	Virgin Islands (U.K.)
VALERO ARUBA HOLDING COMPANY N.V.	Aruba
VALERO ARUBA HOLDINGS INTERNATIONAL, LTD.	Virgin Islands (U.K.)

Name of Entity	State of Incorporation/Organization
VALERO ARUBA MAINTENANCE/OPERATIONS COMPANY N.V.	Aruba
VALERO BROWNSVILLE TERMINAL LLC	Texas
VALERO CANADA FINANCE, INC.	Delaware
VALERO CANADA L.P.	Newfoundland
VALERO CAPITAL CORPORATION	Delaware
VALERO CARIBBEAN SERVICES COMPANY	Delaware
VALERO COKER CORPORATION ARUBA N.V.	Aruba
VALERO CUSTOMS & TRADE SERVICES, INC.	Delaware
VALERO ENERGY ARUBA II COMPANY	Cayman Islands
VALERO ENERGY INC.	Canada
VALERO ENERGY (IRELAND) LIMITED	Ireland
VALERO ENERGY LTD	England and Wales
VALERO ENERGY PARTNERS GP LLC	Delaware
VALERO ENERGY PARTNERS LP	Delaware
VALERO ENERGY UK LTD	England and Wales
VALERO ENTERPRISES, INC.	Delaware
VALERO EQUITY SERVICES LTD	England and Wales
VALERO FINANCE L.P. I	Newfoundland
VALERO FINANCE L.P. II	Newfoundland
VALERO FINANCE L.P. III	Newfoundland
VALERO GRAIN MARKETING, LLC	Texas
VALERO HOLDCO UK LTD	United Kingdom
VALERO HOLDINGS, INC.	Delaware
VALERO INTERNATIONAL HOLDINGS, INC.	Nevada
VALERO LIVE OAK LLC	Texas
VALERO LOGISTICS UK LTD	England and Wales
VALERO MARKETING & SUPPLY-ARUBA N.V.	Aruba
VALERO MARKETING AND SUPPLY COMPANY	Delaware
VALERO MARKETING AND SUPPY INTERNATIONAL LTD.	Cayman Islands
VALERO MARKETING IRELAND LIMITED	Ireland
VALERO MKS LOGISTICS, L.L.C.	Delaware
VALERO MOSELLE COMPANY S.à r.l.	Luxembourg
VALERO NEDERLAND COÖPERATIEF U.A.	The Netherlands
VALERO NEW AMSTERDAM B.V.	The Netherlands
VALERO OMEGA COMPANY, L.L.C.	Delaware
VALERO OPERATIONS SUPPORT, LTD	England and Wales
VALERO PARTNERS EP, LLC	Delaware
VALERO PARTNERS HOUSTON, LLC	Delaware
VALERO PARTNERS LOUISIANA, LLC	Delaware
VALERO PARTNERS LUCAS, LLC	Delaware
VALERO PARTNERS MEMPHIS, LLC	Delaware
VALERO PARTNERS NORTH TEXAS, LLC	Delaware
VALERO PARTNERS OPERATING CO. LLC	Delaware
VALERO PARTNERS PAPS, LLC	Delaware
VALERO PARTNERS SOUTH TEXAS, LLC	Delaware

Name of Entity	State of Incorporation/Organization
VALERO PARTNERS WEST MEMPHIS, LLC	Delaware
VALERO PARTNERS WYNNEWOOD, LLC	Delaware
VALERO PAYMENT SERVICES COMPANY	Virginia
VALERO PEMBROKESHIRE LLC	Delaware
VALERO PLAINS COMPANY LLC	Texas
VALERO POWER MARKETING LLC	Delaware
VALERO RAIL PARTNERS, LLC	Delaware
VALERO REFINING AND MARKETING COMPANY	Delaware
VALERO REFINING COMPANY-ARUBA N.V.	Aruba
VALERO REFINING COMPANY-CALIFORNIA	Delaware
VALERO REFINING COMPANY-OKLAHOMA	Michigan
VALERO REFINING COMPANY-TENNESSEE, L.L.C.	Delaware
VALERO REFINING-MERAUX LLC	Delaware
VALERO REFINING-NEW ORLEANS, L.L.C.	Delaware
VALERO REFINING-TEXAS, L.P.	Texas
VALERO RENEWABLE FUELS COMPANY, LLC	Texas
VALERO SECURITY SYSTEMS, INC.	Delaware
VALERO SERVICES, INC.	Delaware
VALERO TEJAS COMPANY LLC	Delaware
VALERO TERMINALING AND DISTRIBUTION COMPANY	Delaware
VALERO TEXAS POWER MARKETING, INC.	Delaware
VALERO ULTRAMAR HOLDINGS INC.	Delaware
VALERO UNIT INVESTMENTS, L.L.C.	Delaware
VALERO WEST WALES LLC	Delaware
VEC TRUST I	Delaware
VEC TRUST III	Delaware
VEC TRUST IV	Delaware
VRG PROPERTIES COMPANY	Delaware
VTD PROPERTIES COMPANY	Delaware
WARSHALL COMPANY LLC	Delaware

EX-23.01

Exhibit 23.01

Consent of Independent Registered Public Accounting Firm

The Board of Directors

Valero Energy Corporation and subsidiaries:

We consent to the incorporation by reference in the registration statements, as amended, on Form S-3 (Registration No. 333-157867) and Form S-8 (Registration Nos. 333-31709, 333-31721, 333-31723, 333-31727, 333-81858, 333-106620, 333-118731, 333-125082, 333-129032, 333-136333, and 333-174721) of Valero Energy Corporation and subsidiaries, of our reports dated February 26, 2015, with respect to the consolidated balance sheets of Valero Energy Corporation and subsidiaries as of December 31, 2014 and 2013, and the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the years in the three-year period ended December 31, 2014, and the effectiveness of internal control over financial reporting as of December 31, 2014, which reports appear in the December 31, 2014 annual report on Form 10-K of Valero Energy Corporation and subsidiaries.

/s/ KPMG LLP

San Antonio, Texas

February 26, 2015

EX-31.01

Exhibit 31.01

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Joseph W. Gorder, certify that:

1.    I have reviewed this annual report on Form 10-K 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: February 26, 2015

/s/ Joseph W. Gorder

Joseph W. Gorder

Chief Executive Officer and President

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 annual report on Form 10-K 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: February 26, 2015

/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 Annual Report of Valero Energy Corporation (the Company) on Form 10-K for the year ended December 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Joseph W. Gorder, 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/ Joseph W. Gorder

Joseph W. Gorder

Chief Executive Officer and President

February 26, 2015

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 Annual Report of Valero Energy Corporation (the Company) on Form 10-K for the year ended December 31, 2014, 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

February 26, 2015

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.

EX-99.01

Exhibit 99.01

VALERO ENERGY CORPORATION

Audit Committee Pre-Approval Policy

I.    Statement of Principles

Pursuant to Section 10A of the Securities Exchange Act of 1934, as amended by Section 202 of the Sarbanes-Oxley Act of 2002 (“SOX Act”), the Audit Committee of the board of directors (the “Audit Committee”) of Valero Energy Corporation (the “Company”) is required to pre-approve the audit and non-audit services performed by the Company’s independent auditor to assure that the provision of such services does not impair the auditor’s independence. The SEC’s rules establish two approaches for pre-approving services. The two approaches are not mutually exclusive:

• the Audit Committee may pre-approve each particular service on a case-by-case basis (“separate pre-approval”), and

• the Audit Committee may adopt a pre-approval policy that is detailed as to the particular types of services that may be provided by the independent auditor without consideration by the Audit Committee on a case-by-case basis (“policy-based pre-approval”).

The Audit Committee believes that a combination of these approaches will provide an effective and efficient procedure to pre-approve services performed by the independent auditor. Therefore, unless a type of service has received policy-based pre-approval (as specifically identified in the appendices to this policy), it will require separate pre-approval by the Audit Committee.

The appendices to this policy contain lists of services that have received policy-based pre-approval of this Audit Committee in the following categories (categorized in accordance with the SEC’s rules):

• Audit Services

• Audit-Related Services

• Tax Services

• All Other Services

II.    Term of Pre-Approvals

The term of the policy-based pre-approvals stated in the appendices to this policy is the period from January 1, 2015 to January 31, 2018, unless the Audit Committee specifically provides for a different period. The Audit Committee will review and pre-approve the services that may be provided by the independent auditor. The Audit Committee will revise the list of policy-based pre-approved services from time to time as the Committee deems necessary or appropriate.

Page 1

III.    Delegation

In accordance with the SOX Act and SEC rules, the Audit Committee hereby delegates to its Chairman the authority to grant separate pre-approvals of services and fees in accordance with this policy. The Audit Committee may further delegate pre-approval authority from time to time to one or more of its other members in its discretion. Any committee member to whom pre-approval authority is delegated shall report any pre-approval decisions to the full Audit Committee at its next meeting. The Audit Committee does not delegate its responsibilities to pre-approve services to any member of the Company’s management.

IV.    Services for whichSeparatePre-Approval is Required

The terms and fees for the following services of the independent auditor require separate pre-approval by the Audit Committee:

• the annual financial statement audit, including all audits, reviews, procedures and other services required to be performed by the independent auditor to form an opinion on the Company’s consolidated financial statements, and

• the annual audit of the Company’s internal control over financial reporting, including all services required to be performed by the independent auditor to issue its report on the effectiveness of the Company’s internal control over financial reporting.

The Audit Committee will monitor these engagements as it deems appropriate, and will approve, if necessary, any changes in terms, conditions and fees resulting from changes in engagement scope, changes in the Company’s structure or other matters.

V.    Services for whichPolicy-BasedPre-Approval is Available

A.    Audit Services

The Audit Committee may grant policy-based pre-approval for Audit Services other than the services described in Section IV above. These Audit Services are generally services that only the Company’s independent auditor reasonably can provide, and include:

• services associated with SEC registration statements (e.g., comfort letters, consents), periodic reports and other documents filed with the SEC or other documents issued in connection with securities offerings,

• statutory audits or financial audits for subsidiaries or affiliates of the Company.

The Audit Committee has given policy-based pre-approval for the Audit Services listed in Appendix A. All other Audit Services must be separately pre-approved by the Audit Committee.

Page 2

B.    Audit-Related Services

Audit-Related Services are assurance and related services that are reasonably related to the performance of the annual audit or quarterly review of the Company’s financial statements or that are traditionally performed by the independent auditor. The Audit Committee may grant policy-based pre-approval for Audit-Related Services. These services would include:

• employee benefit plan audits, and

• due diligence services related to proposed mergers and acquisitions.

The Audit Committee believes that the provision of the Audit-Related Services listed in Appendix B does not impair the independence of the auditor, and has given policy-based pre-approval for the Audit-Related Services listed in Appendix B. All other Audit-Related Services must be separately pre-approved by the Audit Committee.

C.    Tax Services

The Audit Committee believes that the independent auditor can provide Tax Services to the Company such as tax compliance, tax planning and tax advice without impairing the auditor’s independence. However, the Audit Committee will not permit the retention of the independent auditor in connection with a transaction initially recommended by the independent auditor, the purpose of which may be tax avoidance and the tax treatment of which may not be supported in the U.S. Internal Revenue Code and related regulations or in the tax laws and regulations of any jurisdiction in which the Company is subject to taxation. In addition, the independent auditor may not provide any tax services to the Company that are deemed to be incompatible with auditor independence per standards promulgated by the Public Company Accounting Oversight Board (“PCAOB”).

The Audit Committee has given policy-based pre-approval for the Tax Services listed in Appendix C. All other Tax Services must be separately pre-approved by the Audit Committee, including Tax Services related to large and complex transactions and Tax Services proposed to be provided by the independent auditor to any executive officer or director of the Company, in his or her individual capacity, when such services are paid for by the Company.

D.    All Other Services

The Audit Committee may grant policy-based pre-approval for those permissible non-audit services classified as All Other Services that it believes are routine, recurring services that would not impair the independence of the auditor. The Audit Committee has given policy-based pre-approval for the All Other Services listed in Appendix D. Any permissible All Other Services that are not listed in Appendix D must be separately pre-approved by the Audit Committee.

Page 3

VI.    Prohibited Services

A list of the SEC’s prohibited non-audit services is attached to this policy as Appendix E. The list sets forth the several services that the SOX Act and the SEC have specifically identified as services that may not be performed by the Company’s independent auditor. The Audit Committee will consult the SEC’s rules and relevant guidance, with the assistance of counsel when necessary or appropriate, to determine whether any proposed service by the independent auditor falls within any category of prohibited non-audit services.

In addition, the independent auditor may not provide any service or product to the Company for a contingent fee (as defined and interpreted by the SEC pursuant to Rule 2-01(c)(5) of Regulation S-X) or a commission, or pursuant to an agreement (written or otherwise) by the Company to pay a “value added” fee based on the results of the independent auditor’s performance of a service.

VII.    Pre-Approval Fee Levels

Pre-approval fee levels for all services to be provided by the independent auditor have been established by the Audit Committee. All services that have received policy-based pre-approval are subject to the annual pre-approval fee levels set forth in the appendices to this policy. Any proposed services exceeding these amounts will require separate pre-approval by the Audit Committee or by any person to whom pre-approval authority is granted under Section III above. Unused pre-approval amounts from one year may not be carried forward to the next year.

VIII.    Procedures

Requests or applications to provide services that require separate approval by the Audit Committee must be submitted to the Audit Committee by both the independent auditor and the Company’s Chief Financial Officer (or his designee), and must be consistent with the SEC’s rules on auditor independence. In connection with the Audit Committee’s consideration of any proposed service, the independent auditor, at the Committee’s request, will provide to the Audit Committee detailed documentation regarding the specific services to be provided so that the Committee can make a well-reasoned assessment of the impact of the service on the auditor’s independence.

The Audit Committee hereby designates the Company’s Vice President of Internal Audit (the “Monitor”) to monitor the performance of all services provided by the independent auditor and to determine whether such services are in compliance with this policy. The Monitor will report to the Audit Committee on a periodic basis the results of his monitoring.

Page 4

Appendix A

Pre-Approved AUDIT SERVICES

Service

assistance with and review of documents filed with the SEC including registration statements, reports on Forms 10-K and 10-Q, and other documents

services associated with other documents issued in connection with securities offerings (e.g., comfort letters, consents)

assistance in responding to SEC comment letters

statutory audits (e.g., FERC and insurance audits) and financial audits for subsidiaries of the Company, to include services normally provided by the Company’s independent auditor in connection with statutory and regulatory filings

certificates, letters and opinions issued to regulators, agencies and other third-parties (e.g., insurance, banking, environmental) regarding the Company’s assets and/or operations that only the Company’s independent auditors reasonably can provide

consultations concerning principles of accounting and/or financial reporting treatment under standards or interpretations by the SEC, PCAOB, FASB or other regulatory or standard-setting bodies necessary to reach an audit judgment and/or opinion on the Company’s financial statements

Annual pre-approval fee limit for Audit Services (other than services pertaining to registration statements or prospectuses in connection with securities offerings)

$750,000

Annual pre-approval fee limit for Audit Services pertaining to registration statements or prospectuses in connection with securities offerings

$250,000 per registration statement or prospectus

Appendix B

Pre-Approved AUDIT-RELATED SERVICES

Service

due diligence services pertaining to potential business acquisitions or dispositions

financial statement audits of employee benefit plans

accounting consultations and audits in connection with acquisitions

consultations concerning principles of accounting and/or financial reporting treatment under standards or interpretations by the SEC, PCAOB, FASB or other regulatory or standard-setting bodies outside those consultations necessary to perform an audit or review of Valero’s financial statements in accordance with generally accepted auditing standards

Annual pre-approval fee limit for Audit-Related Services

$500,000

Appendix C

Pre-Approved TAX SERVICES

Service

Note: The following are subject to the terms of subsection C. of Section V. of this policy.

U.S. federal, state and local tax compliance, including the preparation of original and amended tax returns and claims for refunds

U.S. federal, state and local tax planning and advice, including assistance with tax audits and appeals (but expressly excluding advocacy or litigation services), tax advice related to mergers and acquisitions, tax advice relating to employee benefit plans, and requests for rulings or technical advice from taxing authorities

review of Canadian federal and provincial income tax returns

Canadian federal and provincial tax planning and advice, including assistance with tax audits and appeals (but expressly excluding advocacy or litigation services), and advice relating to the tax effects of certain employee benefit arrangements

review of federal, state, local and international income, franchise, and other tax returns

Annual pre-approval fee limit for Tax Services

$250,000

Appendix D

Pre-Approved ALL OTHER SERVICES

Services

Permissible non-audit services that would not impair the independence of the auditor. Expressly excluded from this pre-approval are the prohibited non-audit services listed on Appendix E of this policy.

Annual pre-approval fee limit for All Other Services

$ 150,000

Appendix E

Prohibited Non-Audit Services

• Bookkeeping or other services related to the accounting records or financial statements of the audit client*

• Financial information systems design and implementation*

• Appraisal or valuation services, fairness opinions or contribution-in-kind reports*

• Actuarial services*

• Internal audit outsourcing services*

• Management functions

• Human resources

• Broker-dealer, investment adviser or investment banking services

• Legal services

• Expert services unrelated to the audit

____________________

* Provision of these non-audit services may be permitted if it is reasonable to conclude that the results of these services will not be subject to audit procedures. Materiality is not an appropriate basis upon which to overcome the rebuttable presumption that prohibited services will be subject to audit procedures.

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Equity (Tables)

12 Months Ended

Dec. 31, 2014

Equity [Abstract]

Share activity

For the years ended December 31, 2014, 2013, and 2012, activity in the number of shares of common stock and treasury stock was as follows (in millions):

	Common Stock	Treasury Stock
Balance as of December 31, 2011	673	(117	)
Transactions in connection with stock-based compensation plans:
Stock issuances	—	6
Stock repurchases	—	(6	)
Stock repurchases under buyback program	—	(4	)
Balance as of December 31, 2012	673	(121	)
Transactions in connection with stock-based compensation plans:
Stock issuances	—	6
Stock repurchases	—	(6	)
Stock repurchases under buyback program	—	(17	)
Balance as of December 31, 2013	673	(138	)
Transactions in connection with stock-based compensation plans:
Stock issuances	—	4
Stock repurchases	—	(2	)
Stock repurchases under buyback program	—	(23	)
Balance as of December 31, 2014	673	(159	)

Income tax effects related to components of other comprehensive income (loss)

The following table reflects the tax effects allocated to each component of other comprehensive income (loss) for the years ended December 31, 2014, 2013, and 2012 (in millions):

	Before-Tax  Amount			Tax Expense (Benefit)			Net Amount
Year Ended December 31, 2014:
Foreign currency translation adjustment	$	(407	)	$	—		$	(407	)
Pension and other postretirement benefits:
Loss arising during the year related to:
Net actuarial loss	(471		)	(162		)	(309		)
Prior service cost	(1		)	(1		)	—
(Gain) loss reclassified into income related to:
Net actuarial loss	34			12			22
Prior service credit	(40		)	(14		)	(26		)
Curtailment and settlement	3			—			3
Net loss on pension and other postretirement benefits	(475		)	(165		)	(310		)
Derivative instruments designated and qualifying as cash flow hedges:
Net loss arising during the year	(1		)	—			(1		)
Net loss reclassified into income	2			1			1
Net gain on cash flow hedges	1			1			—
Other comprehensive loss	$	(881	)	$	(164	)	$	(717	)

	Before-Tax Amount			Tax Expense (Benefit)			Net Amount
Year Ended December 31, 2013:
Foreign currency translation adjustment	$	(98	)	$	—		$	(98	)
Pension and other postretirement benefits:
Gain arising during the year related to:
Net actuarial gain	367			125			242
Plan amendments	371			130			241
(Gain) loss reclassified into income related to:
Net actuarial loss	57			20			37
Prior service credit	(33		)	(12		)	(21		)
Settlement	1			—			1
Net gain on pension and other postretirement benefits	763			263			500
Derivative instruments designated and qualifying as cash flow hedges:
Net loss arising during the year	(4		)	(2		)	(2		)
Net loss reclassified into income	2			1			1
Net loss on cash flow hedges	(2		)	(1		)	(1		)
Other comprehensive income	$	663		$	262		$	401

Year Ended December 31, 2012:
Foreign currency translation adjustment	$	164		$	—		$	164
Pension and other postretirement benefits:
Loss arising during the year related to:
Net actuarial loss	(228		)	(79		)	(149		)
Prior service cost	(9		)	(3		)	(6		)
(Gain) loss reclassified into income related to:
Net actuarial loss	34			12			22
Prior service credit	(20		)	(7		)	(13		)
Settlement	12			—			12
Net loss on pension and other postretirement benefits	(211		)	(77		)	(134		)
Derivative instruments designated and qualifying as cash flow hedges:
Net gain arising during the year	45			16			29
Net gain reclassified into income	(73		)	(26		)	(47		)
Net loss on cash flow hedges	(28		)	(10		)	(18		)
Other comprehensive income (loss)	$	(75	)	$	(87	)	$	12

Changes in components of accumulated other comprehensive income (loss)

Changes in accumulated other comprehensive income (loss) by component, net of tax, were as follows (in millions):

	Foreign Currency Translation Adjustment			Defined Benefit Plan Items			Gains and (Losses) on Cash Flow Hedges			Total
Balance as of December 31, 2011	$	501		$	(424	)	$	19		$	96
Other comprehensive income (loss)	164			(134		)	(18		)	12
Balance as of December 31, 2012	665			(558		)	1			108
Other comprehensive income (loss) before reclassifications	(98		)	483			(2		)	383
Amounts reclassified from accumulated other comprehensive income (loss)	—			17			1			18
Net other comprehensive income (loss)	(98		)	500			(1		)	401
Separation of retail business	(159		)	—			—			(159		)
Balance as of December 31, 2013	408			(58		)	—			350
Other comprehensive loss before reclassifications	(407		)	(309		)	(1		)	(717		)
Amounts reclassified from accumulated other comprehensive income (loss)	—			(1		)	1			—
Net other comprehensive loss	(407		)	(310		)	—			(717		)
Balance as of December 31, 2014	$	1		$	(368	)	$	—		$	(367	)

Gains (losses) reclassified 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							Affected Line Item in the Statement of Income
	Year Ended December 31,
	2014			2013
Amortization of items related to defined benefit pension plans:
Net actuarial loss	$	(34	)	$	(57	)	(a)
Prior service credit	40			33			(a)
Curtailment and settlement	(3		)	(1		)	(a)
	3			(25		)	Total before tax
	(2		)	8			Tax (expense) benefit
	$	1		$	(17	)	Net of tax
Losses on cash flow hedges:
Commodity contracts	$	(2	)	$	(2	)	Cost of sales
	(2		)	(2		)	Total before tax
	1			1			Tax benefit
	$	(1	)	$	(1	)	Net of tax
Total reclassifications for the year	$	—		$	(18	)	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 14. Net periodic benefit cost is reflected in operating expenses and general and administrative expenses.

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Receivables (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Receivables
Accounts receivable	$ 5,509	$ 8,582
Commodity derivative and foreign currency contract receivables	151	98
Other receivables	256	117
Receivables, gross	5,916	8,797
Allowance for doubtful accounts	(37)	(46)	(56)
Receivables, net	5,879	8,751
Allowance for Doubtful Accounts Rollforward
Balance as of beginning of year	46	56	48
Increase in allowance charged to expense	7	13	21
Accounts charged against the allowance, net of recoveries	15	23	13
Foreign currency translation	(1)	0	0
Balance as of end of year	$ 37	$ 46	$ 56

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Quarterly Financial Data (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2014

Quarterly Financial Information Disclosure [Abstract]

Schedule of quarterly financial information

The following table summarizes quarterly financial data for the years ended December 31, 2014 and 2013 (in millions, except per share amounts). The amounts shown below differ from those previously reported in our quarterly reports on Form 10-Q for the quarters ended March 31, 2013 and 2014 due to the abandonment of the Aruba Refinery in May 2014 as discussed in Note 2. The results of operations of the Aruba Refinery have been presented as discontinued operations for all periods presented.

	2014 Quarter Ended
	March 31		June 30		September 30		December 31
Operating revenues	$	33,663	$	34,914	$	34,408	$	27,859
Operating income	1,351		1,085		1,670		1,796
Net income	836		593		1,062		1,220
Net income attributable to Valero Energy Corporation stockholders	828		588		1,059		1,155
Earnings per common share	1.55		1.11		2.01		2.22
Earnings per common share – assuming dilution	1.54		1.10		2.00		2.22
	2013 Quarter Ended
	March 31		June 30 (a)		September 30		December 31
Operating revenues	33,474		34,034		36,137		34,429
Operating income	1,058		805		532		1,562
Net income	652		465		324		1,287
Net income attributable to Valero Energy Corporation stockholders	654		466		312		1,288
Earnings per common share	1.18		0.86		0.58		2.39
Earnings per common share – assuming dilution	1.18		0.85		0.57		2.38

^{____________________} 

(a) The separation of our retail business was completed on May 1, 2013.

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Equity, Reclassification Out of Accumulated Other Comprehensive Income (Loss) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended									12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013		Mar. 31, 2013	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012
Amortization of items related to defined benefit pension plans:
Net actuarial loss, before-tax amount										$ 34		$ 57		$ 34
Prior service credit, before-tax amount										(40)		(33)		(20)
Curtailment and settlement, before-tax amount										3		1		12
Total before tax										5,552		3,976		4,740
Tax (expense) benefit										(1,777)		(1,254)		(1,626)
Net income (loss)	1,220	1,062	593	836	1,287	324	465	[1]	652	3,711		2,728		2,080
Reclassification out of Accumulated Other Comprehensive Income (Loss) [Member]
Amortization of items related to defined benefit pension plans:
Net income (loss)										0		(18)
Reclassification out of Accumulated Other Comprehensive Income (Loss) [Member] | Accumulated Defined Benefit Plans Adjustment [Member]
Amortization of items related to defined benefit pension plans:
Net actuarial loss, before-tax amount										(34)	[2]	(57)	[2]
Prior service credit, before-tax amount										40	[2]	33	[2]
Curtailment and settlement, before-tax amount										(3)	[2]	(1)	[2]
Total before tax										3		(25)
Tax (expense) benefit										(2)		8
Net income (loss)										1		(17)
Reclassification out of Accumulated Other Comprehensive Income (Loss) [Member] | Accumulated Net Loss from Designated or Qualifying Cash Flow Hedges [Member]
Amortization of items related to defined benefit pension plans:
Total before tax										(2)		(2)
Tax (expense) benefit										1		1
Net income (loss)										(1)		(1)
Reclassification out of Accumulated Other Comprehensive Income (Loss) [Member] | Accumulated Net Loss from Designated or Qualifying Cash Flow Hedges [Member] | Commodity Contract [Member]
Amortization of items related to defined benefit pension plans:
Cost of sales										$ (2)		$ (2)

[1] The separation of our retail business was completed on May 1, 2013.

[2] (a)These accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit cost, as further discussed in Note 14. Net periodic benefit cost is reflected in operating expenses and general and administrative expenses.

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Inventories (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2014
Schedule of Inventories
Refinery feedstocks	$ 2,135		$ 2,269
Refined products and blendstocks	3,231		3,926
Ethanol feedstocks and products	166		195
Materials and supplies	226		233
Inventories	5,758		6,623
Inventories (Textual)
Effect of LIFO inventory liquidation on income, decrease	17	134
Excess of market value over carrying amount of LIFO inventories	6,900		857
Inventory not valued at LIFO	$ 681		$ 906

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Employee Benefit Plans, Weighted-Average Assumptions (Details)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Minimum [Member]
Employee Benefit Plans (Textual)
Yield curve maturities	6 months
Maximum [Member]
Employee Benefit Plans (Textual)
Yield curve maturities	99 years
Pension Plans [Member]
Weighted Average Assumptions Used to Determine Benefit Obligation
Discount rate	4.10%	4.92%
Rate of compensation increase	3.78%	3.81%
Weighted Average Assumptions Used to Determine Net Periodic Benefit Cost
Discount rate	4.92%	4.33%	5.08%
Expected long-term rate of return on plan assets	7.61%	7.62%	7.67%
Rate of compensation increase	3.81%	3.73%	3.68%
Other Postretirement Benefit Plans [Member]
Weighted Average Assumptions Used to Determine Benefit Obligation
Discount rate	4.13%	4.88%
Rate of compensation increase	0.00%	0.00%
Weighted Average Assumptions Used to Determine Net Periodic Benefit Cost
Discount rate	4.88%	4.19%	4.97%
Expected long-term rate of return on plan assets	0.00%	0.00%	0.00%
Rate of compensation increase	0.00%	0.00%	0.00%

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Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2014

Fair Value Disclosures [Abstract]

Fair value of financial 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 December 31, 2014 and 2013.

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.

	December 31, 2014
							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	$	3,096	$	36	$	—	$	3,132	$	(2,907	)	$	(99	)	$	126	$	—
Physical purchase contracts	—		1		—		1		n/a			n/a			1		n/a
Investments of certain benefit plans	97		—		11		108		n/a			n/a			108		n/a
Total	$	3,193	$	37	$	11	$	3,241	$	(2,907	)	$	(99	)	$	235
Liabilities:
Commodity derivative contracts	$	2,886	$	34	$	—	$	2,920	$	(2,907	)	$	(13	)	$	—	$	(25	)
Biofuels blending obligation	—		14		—		14		n/a			n/a			14		n/a
Physical purchase contracts	—		5		—		5		n/a			n/a			5		n/a
Total	$	2,886	$	53	$	—	$	2,939	$	(2,907	)	$	(13	)	$	19

	December 31, 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	$	499	$	38	$	—	$	537	$	(505	)	$	(7	)	$	25	$	—
Investments of certain benefit plans	98		—		11		109		n/a			n/a			109		n/a
Total	$	597	$	38	$	11	$	646	$	(505	)	$	(7	)	$	134
Liabilities:
Commodity derivative contracts	$	492	$	24	$	—	$	516	$	(505	)	$	(6	)	$	5	$	(76	)
Biofuels blending obligation	—		11		—		11		n/a			n/a			11		n/a
Physical purchase contracts	—		5		—		5		n/a			n/a			5		n/a
Foreign currency contracts	8		—		—		8		n/a			n/a			8		n/a
Total	$	500	$	40	$	—	$	540	$	(505	)	$	(6	)	$	29

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):

	December 31, 2014				December 31, 2013
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Cash and temporary cash investments	$	3,689	$	3,689	$	4,292	$	4,292
Financial liabilities:
Debt (excluding capital leases)	6,354		7,562		6,525		7,659

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Receivables (Tables)

12 Months Ended

Dec. 31, 2014

Receivables [Abstract]

Receivables, net

Receivables consisted of the following (in millions):

	December 31,
	2014			2013
Accounts receivable	$	5,509		$	8,582
Commodity derivative and foreign currency contract receivables	151			98
Other receivables	256			117
	5,916			8,797
Allowance for doubtful accounts	(37		)	(46		)
Receivables, net	$	5,879		$	8,751

Changes in the allowance for doubtful accounts consisted of the following (in millions):

	Year Ended December 31,
	2014			2013			2012
Balance as of beginning of year	$	46		$	56		$	48
Increase in allowance charged to expense	7			13			21
Accounts charged against the allowance, net of recoveries	(15		)	(23		)	(13		)
Foreign currency translation	(1		)	—			—
Balance as of end of year	$	37		$	46		$	56

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Employee Benefit Plans, Health Care Cost Trend Rate (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Assumed Health Care Cost Trend Rates
Health care cost trend rate assumed for the next year	7.36%	7.39%
Rate to which the cost trend rate was assumed to decline (the ultimate trend rate)	5.00%	5.00%
Year that the rate reaches the ultimate trend rate	2020	2020
Effect of One Percentage-Point Change in Assumed Health Care Cost Trend Rates
Effect on total of service and interest cost components, increase	$ 0
Effect on total of service and interest cost components, decrease	0
Effect on accumulated postretirement benefit obligation, increase	5
Effect on accumulated postretirement benefit obligation, decrease	$ (4)

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Employee Benefit Plans, Benefit Payments (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014
Pension Plans [Member]
Estimated Future Benefit Payments
2015	$ 131
2016	127
2017	132
2018	142
2019	189
Years 2020-2024	845
Employee Benefit Plans (Textual)
Future employer contributions to pension and other postretirement plans	47
Other Postretirement Benefit Plans [Member]
Estimated Future Benefit Payments
2015	20
2016	20
2017	21
2018	21
2019	21
Years 2020-2024	108
Employee Benefit Plans (Textual)
Future employer contributions to pension and other postretirement plans	$ 20

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Fair Value Measurements, Recurring (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Assets:
Investments of certain benefit plans	$ 1,978	$ 1,909
Fair Value, Measurements, Recurring [Member]
Assets:
Commodity derivative contracts	3,132	537
Physical purchase contracts	1
Investments of certain benefit plans	108	109
Total gross fair value, assets	3,241	646
Effect of Counterparty Netting	(2,907)	(505)
Effect of Cash Collateral Netting	(99)	(7)
Commodity derivative contracts, net assets	126	25
Net Carrying Value on Balance Sheet, Assets	235	134
Cash Collateral Received Not Offset	0	0
Liabilities:
Commodity derivative contracts	2,920	516
Biofuels blending obligation	14	11
Physical purchase contracts	5	5
Foreign currency contracts		8
Total gross fair value, liabilities	2,939	540
Effect of Counterparty Netting	(2,907)	(505)
Effect of Cash Collateral Netting	(13)	(6)
Commodity derivative contracts, net liabilities	0	5
Net Carrying Value on Balance Sheet, Liabilities	19	29
Cash Collateral Paid Not Offset	(25)	(76)
Fair Value, Inputs, Level 1 [Member]
Assets:
Investments of certain benefit plans	1,155	1,135
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Assets:
Commodity derivative contracts	3,096	499
Physical purchase contracts	0
Investments of certain benefit plans	97	98
Total gross fair value, assets	3,193	597
Liabilities:
Commodity derivative contracts	2,886	492
Biofuels blending obligation	0	0
Physical purchase contracts	0	0
Foreign currency contracts		8
Total gross fair value, liabilities	2,886	500
Fair Value, Inputs, Level 2 [Member]
Assets:
Investments of certain benefit plans	823	774
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Assets:
Commodity derivative contracts	36	38
Physical purchase contracts	1
Investments of certain benefit plans	0	0
Total gross fair value, assets	37	38
Liabilities:
Commodity derivative contracts	34	24
Biofuels blending obligation	14	11
Physical purchase contracts	5	5
Foreign currency contracts		0
Total gross fair value, liabilities	53	40
Fair Value, Inputs, Level 3 [Member]
Assets:
Investments of certain benefit plans	0	0
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Assets:
Commodity derivative contracts	0	0
Physical purchase contracts	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	0
Physical purchase contracts	0	0
Foreign currency contracts		0
Total gross fair value, liabilities	$ 0	$ 0

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Deferred Charges and Other Assets (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Deferred Charges and Other Assets (Textual)
Amortization expense, deferred refinery turnaround and catalyst costs and other assets	$ 489	$ 498	$ 447

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Employee Benefit Plans, Pre-Tax Amounts in Accumulated Other Comprehensive Income (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Pension Plans [Member]
Pension and Other Postretirement Benefit Plans Accumulated Other Comprehensive Income (Loss), before Tax
Prior service credit	$ (210)	$ (233)
Net actuarial (gain) loss	876	479
Total	666	246
Other Postretirement Benefit Plans [Member]
Pension and Other Postretirement Benefit Plans Accumulated Other Comprehensive Income (Loss), before Tax
Prior service credit	(92)	(110)
Net actuarial (gain) loss	(6)	(44)
Total	$ (98)	$ (154)

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Segment Information, Geographic Information by Country for Revenue and Long-Lived Assets (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended									12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013		Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Operating revenues by geographic area
Operating revenues	$ 27,859	$ 34,408	$ 34,914	$ 33,663	$ 34,429	$ 36,137	$ 34,034	[1]	$ 33,474	$ 130,844	$ 138,074	$ 138,393
Geographic information by country for long-lived assets
Long-lived assets	28,247				27,059					28,247	27,059
U.S. [Member]
Operating revenues by geographic area
Operating revenues										91,499	100,418	99,879
Geographic information by country for long-lived assets
Long-lived assets	24,710				23,572					24,710	23,572
Canada [Member]
Operating revenues by geographic area
Operating revenues										10,410	9,974	10,376
Geographic information by country for long-lived assets
Long-lived assets	2,250				2,260					2,250	2,260
U. K. and Ireland [Member]
Operating revenues by geographic area
Operating revenues										14,182	13,675	12,818
U.K. [Member]
Geographic information by country for long-lived assets
Long-lived assets	1,206				1,148					1,206	1,148
Other countries [Member]
Operating revenues by geographic area
Operating revenues										14,753	14,007	15,320
Aruba [Member]
Geographic information by country for long-lived assets
Long-lived assets	59				53					59	53
Ireland [Member]
Geographic information by country for long-lived assets
Long-lived assets	$ 22				$ 26					$ 22	$ 26

[1] The separation of our retail business was completed on May 1, 2013.

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Stock-Based Compensation (Details) (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Stock-based Compensation Arrangements Activity
Stock-based compensation expense	$ 60	$ 64	$ 58
Tax benefit recognized on stock-based compensation expense	21	22	20
Tax benefit realized for tax deductions resulting from exercises and vestings	64	66	45
Effect of tax deductions in excess of recognized stock-based compensation expense reported as a financing cash flow	47	47	27
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding Rollforward
Stock options outstanding as of beginning of year	8,558,093
Number of stock options, granted	126,095
Number of stock options, exercised	(2,564,125)
Number of stock options, expired	(1,449,986)
Number of stock options, forfeited	(856)
Stock options outstanding as of end of year	4,669,221	8,558,093
Number of stock options, exercisable as of December 31, 2014	4,315,414
Weighted-average exercise price per share outstanding, beginning balance	$ 27.88
Weighted-average exercise price per share, granted	$ 48.57
Weighted-average exercise price per share, exercised	$ 18.64
Weighted-average exercise price per share, expired	$ 66.67
Weighted average exercise price per share, forfeited	$ 17.68
Weighted-average exercise price per share outstanding, ending balance	$ 21.48	$ 27.88
Weighted-average exercise price per share, exercisable as of December 31, 2014	$ 19.99
Weighted-average remaining contractual term, outstanding as of December 31, 2014	4 years 6 months
Weighted-average remaining contractual term, exercisable as of December 31, 2014	4 years 2 months
Aggregate intrinsic value, outstanding as of December 31, 2014	131
Aggregate intrinsic value, exercisable as of December 31, 2014	127
Nonvested Shares or Awards Other Than Options Rollforward
Shares or awards, granted	225,829
Employee Stock Option [Member]
Summary of Weighted-Average Assumptions Used in Fair Value Measurements
Expected life in years	6 years	6 years	6 years
Expected volatility	43.21%	49.63%	49.11%
Expected dividend yield	2.27%	2.27%	2.39%
Risk-free interest rate	1.74%	1.77%	0.85%
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding Rollforward
Weighted average grant date fair value of stock option	$ 17.31	$ 15.83	$ 10.98
Intrinsic value of stock options exercised	85	101	78
Cash received from exercise of stock options	47	59	59
Stock Based Compensation (Textual)
Vesting period of stock-based payment awards granted	3 years
Unrecognized share-based compensation cost related to outstanding unvested awards	1
Weighted-average period of recognition for unrecognized compensation costs on nonvested awards	2 years
Employee Stock Option [Member] | Minimum [Member]
Stock Based Compensation (Textual)
Expiration period of stock-based compensation awards	7 years
Employee Stock Option [Member] | Maximum [Member]
Stock Based Compensation (Textual)
Expiration period of stock-based compensation awards	10 years
Restricted Stock Awards - Nonemployee [Member]
Stock Based Compensation (Textual)
Vesting period of stock-based payment awards granted	3 years
Restricted Stock [Member]
Nonvested Shares or Awards Other Than Options Rollforward
Nonvested shares or awards, beginning balance	2,205,314
Shares or awards, granted	969,671
Awards, vested	(1,402,753)
Shares or awards, forfeited	(14,082)
Nonvested shares or awards, ending balance	1,758,150	2,205,314
Nonvested Awards Other Than Options Weighted Average Grant Date Fair Value Rollforward
Weighted average grant date fair value, beginning balance	$ 32.23
Weighted average grant date fair value, granted	$ 49.40
Weighted average grant date fair value, vested	$ 31.90
Weighted average grant date fair value, forfeited	$ 32.56
Weighted average grant date fair value, ending balance	$ 41.96	$ 32.23
Stock Based Compensation (Textual)
Vesting period of stock-based payment awards granted	3 years
Unrecognized share-based compensation cost related to outstanding unvested awards	45
Weighted-average period of recognition for unrecognized compensation costs on nonvested awards	2 years
Total fair value of restricted stock vested	60	74	47
Performance Awards [Member]
Nonvested Shares or Awards Other Than Options Rollforward
Nonvested shares or awards, beginning balance	947,165
Shares or awards, granted	225,829
Awards, vested	(534,028)
Shares or awards, forfeited	(24,576)
Nonvested shares or awards, ending balance	614,390	947,165
Vested Awards Other Than Options Rollforward
Vested awards, beginning balance	0
Awards, vested	534,028
Awards, converted	(534,028)
Awards, forfeited	0
Vested awards, ending balance	0	0
Performance Awards Converted [Abstract]
Vested awards converted	534,028
Converted shares issued	866,634
Stock Based Compensation (Textual)
Vesting period of stock-based payment awards granted	1 year
Unrecognized share-based compensation cost related to outstanding unvested awards	11
Total fair value of restricted stock vested	$ 15	$ 12	$ 3
Performance award vesting rights	33.33%
Number of vesting tranches under performance awards granted	3
Performance Awards [Member] | Award Year 2010 [Member]
Performance Awards Converted [Abstract]
Vested awards converted	201,422
Actual conversion rate of common shares	100.00%
Converted shares issued	201,422
Performance Awards [Member] | Award Year 2011 [Member]
Performance Awards Converted [Abstract]
Vested awards converted	227,571
Actual conversion rate of common shares	200.00%
Converted shares issued	455,142
Performance Awards [Member] | Award Year 2012 [Member]
Performance Awards Converted [Abstract]
Vested awards converted	102,855
Actual conversion rate of common shares	200.00%
Converted shares issued	205,710
Performance Awards [Member] | Award Year 2012 [Member] | Share-based Compensation Award, Tranche Three [Member]
Nonvested Shares or Awards Other Than Options Rollforward
Shares or awards, granted	99,023
Nonvested Awards Other Than Options Weighted Average Grant Date Fair Value Rollforward
Weighted average grant date fair value, granted	$ 47.47
Expected conversion rate of common stock shares	1.00
Performance Awards [Member] | Award Year 2013 [Member]
Performance Awards Converted [Abstract]
Vested awards converted	2,180
Actual conversion rate of common shares	200.00%
Converted shares issued	4,360
Performance Awards [Member] | Award Year 2013 [Member] | Share-based Compensation Award, Tranche Two [Member]
Nonvested Shares or Awards Other Than Options Rollforward
Shares or awards, granted	76,232
Nonvested Awards Other Than Options Weighted Average Grant Date Fair Value Rollforward
Weighted average grant date fair value, granted	$ 47.47
Expected conversion rate of common stock shares	1.00
Performance Awards [Member] | Award Year 2014 [Member] | Share-based Compensation Award, Tranche One [Member]
Nonvested Shares or Awards Other Than Options Rollforward
Shares or awards, granted	50,574
Nonvested Awards Other Than Options Weighted Average Grant Date Fair Value Rollforward
Weighted average grant date fair value, granted	$ 48.57
Expected conversion rate of common stock shares	1.00
Performance Awards [Member] | Minimum [Member]
Stock Based Compensation (Textual)
Performance awards range of conversion rates	0.00%
Performance Awards [Member] | Maximum [Member]
Stock Based Compensation (Textual)
Performance awards range of conversion rates	200.00%
Omnibus Stock Incentive Plan [Member] | Stock Compensation Plan [Member]
Stock Based Compensation (Textual)
Number of shares of common stock available to be awarded under stock-based compensation plans	13,536,081
Formerly Maintained Plans [Member] | Stock Compensation Plan [Member]
Stock Based Compensation (Textual)
Number of shares of common stock available to be awarded under stock-based compensation plans	0

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Segment Information, Total Assets by Reportable Segments (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Total assets by reportable segments
Reportable segment assets	$ 45,550	$ 47,260
Refining [Member]
Total assets by reportable segments
Reportable segment assets	40,103	41,227
Ethanol [Member]
Total assets by reportable segments
Reportable segment assets	954	889
Corporate and Other [Member]
Total assets by reportable segments
Reportable segment assets	$ 4,493	$ 5,144

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Employee Benefit Plans, Net Periodic Benefit Costs Amortized from Accumulated Other Comprehensive Income (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014
Pension Plans [Member]
Pension and Other Postretirement Benefit Plans Amounts that Will be Amortized from Accumulated Other Comprehensive Income (Loss) in Next Fiscal Year
Amortization of prior service credit	$ (22)
Amortization of net actuarial loss	63
Total	41
Other Postretirement Benefit Plans [Member]
Pension and Other Postretirement Benefit Plans Amounts that Will be Amortized from Accumulated Other Comprehensive Income (Loss) in Next Fiscal Year
Amortization of prior service credit	(18)
Amortization of net actuarial loss	0
Total	$ (18)

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Employee Benefit Plans (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Changes in benefit obligation:
Actuarial (gain) loss	$ 477,000,000
Changes in plan assets(a):
Fair value of plan assets at beginning of year	1,909,000,000
Fair value of plan assets at end of year	1,978,000,000	1,909,000,000
Defined Benefit Plan, Amounts Recognized in Balance Sheet
Accrued expenses	(48,000,000)	(30,000,000)
Other long-term liabilities	(792,000,000)	(507,000,000)
Employee Benefit Plans (Textual)
Remeasurement due to plan amendments		371,000,000
Actuarial loss due to changes in discount rates	300,000,000
Actuarial loss due to changes in mortality table	100,000,000
Contributions to defined contribution plans	61,000,000	62,000,000	61,000,000
Pension Plans [Member]
Changes in benefit obligation:
Benefit obligation at beginning of year	1,914,000,000	2,307,000,000
Service cost	120,000,000	137,000,000	140,000,000
Interest cost	91,000,000	86,000,000	93,000,000
Participant contributions	0	0
Plan amendments	2,000,000	(274,000,000)
Curtailment gain	0	(6,000,000)
Benefits paid	(109,000,000)	(170,000,000)
Actuarial (gain) loss	440,000,000	(169,000,000)
Other	(8,000,000)	3,000,000
Benefit obligation at end of year	2,450,000,000	1,914,000,000	2,307,000,000
Changes in plan assets(a):
Fair value of plan assets at beginning of year	1,909,000,000	1,729,000,000
Actual return on plan assets	139,000,000	306,000,000
Valero contributions	46,000,000	41,000,000
Participant contributions	0	0
Benefits paid	(109,000,000)	(170,000,000)
Other	(7,000,000)	3,000,000
Fair value of plan assets at end of year	1,978,000,000	1,909,000,000	1,729,000,000
Reconciliation of funded status (a):
Funded status as of end of year	(472,000,000)	(5,000,000)
Accumulated benefit obligation	2,354,000,000	1,811,000,000
Defined Benefit Plan, Amounts Recognized in Balance Sheet
Deferred charges and other assets, net	7,000,000	208,000,000
Accrued expenses	(28,000,000)	(11,000,000)
Other long-term liabilities	(451,000,000)	(202,000,000)
Amounts recognized in balance sheet for defined benefit plans	(472,000,000)	(5,000,000)
Employee Benefit Plans (Textual)
Initial effect of defined benefit plan amendment		(328,000,000)
Remeasurement due to plan amendments	0	328,000,000	0
Discount rate	4.10%	4.92%
Other Postretirement Benefit Plans [Member]
Changes in benefit obligation:
Benefit obligation at beginning of year	324,000,000	436,000,000
Service cost	7,000,000	12,000,000	12,000,000
Interest cost	15,000,000	18,000,000	21,000,000
Participant contributions	7,000,000	15,000,000
Plan amendments	0	(43,000,000)
Curtailment gain	0	0
Benefits paid	(30,000,000)	(37,000,000)
Actuarial (gain) loss	37,000,000	(77,000,000)
Other	1,000,000	0
Benefit obligation at end of year	361,000,000	324,000,000	436,000,000
Changes in plan assets(a):
Fair value of plan assets at beginning of year	0	0
Actual return on plan assets	0	0
Valero contributions	20,000,000	19,000,000
Participant contributions	7,000,000	15,000,000
Benefits paid	(30,000,000)	(37,000,000)
Other	3,000,000	3,000,000
Fair value of plan assets at end of year	0	0	0
Reconciliation of funded status (a):
Funded status as of end of year	(361,000,000)	(324,000,000)
Defined Benefit Plan, Amounts Recognized in Balance Sheet
Deferred charges and other assets, net	0	0
Accrued expenses	(20,000,000)	(19,000,000)
Other long-term liabilities	(341,000,000)	(305,000,000)
Amounts recognized in balance sheet for defined benefit plans	(361,000,000)	(324,000,000)
Employee Benefit Plans (Textual)
Initial effect of defined benefit plan amendment		(43,000,000)
Remeasurement due to plan amendments	$ 0	$ 43,000,000	$ 0
Discount rate	4.13%	4.88%

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Segment Information

12 Months Ended

Dec. 31, 2014

Segment Reporting [Abstract]

SEGMENT INFORMATION

18. SEGMENT INFORMATION

We have two reportable segments, refining and ethanol, as of December 31, 2014. Prior to May 1, 2013, we also had a retail segment. As discussed in Note 3, we completed the separation of our retail business, CST, 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, which were eliminated in consolidation prior to the separation, are reported as refining segment operating revenues from external customers after May 1, 2013.

Our refining segment includes refining operations, wholesale marketing, product supply and distribution, and transportation operations in the U.S., Canada, the U.K., Aruba, and Ireland. Our ethanol segment primarily includes sales of internally produced ethanol and distillers grains. The retail segment included company-operated convenience stores in the U.S. and Canada; filling stations, truckstop facilities, cardlock facilities, and home heating oil operations in Canada; and credit card operations in the U.S. Operations that are not included in any of the reportable segments are included in the corporate category.

The reportable segments are strategic business units that offer different products and services. They are managed separately as each business requires unique technology and marketing strategies. Performance is evaluated based on operating income. Intersegment sales are generally derived from transactions made at prevailing market rates.

The following table reflects activity related to continuing operations (in millions):

	Refining		Ethanol			Retail		Corporate			Total
Year ended December 31, 2014:
Operating revenues from external customers	$	126,004	$	4,840		$	—	$	—		$	130,844
Intersegment revenues	—		100			—		—			100
Depreciation and amortization expense	1,597		49			—		44			1,690
Operating income (loss)	5,884		786			—		(768		)	5,902
Total expenditures for long-lived assets	2,750		42			—		30			2,822
Year ended December 31, 2013:
Operating revenues from external customers	129,064		5,114			3,896		—			138,074
Intersegment revenues	2,876		128			—		—			3,004
Depreciation and amortization expense	1,566		45			41		68			1,720
Operating income (loss)	4,211		491			81		(826		)	3,957
Total expenditures for long-lived assets	2,597		33			62		65			2,757
Year ended December 31, 2012:
Operating revenues from external customers	122,068		4,317			12,008		—			138,393
Intersegment revenues	8,946		115			—		—			9,061
Depreciation and amortization expense	1,345		42			119		43			1,549
Operating income (loss)	5,484		(47		)	348		(741		)	5,044
Total expenditures for long-lived assets	3,147		36			164		66			3,413

Our principal products include conventional and CARB gasolines, RBOB (reformulated gasoline blendstock for oxygenate blending), ultra-low-sulfur diesel, and gasoline blendstocks. We also produce a substantial slate of middle distillates, jet fuel, and petrochemicals, in addition to lube oils and asphalt. Other product revenues include such products as gas oils, No. 6 fuel oil, and petroleum coke. Operating revenues from external customers for our principal products were as follows (in millions):

	Year Ended December 31,
	2014		2013		2012
Refining:
Gasolines and blendstocks	$	56,846	$	57,806	$	55,647
Distillates	57,521		56,921		51,095
Petrochemicals	3,759		4,281		3,908
Lubes and asphalts	1,397		1,643		2,033
Other product revenues	6,481		8,413		9,385
Total refining operating revenues	126,004		129,064		122,068
Ethanol:
Ethanol	4,192		4,245		3,545
Distillers grains	648		869		772
Total ethanol operating revenues	4,840		5,114		4,317
Retail:
Fuel sales (gasoline and diesel)	—		3,226		10,045
Merchandise sales and other	—		524		1,649
Home heating oil	—		146		314
Total retail operating revenues	—		3,896		12,008
Total operating revenues	$	130,844	$	138,074	$	138,393

Operating revenues by geographic area are shown in the table below (in millions). The geographic area is based on location of customer and no customer accounted for 10 percent or more of our operating revenues.

	Year Ended December 31,
	2014		2013		2012
U.S.	$	91,499	$	100,418	$	99,879
Canada	10,410		9,974		10,376
U.K. and Ireland	14,182		13,675		12,818
Other countries	14,753		14,007		15,320
Total operating revenues	$	130,844	$	138,074	$	138,393

Long-lived assets include property, plant, and equipment and certain long-lived assets included in “deferred charges and other assets, net.” Geographic information by country for long-lived assets consisted of the following (in millions):

	December 31,
	2014		2013
U.S.	$	24,710	$	23,572
Canada	2,250		2,260
U.K.	1,206		1,148
Aruba	59		53
Ireland	22		26
Total long-lived assets	$	28,247	$	27,059

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

	December 31,
	2014		2013
Refining	$	40,103	$	41,227
Ethanol	954		889
Corporate	4,493		5,144
Total assets	$	45,550	$	47,260

In March 2014, we purchased an idled corn ethanol plant in Mount Vernon, Indiana for $34 million from a wholly owned subsidiary of Aventine Renewable Energy Holdings, Inc. We resumed production at that plant during the third quarter of 2014. In the fourth quarter of 2014, an independent appraisal of the assets acquired and liabilities assumed and certain other evaluations of the fair values related to the Mount Vernon plant were completed and finalized. The purchase price of the Mount Vernon plant was allocated based on the fair values of the assets acquired and the liabilities assumed at the date of acquisition resulting from this final appraisal and other evaluations. There were no significant adjustments made to the preliminary purchase price allocation.

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Discontinued Operations (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended			3 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Jun. 30, 2014	Dec. 31, 2011
Discontinued Operations (Textual)
Asset impairment losses	$ 0	$ 0	$ 86
Asset retirement obligation recognized	91	31	108		87
Asset retirement obligation charged to accretion expense	1	2	5
Aruba Refinery [Member]
Selected Results of Operations of the Aruba Refinery
Operating revenues	0	0	857
Income (loss) before income taxes	(64)	6	(1,034)
Discontinued Operations (Textual)
Asset impairment losses			928
Severance costs			41
Asset retirement obligation recognized				59
Asset retirement obligation charged to accretion expense				59
Liabilities recognized for obligations under certain contracts				$ 4

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

Income from continuing operations before income tax expense from U.S. and international operations

Income from continuing operations before income tax expense was as follows (in millions):

	Year Ended December 31,
	2014		2013		2012
U.S. operations	$	4,677	$	3,531	$	4,015
International operations	875		445		725
Income from continuing operations before income tax expense	$	5,552	$	3,976	$	4,740

Reconciliation of income tax expense related to continuing operations to federal income tax expense at U.S. federal statutory rate

The following is a reconciliation of income tax expense computed by applying the U.S. federal statutory income tax rate (35 percent for all years presented) to actual income tax expense related to continuing operations (in millions):

	Year Ended December 31,
	2014			2013			2012
Federal income tax expense at the U.S. federal statutory rate	$	1,943		$	1,392		$	1,659
U.S. state income tax expense, net of U.S. federal income tax effect	62			62			64
U.S. manufacturing deduction	(74		)	(36		)	(33		)
International operations	(88		)	(69		)	(96		)
Permanent differences	(16		)	(104		)	20
Change in tax law	—			(32		)	—
Other, net	(50		)	41			12
Income tax expense	$	1,777		$	1,254		$	1,626

Components of income tax expense related to continuing operations

Components of income tax expense related to continuing operations were as follows (in millions):

	Year Ended December 31,
	2014		2013			2012
Current:
U.S. federal	$	1,196	$	635		$	515
U.S. state	59		36			22
International	77		82			126
Total current	1,332		753			663
Deferred:
U.S. federal	268		459			854
U.S. state	36		59			77
International	141		(17		)	32
Total deferred	445		501			963
Income tax expense	$	1,777	$	1,254		$	1,626

Deferred income tax assets and liabilities

The tax effects of significant temporary differences representing deferred income tax assets and liabilities were as follows (in millions):

	December 31,
	2014			2013
Deferred income tax assets:
Tax credit carryforwards	$	37		$	48
Net operating losses (NOLs)	436			338
Inventories	160			264
Property, plant, and equipment	—			8
Compensation and employee benefit liabilities	358			178
Environmental liabilities	92			92
Other	178			187
Total deferred income tax assets	1,261			1,115
Less: Valuation allowance	(393		)	(347		)
Net deferred income tax assets	868			768
Deferred income tax liabilities:
Property, plant, and equipment	6,682			6,536
Deferred turnaround costs	356			331
Inventories	426			310
Investments	152			94
Other	73			81
Total deferred income tax liabilities	7,689			7,352
Net deferred income tax liabilities	$	6,821		$	6,584

Income tax credit and loss carryforwards

We had the following income tax credit and loss carryforwards as of December 31, 2014 (in millions):

	Amount		Expiration
U.S. state income tax credits	$	53	2015 through 2027
U.S. state NOLs (gross amount)	6,574		2015 through 2034
International NOLs	1,630		Unlimited

Subsequently recognized tax benefits related to the valuation allowance for deferred income tax assets

Should we ultimately recognize tax benefits related to the valuation allowance for deferred income tax assets as of December 31, 2014, such amounts will be allocated as follows (in millions):

Income tax benefit	$	386
Additional paid-in capital	7
Total	$	393

Reconciliation of the change in unrecognized tax benefits

The following is a reconciliation of the change in unrecognized tax benefits, excluding related penalties, interest (net of the U.S. federal and state income tax effects), and the U.S. federal income tax effect of state unrecognized tax benefits (in millions):

	Year Ended December 31,
	2014			2013			2012
Balance as of beginning of year	$	950		$	341		$	326
Additions based on tax positions related to the current year	35			64			11
Additions for tax positions related to prior years	118			576			40
Reductions for tax positions related to prior years	(67		)	(26		)	(36		)
Reductions for tax positions related to the lapse of applicable statute of limitations	(1		)	(4		)	—
Settlements	(46		)	(1		)	—
Balance as of end of year	$	989		$	950		$	341

Reconciliation of unrecognized tax benefits to uncertain tax position liabilities

The following is a reconciliation of unrecognized tax benefits reflected in the table above to our uncertain tax position liabilities as of December 31, 2014 and 2013 that are reflected in Note 10 (in millions):

	December 31,
	2014			2013
Unrecognized tax benefits	$	989		$	950
Tax refund claim not recognized in our financial statements	(554		)	(556		)
Penalties, interest (net of U.S. federal and state income tax effect), and the U.S. federal income tax effect of state unrecognized tax benefits	49			49
Uncertain tax position liabilities	$	484		$	443

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Employee Benefit Plans, Amounts Recognized in Other Comprehensive Income (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Net gain (loss) arising during the year:
Net actuarial gain (loss) arising during the year	$ (471)	$ 367	$ (228)
Prior service cost arising during the year	(1)		(9)
Remeasurement due to plan amendments		371
Net (gain) loss reclassified into income:
Net actuarial (gain) loss	34	57	34
Prior service cost (credit)	(40)	(33)	(20)
Curtailment and settlement loss	3	1	12
Net gain (loss) on pension and other postretirement benefits, before-tax amount	(475)	763	(211)
Pension Plans [Member]
Net gain (loss) arising during the year:
Net actuarial gain (loss) arising during the year	(434)	290	(245)
Prior service cost arising during the year	(1)	0	(9)
Remeasurement due to plan amendments	0	328	0
Net (gain) loss reclassified into income:
Net actuarial (gain) loss	35	57	33
Prior service cost (credit)	(22)	(19)	3
Curtailment and settlement loss	3	1	12
Net gain (loss) on pension and other postretirement benefits, before-tax amount	(419)	657	(206)
Other Postretirement Benefit Plans [Member]
Net gain (loss) arising during the year:
Net actuarial gain (loss) arising during the year	(37)	77	17
Prior service cost arising during the year	0	0	0
Remeasurement due to plan amendments	0	43	0
Net (gain) loss reclassified into income:
Net actuarial (gain) loss	(1)	0	1
Prior service cost (credit)	(18)	(14)	(23)
Curtailment and settlement loss	0	0	0
Net gain (loss) on pension and other postretirement benefits, before-tax amount	$ (56)	$ 106	$ (5)

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Debt and Capital Lease Obligations (Tables)

12 Months Ended

Dec. 31, 2014

Debt and Capital Lease Obligations [Abstract]

Debt and capital lease obligations

Debt, at stated values, and capital lease obligations consisted of the following (in millions):

	Final Maturity	December 31,
		2014			2013
Bank credit facilities	Various	$	—		$	—
Senior Notes:
4.5%	2015	400			400
4.75%	2014	—			200
6.125%	2017	750			750
6.125%	2020	850			850
6.625%	2037	1,500			1,500
6.75%	2037	24			24
7.2%	2017	200			200
7.45%	2097	100			100
7.5%	2032	750			750
8.75%	2030	200			200
9.375%	2019	750			750
10.5%	2039	250			250
Debentures:
7.65%	2026	100			100
8.75%	2015	75			75
Gulf Opportunity Zone Revenue Bonds, Series 2010, 4.0%	2040	300			300
Accounts receivable sales facility	2015	100			100
Other debt	2015	26			—
Net unamortized discount, including fair value adjustments		(21		)	(24		)
Total debt		6,354			6,525
Capital lease obligations, including unamortized fair value adjustments		32			39
Total debt and capital lease obligations		6,386			6,564
Less current portion		(606		)	(303		)
Debt and capital lease obligations, less current portion		$	5,780		$	6,261

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	December 31,
				2014		2013
Letter of credit facilities	$	550	June 2015	$	56	$	278
Revolver	$	3,000	November 2018	$	54	$	59
VLP Revolver	$	300	December 2018	$	—	$	—
Canadian Revolver	C$	50	November 2015	C$	10	C$	10

Changes in accounts receivable sales facility

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

	Year Ended December 31,
	2014		2013		2012
Balance as of beginning of year	$	100	$	100	$	250
Proceeds from the sale of receivables	—		—		1,500
Repayments	—		—		(1,650		)
Balance as of end of year	$	100	$	100	$	100

Principal payments on debt and future minimum rentals on capital lease obligations

Principal payments on our debt obligations and future minimum rentals on capital lease obligations as of December 31, 2014 were as follows (in millions):

	Debt			Capital Lease Obligations
2015	$	601		$	8
2016	—			8
2017	950			6
2018	—			6
2019	750			6
Thereafter	4,074			18
Net unamortized discount and fair value adjustments	(21		)	1
Less interest expense	—			(21		)
Total	$	6,354		$	32

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Impairments (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Impairments (Textual)
Asset impairment losses	$ 0	$ 0	$ 86
Construction in Progress [Member]
Impairments (Textual)
Asset impairment losses			65
Retail Assets [Member]
Impairments (Textual)
Asset impairment losses			$ 21

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Equity, Stock Related Disclosures (Details) (USD $)	0 Months Ended	12 Months Ended			2 Months Ended
	Jan. 23, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Feb. 20, 2015
Transactions in connection with stock-based compensation plans:
Treasury stock, ending balance		(159,202,872)	(137,932,138)
Equity (Textual)
Preferred stock, shares authorized		20,000,000
Preferred stock, par value per share		$ 0.01
Subsequent Event [Member] | Dividend Declared [Member]
Equity (Textual)
Dividends payable, date declared	Jan. 23, 2015
Dividends payable, amount per share	$ 0.40
Dividends payable, date to be paid	Mar. 03, 2015
Dividends payable, date of record	Feb. 11, 2015
Stock-Based Compensation Plans Repurchase Program [Member]
Equity (Textual)
Stock repurchases under buyback program		$ 128,000,000	$ 236,000,000	$ 153,000,000
Common Stock Repurchase Program [Member]
Equity (Textual)
Stock repurchases under buyback program		1,168,000,000	692,000,000	118,000,000
Approvals Under Program Two [Member]
Equity (Textual)
Authorized amount under stock purchase program		3,000,000,000
Remaining amount authorized under stock purchase programs		1,500,000,000
Approvals Under Program One [Member]
Equity (Textual)
Authorized amount under stock purchase program		6,000,000,000
Common Stock [Member]
Share Activity Rollforward
Common stock, beginning balance		673,000,000	673,000,000	673,000,000
Transactions in connection with stock-based compensation plans:
Stock issuances		0	0	0
Common stock, ending balance		673,000,000	673,000,000	673,000,000
Treasury Stock [Member]
Share Activity Rollforward
Treasury stock, beginning balance		(138,000,000)	(121,000,000)	(117,000,000)
Transactions in connection with stock-based compensation plans:
Stock issuances		4,000,000	6,000,000	6,000,000
Treasury stock, ending balance		(159,000,000)	(138,000,000)	(121,000,000)
Treasury Stock [Member] | Stock-Based Compensation Plans Repurchase Program [Member]
Transactions in connection with stock-based compensation plans:
Stock repurchases		(2,000,000)	(6,000,000)	(6,000,000)
Equity (Textual)
Stock repurchases under buyback program		128,000,000	236,000,000	163,000,000
Stock repurchases		2,000,000	6,000,000	6,000,000
Treasury Stock [Member] | Common Stock Repurchase Program [Member]
Transactions in connection with stock-based compensation plans:
Stock repurchases		(23,000,000)	(17,000,000)	(4,000,000)
Equity (Textual)
Stock repurchases under buyback program		1,168,000,000	692,000,000	118,000,000
Stock repurchases		23,000,000	17,000,000	4,000,000
Treasury Stock [Member] | Common Stock Repurchase Program [Member] | Subsequent Event [Member]
Transactions in connection with stock-based compensation plans:
Stock repurchases					(1,000,000)
Equity (Textual)
Stock repurchases under buyback program					$ 57,000,000
Stock repurchases					1,000,000

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Debt and Capital Lease Obligations (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2012	Dec. 31, 2013	Dec. 31, 2011
Debt Instruments
Net unamortized discount, including fair value adjustments	$ (21,000,000)		$ (24,000,000)
Total debt	6,354,000,000		6,525,000,000
Capital lease obligations, including unamortized fair value adjustments	32,000,000		39,000,000
Total debt and capital lease obligations	6,386,000,000		6,564,000,000
Less current portion	(606,000,000)		(303,000,000)
Debt and capital lease obligations, less current portion	5,780,000,000		6,261,000,000
A/R Sales Facility [Member]
Debt Instruments
Long-term debt at stated values	100,000,000	100,000,000	100,000,000	250,000,000
Credit Facilities [Member] | Bank Credit Facilities [Member]
Debt Instruments
Long-term debt at stated values	0		0
Credit Facilities [Member] | A/R Sales Facility [Member]
Debt Instruments
Debt instrument, maturity date (year)	Jul. 31, 2015
Long-term debt at stated values	100,000,000		100,000,000
Senior Notes [Member] | Senior Notes Due In 2015 [Member]
Debt Instruments
Debt instrument, maturity date (year)	Dec. 31, 2015
Long-term debt at stated values	400,000,000		400,000,000
Interest rate of notes in percentage	4.50%
Senior Notes [Member] | Senior Notes Due In 2014 [Member]
Debt Instruments
Debt instrument, maturity date (year)	Dec. 31, 2014
Long-term debt at stated values	0		200,000,000
Interest rate of notes in percentage	4.75%
Senior Notes [Member] | Senior Notes Due In June 2017 [Member]
Debt Instruments
Debt instrument, maturity date (year)	Dec. 31, 2017
Long-term debt at stated values	750,000,000		750,000,000
Interest rate of notes in percentage	6.125%
Senior Notes [Member] | Senior Notes Due In 2020 [Member]
Debt Instruments
Debt instrument, maturity date (year)	Dec. 31, 2020
Long-term debt at stated values	850,000,000		850,000,000
Interest rate of notes in percentage	6.125%
Senior Notes [Member] | Senior Notes Due In June 2037 [Member]
Debt Instruments
Debt instrument, maturity date (year)	Dec. 31, 2037
Long-term debt at stated values	1,500,000,000		1,500,000,000
Interest rate of notes in percentage	6.625%
Senior Notes [Member] | Senior Notes Due In October 2037 [Member]
Debt Instruments
Debt instrument, maturity date (year)	Dec. 31, 2037
Long-term debt at stated values	24,000,000		24,000,000
Interest rate of notes in percentage	6.75%
Senior Notes [Member] | Senior Notes Due In October 2017 [Member]
Debt Instruments
Debt instrument, maturity date (year)	Dec. 31, 2017
Long-term debt at stated values	200,000,000		200,000,000
Interest rate of notes in percentage	7.20%
Senior Notes [Member] | Senior Notes Due In 2097 [Member]
Debt Instruments
Debt instrument, maturity date (year)	Dec. 31, 2097
Long-term debt at stated values	100,000,000		100,000,000
Interest rate of notes in percentage	7.45%
Senior Notes [Member] | Senior Notes Due In 2032 [Member]
Debt Instruments
Debt instrument, maturity date (year)	Dec. 31, 2032
Long-term debt at stated values	750,000,000		750,000,000
Interest rate of notes in percentage	7.50%
Senior Notes [Member] | Senior Notes Due In 2030 [Member]
Debt Instruments
Debt instrument, maturity date (year)	Dec. 31, 2030
Long-term debt at stated values	200,000,000		200,000,000
Interest rate of notes in percentage	8.75%
Senior Notes [Member] | Senior Notes Due In 2019 [Member]
Debt Instruments
Debt instrument, maturity date (year)	Dec. 31, 2019
Long-term debt at stated values	750,000,000		750,000,000
Interest rate of notes in percentage	9.375%
Senior Notes [Member] | Senior Notes Due In 2039 [Member]
Debt Instruments
Debt instrument, maturity date (year)	Dec. 31, 2039
Long-term debt at stated values	250,000,000		250,000,000
Interest rate of notes in percentage	10.50%
Debentures [Member] | Debenture Due In 2026 [Member]
Debt Instruments
Debt instrument, maturity date (year)	Dec. 31, 2026
Long-term debt at stated values	100,000,000		100,000,000
Interest rate of notes in percentage	7.65%
Debentures [Member] | Debenture Due In 2015 [Member]
Debt Instruments
Debt instrument, maturity date (year)	Dec. 31, 2015
Long-term debt at stated values	75,000,000		75,000,000
Interest rate of notes in percentage	8.75%
Debentures [Member] | Other Debt [Member]
Debt Instruments
Debt instrument, maturity date (year)	Dec. 31, 2015
Long-term debt at stated values	26,000,000		0
Revenue Bonds [Member] | Gulf Opportunity Zone Revenue Bonds Series 2010 [Member]
Debt Instruments
Debt instrument, maturity date (year)	Dec. 01, 2040	Dec. 01, 2040
Long-term debt at stated values	$ 300,000,000		$ 300,000,000
Interest rate of notes in percentage	4.00%	4.00%

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Price Risk Management Activities (Tables)

12 Months Ended

Dec. 31, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Risk management activities by type of risk

As of December 31, 2014, we had the following outstanding commodity 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).

	Notional Contract Volumes by Year of Maturity
Derivative Instrument	2015	2016
Crude oil and refined products:
Swaps – long	645	—
Swaps – short	645	—
Futures – long	95,709	5,116
Futures – short	96,897	4,341
Options – long	1,900	—
Options – short	1,200	—
Natural gas:
Futures – long	6,200	—
Futures – short	4,200	—

As of December 31, 2014, we had the following outstanding commodity derivative instruments that were used as economic hedges, as well as 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	2015	2016
Crude oil and refined products:
Swaps – long	7,532	—
Swaps – short	5,676	—
Futures – long	46,886	—
Futures – short	67,600	—
Natural gas:
Options – long	1,250	—
Corn:
Futures – long	20,815	80
Futures – short	46,585	1,155
Physical contracts – long	25,327	1,081
Soybean oil:
Futures – long	94,920	—
Futures – short	178,920	—

Fair values of derivative instruments

The following tables provide information about the fair values of our derivative instruments as of December 31, 2014 and 2013 (in millions) and the line items in the balance sheets in which the fair values are reflected. See Note 20 for additional information related to the fair values of our derivative instruments.

As indicated in Note 20, 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	December 31, 2014
		Asset Derivatives		Liability Derivatives
Derivatives not designated as hedging instruments
Commodity contracts:
Futures	Receivables, net	$	3,096	$	2,886
Swaps	Receivables, net	34		31
Options	Receivables, net	2		3
Physical purchase contracts	Inventories	1		5
Total		$	3,133	$	2,925

	Balance Sheet Location	December 31, 2013
		Asset Derivatives		Liability Derivatives
Derivatives designated as hedging instruments
Commodity contracts:
Futures	Receivables, net	$	25	$	36
Derivatives not designated as hedging instruments
Commodity contracts:
Futures	Receivables, net	$	474	$	455
Swaps	Receivables, net	33		18
Swaps	Prepaid expenses and other	3		—
Swaps	Accrued expenses	—		5
Options	Receivables, net	2		2
Physical purchase contracts	Inventories	—		5
Foreign currency contracts	Accrued expenses	—		8
Total		$	512	$	493
Total derivatives		$	537	$	529

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	Year Ended December 31,
		2014		2013		2012
Commodity contracts	Cost of sales	$	693	$	193	$	1
Foreign currency contracts	Cost of sales	40		14		(38		)

Derivatives in Cash Flow Hedging Relationships	Location of Gain (Loss) Recognized in Income on Derivatives	Year Ended December 31,
		2014			2013			2012
Commodity contracts:
Gain (loss) recognized in OCI on derivatives (effective portion)		$	(1	)	$	(4	)	$	45
Gain (loss) reclassified from accumulated OCI into income (effective portion)	Cost of sales	(2		)	(2		)	73
Gain (loss) recognized in income on derivatives (ineffective portion)	Cost of sales	(1		)	21			48

Trading Derivatives	Location of Gain (Loss) Recognized in Income on Derivatives	Year Ended December 31,
		2014		2013			2012
Commodity contracts	Cost of sales	$	38	$	21		$	(16	)
RINs fixed-price contracts	Cost of sales	—		(20		)	—

The following tables provide information about the gain or loss recognized in income and other comprehensive income (OCI) 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	Year Ended December 31,
		2014			2013			2012
Commodity contracts:
Loss recognized in income on derivatives	Cost of sales	$	(42	)	$	(12	)	$	(250	)
Gain recognized in income on hedged item	Cost of sales	42			18			183
Gain (loss) recognized in income on derivatives (ineffective portion)	Cost of sales	—			6			(67		)

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Discontinued Operations

12 Months Ended

Dec. 31, 2014

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS

2. DISCONTINUED OPERATIONS

In May 2014, we abandoned our Aruba Refinery, except for the associated crude oil and refined products terminal assets that we continue to operate. As a result, the refinery’s results of operations have been presented in this report as discontinued operations for all years presented.

We had suspended operations of the refinery in 2012 and at that time we wrote off the entire carrying value of the refinery’s idled crude oil processing units and related infrastructure (refining assets) and supplies inventories that supported the refining operations; as a result, we recognized an asset impairment loss of $928 million. In addition, we terminated the employees who supported the refining operations and incurred severance costs of $41 million at that time. Even though we suspended refining operations in 2012, we continued to maintain the refining assets to allow them to be restarted and did not abandon them until our recent decision to no longer pursue options to restart refining operations.

The Aruba Refinery resides on land leased from the Government of Aruba (GOA) and our agreements with the GOA require us to dismantle our leasehold improvements under certain conditions. Because of our May 2014 decision to abandon the refining assets, we believe the GOA will require us to dismantle those assets. As a result, we recognized an asset retirement obligation of $59 million, which was charged to expense during the second quarter of 2014 and is reflected in discontinued operations. We had not recognized an asset retirement obligation previously due to our belief that we would not be required to dismantle the assets as long as we intended to operate them. During the second quarter of 2014, we also recognized liabilities of $4 million relating to obligations under certain contracts, including a liability for the remaining lease payments for the land on which the refining assets reside.

Selected results of operations of the Aruba Refinery are shown below (in millions).

	Year Ended December 31,
	2014			2013		2012
Operating revenues	$	—		$	—	$	857
Income (loss) before income taxes	(64		)	6		(1,034		)

There was no tax benefit recognized for the loss from discontinued operations for the years ended December 31, 2014 and 2012 as we do not expect to realize this tax benefit.

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Debt, Credit Facilities and Bank Debt (Details)	12 Months Ended			0 Months Ended		0 Months Ended							12 Months Ended		12 Months Ended						12 Months Ended					12 Months Ended
	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)	Dec. 31, 2012 USD ($)	Nov. 14, 2013 Spinoff [Member] USD ($)	May 01, 2013 Spinoff [Member] USD ($)	Nov. 14, 2013 Spinoff [Member] Notes Payable to Banks [Member] USD ($)	Oct. 24, 2013 Spinoff [Member] Notes Payable to Banks [Member] USD ($)	May 01, 2013 Spinoff [Member] Notes Payable to Banks [Member] USD ($)	Apr. 16, 2013 Spinoff [Member] Notes Payable to Banks [Member] USD ($)	Dec. 31, 2014 Other Letter of Credit [Member] USD ($)	Dec. 31, 2013 Other Letter of Credit [Member] USD ($)	Mar. 20, 2013 Credit Facilities [Member] Spinoff [Member] USD ($)	Dec. 31, 2014 Credit Facilities [Member] Letter of Credit [Member] USD ($)	Dec. 31, 2013 Credit Facilities [Member] Letter of Credit [Member] USD ($)	Dec. 31, 2014 Credit Facilities [Member] U S Revolver [Member] USD ($)	Dec. 31, 2013 Credit Facilities [Member] U S Revolver [Member] USD ($)	Dec. 31, 2012 Credit Facilities [Member] U S Revolver [Member] USD ($)	Dec. 31, 2014 Credit Facilities [Member] U S Revolver [Member] Maximum [Member]	Dec. 31, 2014 Credit Facilities [Member] U S Revolver Letter of Credit [Member] USD ($)	Dec. 31, 2013 Credit Facilities [Member] U S Revolver Letter of Credit [Member] USD ($)	Dec. 31, 2014 Credit Facilities [Member] VLP Revolver [Member] USD ($) quarter renewal	Dec. 31, 2013 Credit Facilities [Member] VLP Revolver [Member] USD ($)	Dec. 31, 2014 Credit Facilities [Member] VLP Revolver [Member] Maximum [Member]	Dec. 31, 2014 Credit Facilities [Member] VLP Revolver Letter of Credit [Member] USD ($)	Dec. 31, 2013 Credit Facilities [Member] VLP Revolver Letter of Credit [Member] USD ($)	Dec. 31, 2014 Credit Facilities [Member] Canadian Revolver [Member] CAD	Dec. 31, 2013 Credit Facilities [Member] Canadian Revolver [Member] CAD	Dec. 31, 2012 Credit Facilities [Member] Canadian Revolver [Member] CAD	Dec. 31, 2014 Credit Facilities [Member] Canadian Revolver Letter of Credit [Member] CAD	Dec. 31, 2013 Credit Facilities [Member] Canadian Revolver Letter of Credit [Member] CAD
Line of Credit Facility
Line of credit facility, maximum borrowing capacity												$ 800,000,000	$ 550,000,000		$ 3,000,000,000						$ 300,000,000					50,000,000
Line of credit facility, expiration date													Jun. 30, 2015		Nov. 30, 2018						Dec. 31, 2018					Nov. 30, 2015
Amount outstanding										80,000,000	189,000,000		56,000,000	278,000,000					54,000,000	59,000,000				0	0				10,000,000	10,000,000
Credit Facilities (Textual)
Line of credit facility, accordion feature, higher borrowing capacity option															4,500,000,000						500,000,000
Line of credit facility, duration of renewal option (in years)															1 year						1 year
Debt to capitalization ratios as per terms of revolver															0.12	0.12		0.60
Line of credit facility, number of renewal options																					2
Number of prior quarterly reporting periods used for debt to EBITDA ratio																					4
Debt to EBITDA ratio as per terms of revolver																							5.0
Borrowings from long-term lines of credit															0	0	1,100,000,000				0	0				0	0	0
Repayments of long-term lines of credit															0	0	1,100,000,000				0	0				0	0	0
Bank Debt (Textual)
Proceeds from short-term debt in anticipation of separation	0	550,000,000	0						550,000,000
Senior unsecured bonds of CST Brands, Inc. issued to us	256,000,000	117,000,000			550,000,000
CST Brands, Inc. securities exchanged in settlement of short-term borrowings						467,000,000		550,000,000
Proceeds from short-term debt related to disposition of retained interest	0	525,000,000	0				525,000,000
Repayment of short-term debt related to disposition of retained interest						58,000,000
Fees paid related to disposition of retained interest	42,000,000	57,000,000	101,000,000	19,000,000
Gain on disposition of retained interest in CST Brands, Inc.	$ 0	$ 325,000,000	$ 0	$ 325,000,000

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Earnings Per Common Share (Tables)

12 Months Ended

Dec. 31, 2014

Earnings Per Share [Abstract]

Schedule of earnings per common share, basic and diluted

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

	Year Ended December 31,
	2014				2013				2012
	Restricted Stock		Common Stock		Restricted Stock		Common Stock		Restricted Stock		Common Stock
Earnings per common share from continuing operations:
Net income attributable to Valero stockholders from continuing operations			$	3,694			$	2,714			$	3,117
Less dividends paid:
Common stock			552				460				358
Nonvested restricted stock			2				2				2
Undistributed earnings			$	3,140			$	2,252			$	2,757
Weighted-average common shares outstanding	2		526		3		542		3		550
Earnings per common share from continuing operations:
Distributed earnings	$	1.05	$	1.05	$	0.85	$	0.85	$	0.65	$	0.65
Undistributed earnings	5.95		5.95		4.13		4.13		4.99		4.99
Total earnings per common share from continuing operations	$	7.00	$	7.00	$	4.98	$	4.98	$	5.64	$	5.64
Earnings per common share from continuing operations – assuming dilution:
Net income attributable to Valero stockholders from continuing operations			$	3,694			$	2,714			$	3,117
Weighted-average common shares outstanding			526				542				550
Common equivalent shares:
Stock options			2				4				4
Performance awards and nonvested restricted stock			2				2				2
Weighted-average common shares outstanding – assuming dilution			530				548				556
Earnings per common share from continuing operations – assuming dilution			$	6.97			$	4.96			$	5.61

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Quarterly Financial Data (Unaudited)

12 Months Ended

Dec. 31, 2014

Quarterly Financial Information Disclosure [Abstract]

QUARTERLY FINANCIAL DATA (Unaudited)

22. QUARTERLY FINANCIAL DATA (Unaudited)

The following table summarizes quarterly financial data for the years ended December 31, 2014 and 2013 (in millions, except per share amounts). The amounts shown below differ from those previously reported in our quarterly reports on Form 10-Q for the quarters ended March 31, 2013 and 2014 due to the abandonment of the Aruba Refinery in May 2014 as discussed in Note 2. The results of operations of the Aruba Refinery have been presented as discontinued operations for all periods presented.

	2014 Quarter Ended
	March 31		June 30		September 30		December 31
Operating revenues	$	33,663	$	34,914	$	34,408	$	27,859
Operating income	1,351		1,085		1,670		1,796
Net income	836		593		1,062		1,220
Net income attributable to Valero Energy Corporation stockholders	828		588		1,059		1,155
Earnings per common share	1.55		1.11		2.01		2.22
Earnings per common share – assuming dilution	1.54		1.10		2.00		2.22
	2013 Quarter Ended
	March 31		June 30 (a)		September 30		December 31
Operating revenues	33,474		34,034		36,137		34,429
Operating income	1,058		805		532		1,562
Net income	652		465		324		1,287
Net income attributable to Valero Energy Corporation stockholders	654		466		312		1,288
Earnings per common share	1.18		0.86		0.58		2.39
Earnings per common share – assuming dilution	1.18		0.85		0.57		2.38

^{____________________} 

(a) The separation of our retail business was completed on May 1, 2013.

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Price Risk Management Activities

12 Months Ended

Dec. 31, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

PRICE RISK MANAGEMENT ACTIVITIES

21. PRICE RISK MANAGEMENT ACTIVITIES

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 20), 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 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 December 31, 2014, we had no outstanding commodity derivative instruments that were entered into as fair value hedges.

• 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 December 31, 2014, we had no outstanding commodity derivative instruments that were entered into as cash flow hedges.

• 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) feedstock and refined product inventories, (ii) forecasted feedstock and product purchases, and product sales, and (iii) fixed-price 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 December 31, 2014, we had the following outstanding commodity derivative instruments that were used as economic hedges, as well as 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	2015	2016
Crude oil and refined products:
Swaps – long	7,532	—
Swaps – short	5,676	—
Futures – long	46,886	—
Futures – short	67,600	—
Natural gas:
Options – long	1,250	—
Corn:
Futures – long	20,815	80
Futures – short	46,585	1,155
Physical contracts – long	25,327	1,081
Soybean oil:
Futures – long	94,920	—
Futures – short	178,920	—

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

As of December 31, 2014, we had the following outstanding commodity 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).

	Notional Contract Volumes by Year of Maturity
Derivative Instrument	2015	2016
Crude oil and refined products:
Swaps – long	645	—
Swaps – short	645	—
Futures – long	95,709	5,116
Futures – short	96,897	4,341
Options – long	1,900	—
Options – short	1,200	—
Natural gas:
Futures – long	6,200	—
Futures – short	4,200	—

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 December 31, 2014 and 2013, or during the years ended December 31, 2014, 2013, or 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 these 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 December 31, 2014, we had commitments to purchase $377 million of U.S. dollars. These commitments matured on or before January 31, 2015 resulting in a gain of $12 million in the first quarter of 2015.

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. For the years ended December 31, 2014, 2013, and 2012, the cost of meeting our obligations under these compliance programs was $372 million, $517 million, and $250 million, 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 December 31, 2014 and 2013 (in millions) and the line items in the balance sheets in which the fair values are reflected. See Note 20 for additional information related to the fair values of our derivative instruments.

As indicated in Note 20, 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	December 31, 2014
		Asset Derivatives		Liability Derivatives
Derivatives not designated as hedging instruments
Commodity contracts:
Futures	Receivables, net	$	3,096	$	2,886
Swaps	Receivables, net	34		31
Options	Receivables, net	2		3
Physical purchase contracts	Inventories	1		5
Total		$	3,133	$	2,925

	Balance Sheet Location	December 31, 2013
		Asset Derivatives		Liability Derivatives
Derivatives designated as hedging instruments
Commodity contracts:
Futures	Receivables, net	$	25	$	36
Derivatives not designated as hedging instruments
Commodity contracts:
Futures	Receivables, net	$	474	$	455
Swaps	Receivables, net	33		18
Swaps	Prepaid expenses and other	3		—
Swaps	Accrued expenses	—		5
Options	Receivables, net	2		2
Physical purchase contracts	Inventories	—		5
Foreign currency contracts	Accrued expenses	—		8
Total		$	512	$	493
Total derivatives		$	537	$	529

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. 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 (OCI) 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	Year Ended December 31,
		2014			2013			2012
Commodity contracts:
Loss recognized in income on derivatives	Cost of sales	$	(42	)	$	(12	)	$	(250	)
Gain recognized in income on hedged item	Cost of sales	42			18			183
Gain (loss) recognized in income on derivatives (ineffective portion)	Cost of sales	—			6			(67		)

For fair value hedges, no component of the derivative instruments’ gains or losses was excluded from the assessment of hedge effectiveness for the years ended December 31, 2014, 2013, and 2012. There were no amounts recognized in income for hedged firm commitments that no longer qualified as fair value hedges during the years ended December 31, 2014and 2013; however, a gain of $28 million was recognized in income during the year ended December 31, 2012 for hedged firm commitments that no longer qualified as fair value hedges.

Derivatives in Cash Flow Hedging Relationships	Location of Gain (Loss) Recognized in Income on Derivatives	Year Ended December 31,
		2014			2013			2012
Commodity contracts:
Gain (loss) recognized in OCI on derivatives (effective portion)		$	(1	)	$	(4	)	$	45
Gain (loss) reclassified from accumulated OCI into income (effective portion)	Cost of sales	(2		)	(2		)	73
Gain (loss) recognized in income on derivatives (ineffective portion)	Cost of sales	(1		)	21			48

For cash flow hedges, no component of the derivative instruments’ gains or losses was excluded from the assessment of hedge effectiveness for the years ended December 31, 2014, 2013, and 2012. For the year ended December 31, 2014, cash flow hedges primarily related to forward purchases of crude oil, with nocumulative after-tax gains or losses on cash flow hedges remaining in accumulated other comprehensive income. For the years ended December 31, 2014, 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	Year Ended December 31,
		2014		2013		2012
Commodity contracts	Cost of sales	$	693	$	193	$	1
Foreign currency contracts	Cost of sales	40		14		(38		)

Trading Derivatives	Location of Gain (Loss) Recognized in Income on Derivatives	Year Ended December 31,
		2014		2013			2012
Commodity contracts	Cost of sales	$	38	$	21		$	(16	)
RINs fixed-price contracts	Cost of sales	—		(20		)	—

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Property, Plant, and Equipment (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Property, Plant, and Equipment, Net
Property, plant, and equipment, at cost	$ 35,933,000,000	$ 33,933,000,000
Accumulated depreciation	(9,198,000,000)	(8,226,000,000)
Property, plant, and equipment, net	26,735,000,000	25,707,000,000
Property, Plant, and Equipment (Textual)
Property, plant, and equipment, assets under capital leases	72,000,000	74,000,000
Accumulated amortization on assets under capital leases	(40,000,000)	(35,000,000)
Depreciation expense related to continuing operations	1,200,000,000	1,200,000,000	1,100,000,000
Land [Member]
Property, Plant, and Equipment, Net
Property, plant, and equipment, at cost	396,000,000	404,000,000
Crude Oil Processing Facilities (Member)
Property, Plant, and Equipment, Net
Property, plant, and equipment, at cost	28,054,000,000	27,260,000,000
Pipeline and Terminal Facilities [Member]
Property, Plant, and Equipment, Net
Property, plant, and equipment, at cost	1,955,000,000	1,513,000,000
Grain Processing Equipment [Member]
Property, Plant, and Equipment, Net
Property, plant, and equipment, at cost	779,000,000	719,000,000
Administrative Buildings (Member)
Property, Plant, and Equipment, Net
Property, plant, and equipment, at cost	800,000,000	800,000,000
Other [Member]
Property, Plant, and Equipment, Net
Property, plant, and equipment, at cost	2,596,000,000	2,109,000,000
Construction in Progress [Member]
Property, Plant, and Equipment, Net
Property, plant, and equipment, at cost	$ 1,353,000,000	$ 1,128,000,000

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Segment Information (Tables)

12 Months Ended

Dec. 31, 2014

Segment Reporting [Abstract]

Segment activity, including total assets by reportable segment

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

	December 31,
	2014		2013
Refining	$	40,103	$	41,227
Ethanol	954		889
Corporate	4,493		5,144
Total assets	$	45,550	$	47,260

In March 2014, we purchased an idled corn ethanol plant in Mount Vernon, Indiana for $34 million from a wholly owned subsidiary of Aventine Renewable Energy Holdings, Inc. We resumed production at that plant during the third quarter of 2014. In the fourth quarter of 2014, an independent appraisal of the assets acquired and liabilities assumed and certain other evaluations of the fair values related to the Mount Vernon plant were completed and finalized. The purchase price of the Mount Vernon plant was allocated based on the fair values of the assets acquired and the liabilities assumed at the date of acquisition resulting from this final appraisal and other evaluations. There were no significant adjustments made to the preliminary purchase price allocation.

The following table reflects activity related to continuing operations (in millions):

	Refining		Ethanol			Retail		Corporate			Total
Year ended December 31, 2014:
Operating revenues from external customers	$	126,004	$	4,840		$	—	$	—		$	130,844
Intersegment revenues	—		100			—		—			100
Depreciation and amortization expense	1,597		49			—		44			1,690
Operating income (loss)	5,884		786			—		(768		)	5,902
Total expenditures for long-lived assets	2,750		42			—		30			2,822
Year ended December 31, 2013:
Operating revenues from external customers	129,064		5,114			3,896		—			138,074
Intersegment revenues	2,876		128			—		—			3,004
Depreciation and amortization expense	1,566		45			41		68			1,720
Operating income (loss)	4,211		491			81		(826		)	3,957
Total expenditures for long-lived assets	2,597		33			62		65			2,757
Year ended December 31, 2012:
Operating revenues from external customers	122,068		4,317			12,008		—			138,393
Intersegment revenues	8,946		115			—		—			9,061
Depreciation and amortization expense	1,345		42			119		43			1,549
Operating income (loss)	5,484		(47		)	348		(741		)	5,044
Total expenditures for long-lived assets	3,147		36			164		66			3,413

Operating revenues from external customers by product

Operating revenues from external customers for our principal products were as follows (in millions):

	Year Ended December 31,
	2014		2013		2012
Refining:
Gasolines and blendstocks	$	56,846	$	57,806	$	55,647
Distillates	57,521		56,921		51,095
Petrochemicals	3,759		4,281		3,908
Lubes and asphalts	1,397		1,643		2,033
Other product revenues	6,481		8,413		9,385
Total refining operating revenues	126,004		129,064		122,068
Ethanol:
Ethanol	4,192		4,245		3,545
Distillers grains	648		869		772
Total ethanol operating revenues	4,840		5,114		4,317
Retail:
Fuel sales (gasoline and diesel)	—		3,226		10,045
Merchandise sales and other	—		524		1,649
Home heating oil	—		146		314
Total retail operating revenues	—		3,896		12,008
Total operating revenues	$	130,844	$	138,074	$	138,393

Operating revenues by geographic area of customer

Operating revenues by geographic area are shown in the table below (in millions). The geographic area is based on location of customer and no customer accounted for 10 percent or more of our operating revenues.

	Year Ended December 31,
	2014		2013		2012
U.S.	$	91,499	$	100,418	$	99,879
Canada	10,410		9,974		10,376
U.K. and Ireland	14,182		13,675		12,818
Other countries	14,753		14,007		15,320
Total operating revenues	$	130,844	$	138,074	$	138,393

Geographic information by country for long-lived assets

Geographic information by country for long-lived assets consisted of the following (in millions):

	December 31,
	2014		2013
U.S.	$	24,710	$	23,572
Canada	2,250		2,260
U.K.	1,206		1,148
Aruba	59		53
Ireland	22		26
Total long-lived assets	$	28,247	$	27,059

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

12 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

General

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. We are an independent petroleum refining and marketing company and own 15 refineries with a combined throughput capacity of approximately 2.9 million barrels per day as of December 31, 2014. We market branded and unbranded refined products on a wholesale basis in the United States (U.S.), Canada, the Caribbean, the United Kingdom (U.K.), and Ireland through an extensive bulk and rack marketing network and through approximately 7,400 outlets that carry the Valero^®, Shamrock^®, Ultramar^®, Beacon^®, and Texaco^® brand names. We also own 11 ethanol plants in the U.S. that primarily produce ethanol with a combined production capacity of approximately1.3 billion gallons per year as of December 31, 2014. Our operations are affected by:

• company-specific factors, primarily refinery utilization rates and refinery maintenance turnarounds;

• seasonal factors, such as the demand for refined products during the summer driving season and heating oil during the winter season; and

• industry factors, such as movements in and the level of crude oil prices including the effect of quality differentials between grades of crude oil, the demand for and prices of refined products, industry supply capacity, and competitor refinery maintenance turnarounds.

Reclassifications

Reclassifications

Certain amounts reported as of and for the year ended December 31, 2013 have been reclassified to conform to the 2014 presentation. As discussed in Note 2, in May 2014, we abandoned the Aruba Refinery. As a result, the refinery’s results of operations have been presented as discontinued operations in the consolidated statements of income for all years presented.

Principles of Consolidation

Principles of Consolidation

These financial statements include the accounts of Valero, and subsidiaries and entities in which Valero has a controlling financial interest. The ownership of noncontrolling investors are recorded as noncontrolling interests. Intercompany balances and transactions have been eliminated in consolidation. Investments in significant noncontrolled entities are accounted for using the equity method.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (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.

Cash and Temporary Cash Investments

Cash and Temporary Cash Investments

Our temporary cash investments are highly liquid, low-risk debt instruments that have a maturity of three months or less when acquired.

Receivables

Receivables

Trade receivables are carried at original invoice amount. We maintain an allowance for doubtful accounts, which is adjusted based on management’s assessment of our customers’ historical collection experience, known credit risks, and industry and economic conditions.

Inventories

Inventories

Inventories are carried at the lower of cost or market. The cost of refinery feedstocks purchased for processing, refined products, and grain and ethanol inventories are determined under the last-in, first-out (LIFO) method using the dollar-value LIFO method, with any increments valued based on average purchase prices during the year. The cost of feedstocks and products purchased for resale and the cost of materials and supplies are determined principally under the weighted-average cost method.

Property, Plant, and Equipment

Property, Plant, and Equipment

The cost of property, plant, and equipment (property assets) purchased or constructed, including betterments of property assets, is capitalized. However, the cost of repairs to and normal maintenance of property assets is expensed as incurred. Betterments of property assets are those that extend the useful life, increase the capacity or improve the operating efficiency of the asset, or improve the safety of our operations. The cost of property assets constructed includes interest and certain overhead costs allocable to the construction activities.

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 continuously improved. Improvements consist of the addition of new Units and betterments of existing Units. We plan for these improvements by developing a multi-year capital program that is updated and revised based on changing internal and external factors.

Depreciation of property assets used in our refining segment is recorded on a straight-line basis over the estimated useful lives of these assets primarily using the composite method of depreciation. We maintain a separate composite group of property assets for each of our refineries. We estimate the useful life of each group based on an evaluation of the property assets comprising the group, and such evaluations consist of, but are not limited to, the physical inspection of the assets to determine their condition, consideration of the manner in which the assets are maintained, assessment of the need to replace assets, and evaluation of the manner in which improvements impact the useful life of the group. The estimated useful lives of our composite groups range primarily from 25 to 30 years.

Under the composite method of depreciation, the cost of an improvement is added to the composite group to which it relates and is depreciated over that group’s estimated useful life. We design improvements to our refineries in accordance with engineering specifications, design standards and practices accepted in our industry, and these improvements have design lives consistent with our estimated useful lives. Therefore, we believe the use of the group life to depreciate the cost of improvements made to the group is reasonable because the estimated useful life of each improvement is consistent with that of the group. It should be noted, however, that factors such as competition, regulation, or environmental matters could cause us to change our estimates, thus impacting depreciation expense in the future.

Also under the composite method of depreciation, the historical cost of a minor property asset (net of salvage value) that is retired or replaced is charged to accumulated depreciation and no gain or loss is recognized in income. However, a gain or loss is recognized in income for a major property asset that is retired, replaced, or sold and for an abnormal disposition of a property asset (primarily involuntary conversions). Gains and losses are reflected in depreciation and amortization expense, unless such amounts are reported separately due to materiality.

Depreciation of property assets used in our ethanol segment and our former retail segment (see Note 3) is recorded on a straight-line basis over the estimated useful lives of the related assets. Leasehold improvements are amortized on a straight-line basis over the shorter of the lease term or the estimated useful life of the related asset. Assets acquired under capital leases are amortized on a straight-line basis over (i) the lease term if transfer of ownership does not occur at the end of the lease term or (ii) the estimated useful life of the asset if transfer of ownership does occur at the end of the lease term.

Deferred Charges and Other Assets

Deferred Charges and Other Assets

“Deferred charges and other assets, net” include the following:

• turnaround costs, which are incurred in connection with planned major maintenance activities at our refineries and ethanol plants and which are deferred when incurred and amortized on a straight-line basis over the period of time estimated to lapse until the next turnaround occurs;

• fixed-bed catalyst costs, representing the cost of catalyst that is changed out at periodic intervals when the quality of the catalyst has deteriorated beyond its prescribed function, which are deferred when incurred and amortized on a straight-line basis over the estimated useful life of the specific catalyst;

• intangible assets;

• investments in entities that we do not control; and

• other noncurrent assets such as investments of certain benefit plans (related primarily to certain U.S. nonqualified defined benefit plans whose plan assets are not protected from our creditors and therefore cannot be reflected as a reduction from our obligations under those pension plans), debt issuance costs, and various other costs.

Impairment of Assets

Impairment of Assets

Long-lived assets, which include property, plant, and equipment, intangible assets, and deferred refinery turnaround and catalysts costs, are tested for recoverability whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. A long-lived asset is not recoverable if its carrying amount exceeds the sum of the undiscounted cash flows expected to result from its use and eventual disposition. If a long-lived asset is not recoverable, an impairment loss is recognized for the amount by which the carrying amount of the long-lived asset exceeds its fair value, with fair value determined based on discounted estimated net cash flows or other appropriate methods.

Investments

We evaluate our equity method investments for impairment when there is evidence that we may not be able to recover the carrying amount of our investments or the investee is unable to sustain an earnings capacity that justifies the carrying amount. A loss in the value of an investment that is other than a temporary decline is recognized currently in income, and is based on the difference between the estimated current fair value of the investment and its carrying amount.

Environmental Matters

Environmental Matters

Liabilities for future remediation costs are recorded when environmental assessments and/or remedial efforts are probable and the costs can be reasonably estimated. Other than for assessments, the timing and magnitude of these accruals generally are based on the completion of investigations or other studies or a commitment to a formal plan of action. Amounts recorded for environmental liabilities have not been reduced by possible recoveries from third parties and have not been measured on a discounted basis.

Asset Retirement Obligations

Asset Retirement Obligations

We record a liability, which is referred to as an asset retirement obligation, at fair value for the estimated cost to retire a tangible long-lived asset at the time we incur that liability, which is generally when the asset is purchased, constructed, or leased. We record the liability when we have a legal obligation to incur costs to retire the asset and when a reasonable estimate of the fair value of the liability can be made. If a reasonable estimate cannot be made at the time the liability is incurred, we record the liability when sufficient information is available to estimate the liability’s fair value.

Foreign Currency Translation

Foreign Currency Translation

The functional currency of each of our international operations is generally the respective local currency, which includes the Canadian dollar, the Aruban florin, the pound sterling, and the euro. Balance sheet accounts are translated into U.S. dollars using exchange rates in effect as of the balance sheet date. Revenue and expense accounts are translated using the weighted-average exchange rates during the year presented. Foreign currency translation adjustments are recorded as a component of accumulated other comprehensive income.

Revenue Recognition

Revenue Recognition

Revenues for products sold by the refining and ethanol segments and our former retail segment (see Note 3) are recorded upon delivery of the products to our customers, which is the point at which title to the products is transferred, and when payment has either been received or collection is reasonably assured.

Excise taxes on sales by our U.S. retail system were presented on a gross basis. All other excise taxes are presented on a net basis.

We enter into certain purchase and sale arrangements with the same counterparty that are deemed to be made in contemplation of one another. We combine these transactions and, as a result, revenues and cost of sales are not recognized in connection with these arrangements. We also enter into refined product exchange transactions to fulfill sales contracts with our customers by accessing refined products in markets where we do not operate our own refineries. These refined product exchanges are accounted for as exchanges of non-monetary assets, and no revenues are recorded on these transactions.

Product Shipping and Handling Costs

Product Shipping and Handling Costs

Costs incurred for shipping and handling of products are included in cost of sales.

Cost of Biofuel Credits

Cost of Biofuel Credits

We purchase biofuel credits (primarily Renewable Identification Numbers (RINs) in the U.S.) to comply with government regulations that require us to blend a certain percentage of biofuels into the products we produce, as further described in Note 21 under “Compliance Program Price Risk.” To the degree that we are unable to blend biofuels at the required percentage, we must purchase biofuel credits in the open market to meet our obligation. The cost of purchased biofuel credits is charged to cost of sales as such credits are needed to satisfy our obligation. To the extent we have not purchased enough biofuel credits to satisfy our obligation as of the balance sheet date, we charge cost of sales for such deficiency based on the market price of the biofuel credits as of the balance sheet date, and we record a liability for our obligation to purchase those credits. See Note 20 for disclosure of our fair value liability.

Stock-Based Compensation

Stock-Based Compensation

Compensation expense for our share-based compensation plans is based on the fair value of the awards granted and is recognized in income on a straight-line basis over the shorter of (a) the requisite service period of each award or (b) the period from the grant date to the date retirement eligibility is achieved if that date is expected to occur during the nominal vesting period.

Income Taxes

Income Taxes

Income taxes are accounted for under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred amounts are measured using enacted tax rates expected to apply to taxable income in the year those temporary differences are expected to be recovered or settled. Deferred tax assets are reduced by unrecognized tax benefits, if such items may be available to offset the unrecognized tax benefit.

We have elected to classify any interest expense and penalties related to the underpayment of income taxes in income tax expense.

Earnings Per Common Share

Earnings per Common Share

Earnings per common share is computed by dividing net income by the weighted-average number of common shares outstanding for the year. Participating share-based payment awards, including shares of restricted stock granted under certain of our stock-based compensation plans, are included in the computation of basic earnings per share using the two-class method. Earnings per common share – assuming dilution reflects the potential dilution arising from our outstanding stock options and nonvested shares granted to employees in connection with our stock-based compensation plans. Potentially dilutive securities are excluded from the computation of earnings per common share – assuming dilution when the effect of including such shares would be antidilutive.

Financial Instruments

Financial Instruments

Our financial instruments include cash and temporary cash investments, receivables, payables, debt, capital lease obligations, commodity derivative contracts, and foreign currency derivative contracts. The estimated fair values of these financial instruments approximate their carrying amounts, except for certain debt as discussed in Note 20.

Derivatives and Hedging

Derivatives and Hedging

All derivative instruments are recorded in the balance sheet as either assets or liabilities measured at their fair values. 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, are 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 in 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 hedging relationships (derivative instruments not designated as fair value or cash flow hedges) and for derivative instruments entered into 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 the statements of cash flows.

New Accounting Pronouncements

New Accounting Pronouncements

In April 2014, the provisions of Accounting Standards Codification (ASC) Topic 205, “Presentation of Financial Statements,” and ASC Topic 360, “Property, Plant, and Equipment,” were amended to change the criteria for reporting discontinued operations. The provisions of these amendments modify the definition of discontinued operations by limiting discontinued operations reporting to disposals of components of an entity that represent strategic shifts that have or will have a major effect on an entity’s operations and financial results. These amendments require additional disclosures about discontinued operations and new disclosures for other disposals of individually material components of an organization that do not meet the definition of a discontinued operation. In addition, the guidance allows companies to have significant continuing involvement and continuing cash flows with the discontinued operation. These provisions are effective prospectively for annual reporting periods beginning on or after December 15, 2014, and interim periods within those annual periods, with early adoption permitted. The adoption of this guidance effective January 1, 2015 will not affect our financial position or results of operations; however, it may result in changes to the manner in which future dispositions of operations or assets, if any, are presented in our financial statements, or it may require additional disclosures.

In May 2014, the Financial Accounting Standards Board (FASB) amended the ASC and issued a new accounting standard, Topic 606, “Revenue from Contracts with Customers,” to clarify the principles for recognizing revenue. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard also requires improved interim and annual disclosures that enable the users of financial statements to better understand the nature, amount, timing, and uncertainty of revenues and cash flows arising from contracts with customers. The new standard is effective for annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period, and can be adopted either retrospectively to each prior reporting period presented using a practical expedient, as allowed by the new standard, or retrospectively with a cumulative effect adjustment to retained earnings as of the date of initial application. Early adoption is not permitted. We are currently evaluating the effect that adopting this new standard will have on our financial statements and related disclosures.

In January 2015, the provisions of ASC Subtopic 225-20, “Income Statement–Extraordinary and Unusual Items” were amended to eliminate the concept of extraordinary items from U.S. GAAP as part of the FASB’s simplification initiative. The guidance eliminates the separate presentation of extraordinary items on the income statement, net of tax and the related earnings per share, but does not affect the requirement to disclose material items that are unusual in nature or infrequently occurring or to exclude those items from the estimated annual effective tax rate for interim reporting purposes. These provisions may be applied prospectively or retrospectively and are effective for annual reporting periods beginning after December 15, 2015, and interim periods within those annual periods, with early adoption permitted. The adoption of this guidance effective January 1, 2016 will not affect our financial position or results of operations; however, it may affect the manner in which future extraordinary or unusual items, if any, are presented in our financial statements.

In February 2015, the provisions of ASC Topic 810, “Consolidation” were amended to improve consolidation guidance for certain types of legal entities. The guidance modifies the evaluation of whether limited partnerships and similar legal entities are variable interest entities (VIEs) or voting interest entities, eliminates the presumption that a general partner should consolidate a limited partnership, affects the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships, and provides a scope exception from consolidation guidance for certain money market funds. These provisions are effective for annual reporting periods beginning after December 15, 2015, and interim periods within those annual periods, with early adoption permitted. These provisions may also be adopted retrospectively in previously issued financial statements for one or more years with a cumulative-effect adjustment to retained earnings as of the beginning of the first year restated. We are currently evaluating the effect that adopting this new accounting standard will have on our consolidated financial statements and related disclosures.

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.

Derivative instruments collateral requirements

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

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Discontinued Operations (Tables)

12 Months Ended

Dec. 31, 2014

Discontinued Operations and Disposal Groups [Abstract]

Selected results of operations of the Aruba Refinery

Selected results of operations of the Aruba Refinery are shown below (in millions).

	Year Ended December 31,
	2014			2013		2012
Operating revenues	$	—		$	—	$	857
Income (loss) before income taxes	(64		)	6		(1,034		)

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 were excluded from our consolidated balance sheet as of December 31, 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	191
Total assets	$	2,174
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

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Basis of Presentation and Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2014

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

General

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. We are an independent petroleum refining and marketing company and own 15 refineries with a combined throughput capacity of approximately 2.9 million barrels per day as of December 31, 2014. We market branded and unbranded refined products on a wholesale basis in the United States (U.S.), Canada, the Caribbean, the United Kingdom (U.K.), and Ireland through an extensive bulk and rack marketing network and through approximately 7,400 outlets that carry the Valero^®, Shamrock^®, Ultramar^®, Beacon^®, and Texaco^® brand names. We also own 11 ethanol plants in the U.S. that primarily produce ethanol with a combined production capacity of approximately1.3 billion gallons per year as of December 31, 2014. Our operations are affected by:

• company-specific factors, primarily refinery utilization rates and refinery maintenance turnarounds;

• seasonal factors, such as the demand for refined products during the summer driving season and heating oil during the winter season; and

• industry factors, such as movements in and the level of crude oil prices including the effect of quality differentials between grades of crude oil, the demand for and prices of refined products, industry supply capacity, and competitor refinery maintenance turnarounds.

Reclassifications

Certain amounts reported as of and for the year ended December 31, 2013 have been reclassified to conform to the 2014 presentation. As discussed in Note 2, in May 2014, we abandoned the Aruba Refinery. As a result, the refinery’s results of operations have been presented as discontinued operations in the consolidated statements of income for all years presented.

Significant Accounting Policies

Principles of Consolidation

These financial statements include the accounts of Valero, and subsidiaries and entities in which Valero has a controlling financial interest. The ownership of noncontrolling investors are recorded as noncontrolling interests. Intercompany balances and transactions have been eliminated in consolidation. Investments in significant noncontrolled entities are accounted for using the equity method.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (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.

Cash and Temporary Cash Investments

Our temporary cash investments are highly liquid, low-risk debt instruments that have a maturity of three months or less when acquired.

Receivables

Trade receivables are carried at original invoice amount. We maintain an allowance for doubtful accounts, which is adjusted based on management’s assessment of our customers’ historical collection experience, known credit risks, and industry and economic conditions.

Inventories

Inventories are carried at the lower of cost or market. The cost of refinery feedstocks purchased for processing, refined products, and grain and ethanol inventories are determined under the last-in, first-out (LIFO) method using the dollar-value LIFO method, with any increments valued based on average purchase prices during the year. The cost of feedstocks and products purchased for resale and the cost of materials and supplies are determined principally under the weighted-average cost method.

Property, Plant, and Equipment

The cost of property, plant, and equipment (property assets) purchased or constructed, including betterments of property assets, is capitalized. However, the cost of repairs to and normal maintenance of property assets is expensed as incurred. Betterments of property assets are those that extend the useful life, increase the capacity or improve the operating efficiency of the asset, or improve the safety of our operations. The cost of property assets constructed includes interest and certain overhead costs allocable to the construction activities.

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 continuously improved. Improvements consist of the addition of new Units and betterments of existing Units. We plan for these improvements by developing a multi-year capital program that is updated and revised based on changing internal and external factors.

Depreciation of property assets used in our refining segment is recorded on a straight-line basis over the estimated useful lives of these assets primarily using the composite method of depreciation. We maintain a separate composite group of property assets for each of our refineries. We estimate the useful life of each group based on an evaluation of the property assets comprising the group, and such evaluations consist of, but are not limited to, the physical inspection of the assets to determine their condition, consideration of the manner in which the assets are maintained, assessment of the need to replace assets, and evaluation of the manner in which improvements impact the useful life of the group. The estimated useful lives of our composite groups range primarily from 25 to 30 years.

Under the composite method of depreciation, the cost of an improvement is added to the composite group to which it relates and is depreciated over that group’s estimated useful life. We design improvements to our refineries in accordance with engineering specifications, design standards and practices accepted in our industry, and these improvements have design lives consistent with our estimated useful lives. Therefore, we believe the use of the group life to depreciate the cost of improvements made to the group is reasonable because the estimated useful life of each improvement is consistent with that of the group. It should be noted, however, that factors such as competition, regulation, or environmental matters could cause us to change our estimates, thus impacting depreciation expense in the future.

Also under the composite method of depreciation, the historical cost of a minor property asset (net of salvage value) that is retired or replaced is charged to accumulated depreciation and no gain or loss is recognized in income. However, a gain or loss is recognized in income for a major property asset that is retired, replaced, or sold and for an abnormal disposition of a property asset (primarily involuntary conversions). Gains and losses are reflected in depreciation and amortization expense, unless such amounts are reported separately due to materiality.

Depreciation of property assets used in our ethanol segment and our former retail segment (see Note 3) is recorded on a straight-line basis over the estimated useful lives of the related assets. Leasehold improvements are amortized on a straight-line basis over the shorter of the lease term or the estimated useful life of the related asset. Assets acquired under capital leases are amortized on a straight-line basis over (i) the lease term if transfer of ownership does not occur at the end of the lease term or (ii) the estimated useful life of the asset if transfer of ownership does occur at the end of the lease term.

Deferred Charges and Other Assets

“Deferred charges and other assets, net” include the following:

• turnaround costs, which are incurred in connection with planned major maintenance activities at our refineries and ethanol plants and which are deferred when incurred and amortized on a straight-line basis over the period of time estimated to lapse until the next turnaround occurs;

• fixed-bed catalyst costs, representing the cost of catalyst that is changed out at periodic intervals when the quality of the catalyst has deteriorated beyond its prescribed function, which are deferred when incurred and amortized on a straight-line basis over the estimated useful life of the specific catalyst;

• intangible assets;

• investments in entities that we do not control; and

• other noncurrent assets such as investments of certain benefit plans (related primarily to certain U.S. nonqualified defined benefit plans whose plan assets are not protected from our creditors and therefore cannot be reflected as a reduction from our obligations under those pension plans), debt issuance costs, and various other costs.

Impairment of Assets

Long-lived assets, which include property, plant, and equipment, intangible assets, and deferred refinery turnaround and catalysts costs, are tested for recoverability whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. A long-lived asset is not recoverable if its carrying amount exceeds the sum of the undiscounted cash flows expected to result from its use and eventual disposition. If a long-lived asset is not recoverable, an impairment loss is recognized for the amount by which the carrying amount of the long-lived asset exceeds its fair value, with fair value determined based on discounted estimated net cash flows or other appropriate methods. See Notes 2 and 4 for our impairment analysis of our long-lived assets.

We evaluate our equity method investments for impairment when there is evidence that we may not be able to recover the carrying amount of our investments or the investee is unable to sustain an earnings capacity that justifies the carrying amount. A loss in the value of an investment that is other than a temporary decline is recognized currently in income, and is based on the difference between the estimated current fair value of the investment and its carrying amount.

Environmental Matters

Liabilities for future remediation costs are recorded when environmental assessments and/or remedial efforts are probable and the costs can be reasonably estimated. Other than for assessments, the timing and magnitude of these accruals generally are based on the completion of investigations or other studies or a commitment to a formal plan of action. Amounts recorded for environmental liabilities have not been reduced by possible recoveries from third parties and have not been measured on a discounted basis.

Asset Retirement Obligations

We record a liability, which is referred to as an asset retirement obligation, at fair value for the estimated cost to retire a tangible long-lived asset at the time we incur that liability, which is generally when the asset is purchased, constructed, or leased. We record the liability when we have a legal obligation to incur costs to retire the asset and when a reasonable estimate of the fair value of the liability can be made. If a reasonable estimate cannot be made at the time the liability is incurred, we record the liability when sufficient information is available to estimate the liability’s fair value.

Foreign Currency Translation

The functional currency of each of our international operations is generally the respective local currency, which includes the Canadian dollar, the Aruban florin, the pound sterling, and the euro. Balance sheet accounts are translated into U.S. dollars using exchange rates in effect as of the balance sheet date. Revenue and expense accounts are translated using the weighted-average exchange rates during the year presented. Foreign currency translation adjustments are recorded as a component of accumulated other comprehensive income.

Revenue Recognition

Revenues for products sold by the refining and ethanol segments and our former retail segment (see Note 3) are recorded upon delivery of the products to our customers, which is the point at which title to the products is transferred, and when payment has either been received or collection is reasonably assured.

Excise taxes on sales by our U.S. retail system were presented on a gross basis. All other excise taxes are presented on a net basis.

We enter into certain purchase and sale arrangements with the same counterparty that are deemed to be made in contemplation of one another. We combine these transactions and, as a result, revenues and cost of sales are not recognized in connection with these arrangements. We also enter into refined product exchange transactions to fulfill sales contracts with our customers by accessing refined products in markets where we do not operate our own refineries. These refined product exchanges are accounted for as exchanges of non-monetary assets, and no revenues are recorded on these transactions.

Product Shipping and Handling Costs

Costs incurred for shipping and handling of products are included in cost of sales.

Cost of Biofuel Credits

We purchase biofuel credits (primarily Renewable Identification Numbers (RINs) in the U.S.) to comply with government regulations that require us to blend a certain percentage of biofuels into the products we produce, as further described in Note 21 under “Compliance Program Price Risk.” To the degree that we are unable to blend biofuels at the required percentage, we must purchase biofuel credits in the open market to meet our obligation. The cost of purchased biofuel credits is charged to cost of sales as such credits are needed to satisfy our obligation. To the extent we have not purchased enough biofuel credits to satisfy our obligation as of the balance sheet date, we charge cost of sales for such deficiency based on the market price of the biofuel credits as of the balance sheet date, and we record a liability for our obligation to purchase those credits. See Note 20 for disclosure of our fair value liability.

Stock-Based Compensation

Compensation expense for our share-based compensation plans is based on the fair value of the awards granted and is recognized in income on a straight-line basis over the shorter of (a) the requisite service period of each award or (b) the period from the grant date to the date retirement eligibility is achieved if that date is expected to occur during the nominal vesting period.

Income Taxes

Income taxes are accounted for under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred amounts are measured using enacted tax rates expected to apply to taxable income in the year those temporary differences are expected to be recovered or settled. Deferred tax assets are reduced by unrecognized tax benefits, if such items may be available to offset the unrecognized tax benefit.

We have elected to classify any interest expense and penalties related to the underpayment of income taxes in income tax expense.

Earnings per Common Share

Earnings per common share is computed by dividing net income by the weighted-average number of common shares outstanding for the year. Participating share-based payment awards, including shares of restricted stock granted under certain of our stock-based compensation plans, are included in the computation of basic earnings per share using the two-class method. Earnings per common share – assuming dilution reflects the potential dilution arising from our outstanding stock options and nonvested shares granted to employees in connection with our stock-based compensation plans. Potentially dilutive securities are excluded from the computation of earnings per common share – assuming dilution when the effect of including such shares would be antidilutive.

Financial Instruments

Our financial instruments include cash and temporary cash investments, receivables, payables, debt, capital lease obligations, commodity derivative contracts, and foreign currency derivative contracts. The estimated fair values of these financial instruments approximate their carrying amounts, except for certain debt as discussed in Note 20.

Derivatives and Hedging

All derivative instruments are recorded in the balance sheet as either assets or liabilities measured at their fair values. 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, are 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 in 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 hedging relationships (derivative instruments not designated as fair value or cash flow hedges) and for derivative instruments entered into 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 the statements of cash flows.

New Accounting Pronouncements

In April 2014, the provisions of Accounting Standards Codification (ASC) Topic 205, “Presentation of Financial Statements,” and ASC Topic 360, “Property, Plant, and Equipment,” were amended to change the criteria for reporting discontinued operations. The provisions of these amendments modify the definition of discontinued operations by limiting discontinued operations reporting to disposals of components of an entity that represent strategic shifts that have or will have a major effect on an entity’s operations and financial results. These amendments require additional disclosures about discontinued operations and new disclosures for other disposals of individually material components of an organization that do not meet the definition of a discontinued operation. In addition, the guidance allows companies to have significant continuing involvement and continuing cash flows with the discontinued operation. These provisions are effective prospectively for annual reporting periods beginning on or after December 15, 2014, and interim periods within those annual periods, with early adoption permitted. The adoption of this guidance effective January 1, 2015 will not affect our financial position or results of operations; however, it may result in changes to the manner in which future dispositions of operations or assets, if any, are presented in our financial statements, or it may require additional disclosures.

In May 2014, the Financial Accounting Standards Board (FASB) amended the ASC and issued a new accounting standard, Topic 606, “Revenue from Contracts with Customers,” to clarify the principles for recognizing revenue. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard also requires improved interim and annual disclosures that enable the users of financial statements to better understand the nature, amount, timing, and uncertainty of revenues and cash flows arising from contracts with customers. The new standard is effective for annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period, and can be adopted either retrospectively to each prior reporting period presented using a practical expedient, as allowed by the new standard, or retrospectively with a cumulative effect adjustment to retained earnings as of the date of initial application. Early adoption is not permitted. We are currently evaluating the effect that adopting this new standard will have on our financial statements and related disclosures.

In January 2015, the provisions of ASC Subtopic 225-20, “Income Statement–Extraordinary and Unusual Items” were amended to eliminate the concept of extraordinary items from U.S. GAAP as part of the FASB’s simplification initiative. The guidance eliminates the separate presentation of extraordinary items on the income statement, net of tax and the related earnings per share, but does not affect the requirement to disclose material items that are unusual in nature or infrequently occurring or to exclude those items from the estimated annual effective tax rate for interim reporting purposes. These provisions may be applied prospectively or retrospectively and are effective for annual reporting periods beginning after December 15, 2015, and interim periods within those annual periods, with early adoption permitted. The adoption of this guidance effective January 1, 2016 will not affect our financial position or results of operations; however, it may affect the manner in which future extraordinary or unusual items, if any, are presented in our financial statements.

In February 2015, the provisions of ASC Topic 810, “Consolidation” were amended to improve consolidation guidance for certain types of legal entities. The guidance modifies the evaluation of whether limited partnerships and similar legal entities are variable interest entities (VIEs) or voting interest entities, eliminates the presumption that a general partner should consolidate a limited partnership, affects the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships, and provides a scope exception from consolidation guidance for certain money market funds. These provisions are effective for annual reporting periods beginning after December 15, 2015, and interim periods within those annual periods, with early adoption permitted. These provisions may also be adopted retrospectively in previously issued financial statements for one or more years with a cumulative-effect adjustment to retained earnings as of the beginning of the first year restated. We are currently evaluating the effect that adopting this new accounting standard will have on our consolidated financial statements and related disclosures.

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Separation of Retail Business (Tables)

12 Months Ended

Dec. 31, 2014

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

Carrying value of retail business assets and liabilities prior to separation

Selected results of operations of the Aruba Refinery are shown below (in millions).

	Year Ended December 31,
	2014			2013		2012
Operating revenues	$	—		$	—	$	857
Income (loss) before income taxes	(64		)	6		(1,034		)

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 were excluded from our consolidated balance sheet as of December 31, 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	191
Total assets	$	2,174
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

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Earnings Per Common Share (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Earnings per common share from continuing operations:
Net income attributable to Valero stockholders from continuing operations	$ 3,694	$ 2,714	$ 3,117
Less dividends paid:
Weighted-average common shares outstanding (in millions)	526	542	550
Earnings per common share from continuing operations:
Total earnings per common share from continuing operations	$ 7.00	$ 4.98	$ 5.64
Earnings per common share from continuing operations – assuming dilution:
Net income attributable to Valero stockholders from continuing operations	3,694	2,714	3,117
Weighted-average common shares outstanding (in millions)	526	542	550
Common equivalent shares:
Weighted-average common shares outstanding – assuming dilution (in millions)	530	548	556
Earnings per common share from continuing operations – assuming dilution (in usd per share)	$ 6.97	$ 4.96	$ 5.61
Common Stock [Member]
Earnings per common share from continuing operations:
Net income attributable to Valero stockholders from continuing operations	3,694	2,714	3,117
Less dividends paid:
Common stock	552	460	358
Nonvested restricted stock	2	2	2
Undistributed earnings	3,140	2,252	2,757
Weighted-average common shares outstanding (in millions)	526	542	550
Earnings per common share from continuing operations:
Distributed earnings (in usd per share)	$ 1.05	$ 0.85	$ 0.65
Undistributed earnings (in usd per share)	$ 5.95	$ 4.13	$ 4.99
Total earnings per common share from continuing operations	$ 7.00	$ 4.98	$ 5.64
Earnings per common share from continuing operations – assuming dilution:
Net income attributable to Valero stockholders from continuing operations	$ 3,694	$ 2,714	$ 3,117
Weighted-average common shares outstanding (in millions)	526	542	550
Common equivalent shares:
Stock options (in shares)	2	4	4
Performance awards and nonvested restricted stock (in shares)	2	2	2
Weighted-average common shares outstanding – assuming dilution (in millions)	530	548	556
Earnings per common share from continuing operations – assuming dilution (in usd per share)	$ 6.97	$ 4.96	$ 5.61
Restricted Stock [Member]
Less dividends paid:
Weighted-average common shares outstanding (in millions)	2	3	3
Earnings per common share from continuing operations:
Distributed earnings (in usd per share)	$ 1.05	$ 0.85	$ 0.65
Undistributed earnings (in usd per share)	$ 5.95	$ 4.13	$ 4.99
Total earnings per common share from continuing operations	$ 7.00	$ 4.98	$ 5.64
Earnings per common share from continuing operations – assuming dilution:
Weighted-average common shares outstanding (in millions)	2	3	3

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Employee Benefit Plans (Tables)

12 Months Ended

Dec. 31, 2014

Compensation and Retirement Disclosure [Abstract]

The changes in benefit obligation, the changes in fair value of plan assets, and the funded status of our pension plans and other postretirement benefit plans

The changes in benefit obligation related to all of our defined benefit plans, the changes in fair value of plan assets^(a), and the funded status of our defined benefit plans as of and for the years ended were as follows (in millions):

	Pension Plans						Other Postretirement Benefit Plans
	December 31,						December 31,
	2014			2013			2014			2013
Changes in benefit obligation:
Benefit obligation as of beginning of year	$	1,914		$	2,307		$	324		$	436
Service cost	120			137			7			12
Interest cost	91			86			15			18
Participant contributions	—			—			7			15
Plan amendments	2			(274		)	—			(43		)
Curtailment gain	—			(6		)	—			—
Benefits paid	(109		)	(170		)	(30		)	(37		)
Actuarial (gain) loss	440			(169		)	37			(77		)
Other	(8		)	3			1			—
Benefit obligation as of end of year	$	2,450		$	1,914		$	361		$	324
Changes in plan assets(a):
Fair value of plan assets as of beginning of year	$	1,909		$	1,729		$	—		$	—
Actual return on plan assets	139			306			—			—
Valero contributions	46			41			20			19
Participant contributions	—			—			7			15
Benefits paid	(109		)	(170		)	(30		)	(37		)
Other	(7		)	3			3			3
Fair value of plan assets as of end of year	$	1,978		$	1,909		$	—		$	—
Reconciliation of funded status(a):
Fair value of plan assets as of end of year	$	1,978		$	1,909		$	—		$	—
Less benefit obligation as of end of year	2,450			1,914			361			324
Funded status as of end of year	$	(472	)	$	(5	)	$	(361	)	$	(324	)
Accumulated benefit obligation	$	2,354		$	1,811		n/a			n/a

^{___________________________} 

^(a)  Plan assets include only the assets associated with pension plans subject to legal minimum funding standards. Plan assets associated with U.S. nonqualified pension plans are not included here because they are not protected from our creditors and therefore cannot be reflected as a reduction from our obligations under the pension plans. As a result, the reconciliation of funded status does not reflect the effect of plan assets that exist for all of our defined benefit plans. See Note 20 for the assets associated with certain U.S. nonqualified pension plans.

Schedule of amounts recognized in balance sheet

Amounts recognized in our balance sheet for our pension and other postretirement benefits plans as of December 31, 2014 and 2013 include (in millions):

	Pension Plans						Other Postretirement Benefit Plans
	2014			2013			2014			2013
Deferred charges and other assets, net	$	7		$	208		$	—		$	—
Accrued expenses	(28		)	(11		)	(20		)	(19		)
Other long-term liabilities	(451		)	(202		)	(341		)	(305		)
	$	(472	)	$	(5	)	$	(361	)	$	(324	)

Benefit obligations in excess of fair value of plan assets

The accumulated benefit obligations for certain of our pension plans exceed the fair values of the assets of those plans. For those plans, the table below presents the total projected benefit obligation, accumulated benefit obligation, and fair value of the plan assets (in millions).

	December 31,
	2014		2013
Projected benefit obligation	$	2,288	$	215
Accumulated benefit obligation	2,217		168
Fair value of plan assets	1,812		3

Expected benefit payments

Benefit payments that we expect to pay, including amounts related to expected future services, and the anticipated Medicare subsidies that we expect to receive are as follows for the years ending December 31 (in millions):

	Pension Benefits		Other Postretirement Benefits
2015	$	131	$	20
2016	127		20
2017	132		21
2018	142		21
2019	189		21
2020-2024	845		108

Components of net periodic benefit costs

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

	Pension Plans									Other Postretirement Benefit Plans
	Year Ended December 31,									Year Ended December 31,
	2014			2013			2012			2014			2013			2012
Components of net periodic benefit cost:
Service cost	$	120		$	137		$	140		$	7		$	12		$	12
Interest cost	91			86			93			15			18			21
Expected return on plan assets	(133		)	(131		)	(125		)	—			—			—
Amortization of:
Prior service cost (credit)	(22		)	(19		)	3			(18		)	(14		)	(23		)
Net actuarial (gain) loss	35			57			33			(1		)	—			1
Special charges (credits)	3			(5		)	(3		)	—			—			—
Net periodic benefit cost	$	94		$	125		$	141		$	3		$	16		$	11

Pre-tax amounts recognized in other comprehensive income

Pre-tax amounts recognized in other comprehensive income were as follows (in millions):

	Pension Plans									Other Postretirement Benefit Plans
	Year Ended December 31,									Year Ended December 31,
	2014			2013			2012			2014			2013			2012
Net gain (loss) arising during the year:
Net actuarial gain (loss)	$	(434	)	$	290		$	(245	)	$	(37	)	$	77		$	17
Prior service cost	(1		)	—			(9		)	—			—			—
Remeasurement due to plan amendments	—			328			—			—			43			—
Net (gain) loss reclassified into income:
Net actuarial (gain) loss	35			57			33			(1		)	—			1
Prior service cost (credit)	(22		)	(19		)	3			(18		)	(14		)	(23		)
Curtailment and settlement loss	3			1			12			—			—			—
Total changes in other comprehensive income (loss)	$	(419	)	$	657		$	(206	)	$	(56	)	$	106		$	(5	)

Pre-tax amounts in accumulated other comprehensive income not yet recognized

The pre-tax amounts in accumulated other comprehensive income as of December 31, 2014 and 2013 that have not yet been recognized as components of net periodic benefit cost were as follows (in millions):

	Pension Plans						Other Postretirement Benefit Plans
	2014			2013			2014			2013
Prior service credit	$	(210	)	$	(233	)	$	(92	)	$	(110	)
Net actuarial (gain) loss	876			479			(6		)	(44		)
Total	$	666		$	246		$	(98	)	$	(154	)

Pre-tax amounts in accumulated other comprehensive income to be recognized in the next fiscal year

The following pre-tax amounts included in accumulated other comprehensive income as of December 31, 2014 are expected to be recognized as components of net periodic benefit cost during the year ending December 31, 2015 (in millions):

	Pension Plans			Other Postretirement Benefit Plans
Amortization of prior service credit	$	(22	)	$	(18	)
Amortization of net actuarial loss	63			—
Total	$	41		$	(18	)

Weighted-average assumptions used to determine the benefit obligations and net periodic benefit cost

The weighted-average assumptions used to determine the net periodic benefit cost for the years ended December 31, 2014, 2013, and 2012 were as follows:

	Pension Plans						Other Postretirement Benefit Plans
	2014		2013		2012		2014		2013		2012
Discount rate	4.92	%	4.33	%	5.08	%	4.88	%	4.19	%	4.97	%
Expected long-term rate of return on plan assets	7.61	%	7.62	%	7.67	%	—	%	—	%	—	%
Rate of compensation increase	3.81	%	3.73	%	3.68	%	—	%	—	%	—	%

The weighted-average assumptions used to determine the benefit obligations as of December 31, 2014 and 2013 were as follows:

	Pension Plans				Other Postretirement Benefit Plans
	2014		2013		2014		2013
Discount rate	4.10	%	4.92	%	4.13	%	4.88	%
Rate of compensation increase	3.78	%	3.81	%	—	%	—	%

Assumed health care cost trend rates

The assumed health care cost trend rates as of December 31, 2014 and 2013 were as follows:

	2014		2013
Health care cost trend rate assumed for the next year	7.36	%	7.39	%
Rate to which the cost trend rate was assumed to decline (the ultimate trend rate)	5.00	%	5.00	%
Year that the rate reaches the ultimate trend rate	2020		2020

Effect of one percentage-point change in assumed health care cost trend rates

A one percentage-point change in assumed health care cost trend rates would have the following effects on other postretirement benefits (in millions):

	1% Increase		1% Decrease
Effect on total of service and interest cost components	$	—	$	—
Effect on accumulated postretirement benefit obligation	5		(4		)

Fair value of pension plan assets by level of fair value hierarchy

The tables below present the fair values of the assets of our pension plans (in millions) as of December 31, 2014 and 2013 by level of the fair value hierarchy. Assets categorized in Level 1 of the hierarchy are measured at fair value using a market approach based on quotations from national securities exchanges. Assets categorized in Level 2 of the hierarchy are measured at net asset value as a practical expedient for fair value. As previously noted, we do not fund or fully fund U.S. nonqualified and certain international pension plans that are not subject to funding requirements, and we do not fund our other postretirement benefit plans.

	Fair Value Measurements Using						Total as of December 31, 2014
	Level 1		Level 2		Level 3
Equity securities:
U.S. companies(a)	$	541	$	—	$	—	$	541
International companies	144		—		—		144
Preferred stock	1		1		—		2
Mutual funds:
International growth	119		—		—		119
Index funds(b)	199		—		—		199
Corporate debt instruments	—		263		—		263
Government securities:
U.S. Treasury securities	71		—		—		71
Other government securities	—		100		—		100
Common collective trusts	—		379		—		379
Private fund	—		40		—		40
Insurance contracts	—		18		—		18
Interest and dividends receivable	5		—		—		5
Cash and cash equivalents	75		22		—		97
Total	$	1,155	$	823	$	—	$	1,978

______________________

See notes on page 98.

	Fair Value Measurements Using						Total as of December 31, 2013
	Level 1		Level 2		Level 3
Equity securities:
U.S. companies(a)	$	529	$	—	$	—	$	529
International companies	155		—		—		155
Preferred stock	2		1		—		3
Mutual funds:
International growth	131		—		—		131
Index funds(b)	160		—		—		160
Corporate debt instruments	—		260		—		260
Government securities:
U.S. Treasury securities	81		—		—		81
Other government securities	—		79		—		79
Common collective trusts	—		373		—		373
Private fund	—		38		—		38
Insurance contracts	—		17		—		17
Interest and dividends receivable	5		—		—		5
Cash and cash equivalents	72		6		—		78
Total	$	1,135	$	774	$	—	$	1,909

^{__________________________________} 

^(a)  Equity securities are held in a wide range of industrial sectors, including consumer goods, information technology, healthcare, industrials, and financial services.

^(b)  This class includes primarily investments in approximately 60 percent equities and 40 percent bonds.

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Valero Energy Partners LP (Details) (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended			0 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Jul. 01, 2014	Dec. 16, 2013	Dec. 31, 2011
Noncontrolling Interest Transactions Textual [Abstract]
Net proceeds from initial public offering of common units of Valero Energy Partners LP	$ 0	$ 369	$ 0
Cash and temporary cash investments	3,689	4,292	1,723			1,024
Noncontrolling interests	567	486
Valero Energy Partners LP [Member]
Noncontrolling Interest Transactions Textual [Abstract]
Cash and temporary cash investments	237	375
Noncontrolling interests	375	370
Valero Energy Partners LP [Member] | Texas Crude Systems Business [Member]
Noncontrolling Interest Transactions Textual [Abstract]
Proceeds from sale of property, plant, and equipment				154
Limited Partner [Member]
Noncontrolling Interest Transactions Textual [Abstract]
Noncontrolling interest, ownership percentage by parent	68.60%	68.60%
Noncontrolling interest, ownership percentage by public	29.40%	29.40%
General Partner [Member]
Noncontrolling Interest Transactions Textual [Abstract]
Noncontrolling interest, ownership percentage by parent	2.00%	2.00%
Offering [Member] | Valero Energy Partners LP [Member]
Noncontrolling Interest Transactions Textual [Abstract]
Common units sold in the Offering					17,250,000
Common unit price per unit					$ 23.00
Net proceeds from initial public offering of common units of Valero Energy Partners LP					$ 369

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Employee Benefit Plans, Aggregate Projected Benefit Obligation (Details) (Pension Plans [Member], USD $) In Millions, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Pension Plans [Member]
Information About Pension Plans in which the Accumulated Benefit Obligation Exceeded the Fair Value of Plan Assets
Projected benefit obligation	$ 2,288	$ 215
Accumulated benefit obligation	2,217	168
Fair value of plan assets	$ 1,812	$ 3

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Consolidated Balance Sheets (USD $) In Millions, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Current assets:
Cash and temporary cash investments	$ 3,689	$ 4,292
Receivables, net	5,879	8,751
Inventories	6,623	5,758
Income taxes receivable	97	72
Deferred income taxes	162	266
Prepaid expenses and other	164	138
Total current assets	16,614	19,277
Property, plant, and equipment, at cost	35,933	33,933
Accumulated depreciation	(9,198)	(8,226)
Property, plant, and equipment, net	26,735	25,707
Deferred charges and other assets, net	2,201	2,276
Total assets	45,550	47,260
Current liabilities:
Current portion of debt and capital lease obligations	606	303
Accounts payable	6,760	9,931
Accrued expenses	596	522
Taxes other than income taxes	1,209	1,345
Income taxes payable	433	773
Deferred income taxes	376	249
Total current liabilities	9,980	13,123
Debt and capital lease obligations, less current portion	5,780	6,261
Deferred income taxes	6,607	6,601
Other long-term liabilities	1,939	1,329
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	7,116	7,187
Treasury stock, at cost; 159,202,872 and 137,932,138 common shares	(8,125)	(7,054)
Retained earnings	22,046	18,970
Accumulated other comprehensive income (loss)	(367)	350
Total Valero Energy Corporation stockholders’ equity	20,677	19,460
Noncontrolling interests	567	486
Total equity	21,244	19,946
Total liabilities and equity	$ 45,550	$ 47,260

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Supplemental Cash Flow Information (Tables)

12 Months Ended

Dec. 31, 2014

Supplemental Cash Flow Information [Abstract]

Supplemental Cash Flow Disclosures

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

	Year Ended December 31,
	2014		2013		2012
Interest paid in excess of amount capitalized	$	392	$	361	$	302
Income taxes paid, net	1,624		387		705

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):

	Year Ended December 31,
	2014			2013			2012
Decrease (increase) in current assets:
Receivables, net	$	2,753		$	(753	)	$	437
Inventories	(1,014		)	(13		)	(282		)
Income taxes receivable	(23		)	10			51
Prepaid expenses and other	(32		)	2			(28		)
Increase (decrease) in current liabilities:
Accounts payable	(3,149		)	977			(113		)
Accrued expenses	38			53			13
Taxes other than income taxes	(64		)	337			(260		)
Income taxes payable	(319		)	309			(120		)
Changes in current assets and current liabilities	$	(1,810	)	$	922		$	(302	)

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Quarterly Financial Data (Unaudited) (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended									12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013		Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Results of operations
Operating revenues	$ 27,859	$ 34,408	$ 34,914	$ 33,663	$ 34,429	$ 36,137	$ 34,034	[1]	$ 33,474	$ 130,844	$ 138,074	$ 138,393
Operating income	1,796	1,670	1,085	1,351	1,562	532	805	[1]	1,058	5,902	3,957	5,044
Net income	1,220	1,062	593	836	1,287	324	465	[1]	652	3,711	2,728	2,080
Net income attributable to Valero Energy Corporation stockholders	$ 1,155	$ 1,059	$ 588	$ 828	$ 1,288	$ 312	$ 466	[1]	$ 654	$ 3,630	$ 2,720	$ 2,083
Earnings per common share (in usd per share)	$ 2.22	$ 2.01	$ 1.11	$ 1.55	$ 2.39	$ 0.58	$ 0.86	[1]	$ 1.18	$ 6.88	$ 4.99	$ 3.77
Earnings per common share - assuming dilution (in usd per share)	$ 2.22	$ 2.00	$ 1.10	$ 1.54	$ 2.38	$ 0.57	$ 0.85	[1]	$ 1.18	$ 6.85	$ 4.97	$ 3.75

[1] The separation of our retail business was completed on May 1, 2013.

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Consolidated Statements of Equity (USD $) In Millions, unless otherwise specified	Total	Stock-Based Compensation Plans Repurchase Program [Member]	Common Stock Repurchase Program [Member]	Parent [Member]	Parent [Member] Stock-Based Compensation Plans Repurchase Program [Member]	Parent [Member] Common Stock Repurchase Program [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Additional Paid-in Capital [Member] Stock-Based Compensation Plans Repurchase Program [Member]	Treasury Stock [Member]	Treasury Stock [Member] Stock-Based Compensation Plans Repurchase Program [Member]	Treasury Stock [Member] Common Stock Repurchase Program [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Noncontrolling Interest [Member]
Beginning balance at Dec. 31, 2011	$ 16,445			$ 16,423			$ 7	$ 7,486		$ (6,475)			$ 15,309	$ 96	$ 22
Increase (Decrease) in Equity Roll Forward
Net income (loss)	2,080			2,083									2,083		(3)
Dividends on common stock	(360)			(360)									(360)
Stock-based compensation expense	57			57				57
Tax deduction in excess of stock- based compensation expense	29			29				29
Transactions in connection with stock-based compensation plans:
Stock issuances	59			59				(260)		319
Stock repurchases		(153)	(118)		(153)	(118)					(163)	(118)
Contributions from noncontrolling interests	44														44
Other									10
Other comprehensive income (loss)	12			12										12
Ending balance at Dec. 31, 2012	18,095			18,032			7	7,322		(6,437)			17,032	108	63
Increase (Decrease) in Equity Roll Forward
Net income (loss)	2,728			2,720									2,720		8
Dividends on common stock	(462)			(462)									(462)
Stock-based compensation expense	64			64				64
Tax deduction in excess of stock- based compensation expense	47			47				47
Transactions in connection with stock-based compensation plans:
Stock issuances	59			59				(243)		302
Stock repurchases		(236)	(692)		(236)	(692)					(236)	(692)
Separation of retail business	(479)			(479)				(9)		9			(320)	(159)
Net proceeds from initial public offering of common units of Valero Energy Partners LP	369														369
Contributions from noncontrolling interests	46														46
Other	6			6				6
Other comprehensive income (loss)	401			401										401
Ending balance at Dec. 31, 2013	19,946			19,460			7	7,187		(7,054)			18,970	350	486
Increase (Decrease) in Equity Roll Forward
Net income (loss)	3,711			3,630									3,630		81
Dividends on common stock	(554)			(554)									(554)
Stock-based compensation expense	60			60				60
Tax deduction in excess of stock- based compensation expense	47			47				47
Transactions in connection with stock-based compensation plans:
Stock issuances	47			47				(178)		225
Stock repurchases		(128)	(1,168)		(128)	(1,168)					(128)	(1,168)
Contributions from noncontrolling interests	12														12
Distributions to public unitholders of Valero Energy Partners LP	(12)														(12)
Other comprehensive income (loss)	(717)			(717)										(717)
Ending balance at Dec. 31, 2014	$ 21,244			$ 20,677			$ 7	$ 7,116		$ (8,125)			$ 22,046	$ (367)	$ 567

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Price Risk Management Activities, Hedging Instruments by Consolidated Balance Sheet Location (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Fair Values of Derivative Instruments
Total derivatives assets, net		$ 537
Total derivative liabilities, net		529
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		25
Derivative asset, fair value, gross liability		36
Not Designated as Hedging Instrument [Member]
Fair Values of Derivative Instruments
Derivative asset, fair value, gross asset	3,133	512
Derivative liability, fair value, gross liability	2,925	493
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	3,096	474
Derivative asset, fair value, gross liability	2,886	455
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	34	33
Derivative asset, fair value, gross liability	31	18
Not Designated as Hedging Instrument [Member] | Swap [Member] | Commodity Contract [Member] | Prepaid Expenses And Other [Member]
Fair Values of Derivative Instruments
Derivative asset, fair value, gross asset		3
Derivative asset, fair value, gross liability		0
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		0
Derivative liability, fair value, gross liability		5
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	2	2
Derivative asset, fair value, gross liability	3	2
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	1	0
Derivative asset, fair value, gross liability	5	5
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		$ 8

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Accrued Expenses and Other Long-Term Liabilities, Environmental Matters (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Changes in Environmental Liabilities Rollforward Analysis
Balance as of beginning of year	$ 301	$ 269	$ 274
Additions to liability	26	67	23
Reductions to liability	0	(1)	(1)
Payments, net of third-party recoveries	(27)	(28)	(29)
Separation of retail business	0	(4)	0
Foreign currency translation	(5)	(2)	2
Balance as of end of year	$ 295	$ 301	$ 269

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Property, Plant, and Equipment (Tables)

12 Months Ended

Dec. 31, 2014

Property, Plant and Equipment [Abstract]

Major classes of property, plant, and equipment

Major classes of property, plant, and equipment, which include capital lease assets, consisted of the following (in millions):

	December 31,
	2014			2013
Land	$	396		$	404
Crude oil processing facilities	28,054			27,260
Pipeline and terminal facilities	1,955			1,513
Grain processing equipment	779			719
Administrative buildings	800			800
Other	2,596			2,109
Construction in progress	1,353			1,128
Property, plant, and equipment, at cost	35,933			33,933
Accumulated depreciation	(9,198		)	(8,226		)
Property, plant, and equipment, net	$	26,735		$	25,707

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Debt, Other Disclosures (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Principal Payments Due on Debt
2015	$ 601
2016	0
2017	950
2018	0
2019	750
Thereafter	4,074
Net unamortized discount and fair value adjustments	(21)	(24)
Total debt	6,354	6,525
Future Minimum Rental on Capital Lease Obligations
2015	8
2016	8
2017	6
2018	6
2019	6
Thereafter	18
Capital lease, net unamortized fair value adjustment	1
Less interest expense	(21)
Total capital lease obligations	$ 32	$ 39

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Stock-Based Compensation

12 Months Ended

Dec. 31, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCK-BASED COMPENSATION

15. STOCK-BASED COMPENSATION

Under our 2011 Omnibus Stock Incentive Plan (the OSIP), various stock and stock-based awards may be granted to employees and non-employee directors. Awards available under the OSIP include options to purchase shares of common stock, performance awards that vest upon the achievement of an objective performance goal, stock appreciation rights, restricted stock that vests over a period determined by our compensation committee, and dividend equivalent rights (DERs). The OSIP was approved by our stockholders on April 28, 2011. As of December 31, 2014, 13,536,081 shares of our common stock remained available to be awarded under the OSIP.

We also maintain other stock-based compensation plans under which previously granted equity awards remain outstanding. No additional grants may be awarded under these plans.

The following table reflects activity related to our stock-based compensation arrangements (in millions):

	Year Ended December 31,
	2014		2013		2012
Stock-based compensation expense	$	60	$	64	$	58
Tax benefit recognized on stock-based compensation expense	21		22		20
Tax benefit realized for tax deductions resulting from exercises and vestings	64		66		45
Effect of tax deductions in excess of recognized stock-based compensation expense reported as a financing cash flow	47		47		27

Each of our stock-based compensation arrangements is discussed below.

Stock Options

Under the terms of our various stock-based compensation plans, the exercise price of options granted is not less than the fair market value of our common stock on the date of grant. Stock options become exercisable pursuant to the individual written agreements between the participants and us, usually in three equal annual installments beginning one year after the date of grant, with unexercised options generally expiring seven or ten years from the date of grant.

The fair value of stock options granted during 2014, 2013, and 2012 were estimated using the Monte Carlo simulation model, as these options contain both a service condition and a market condition in order to be exercised. The expected life of options granted is the period of time from the grant date to the date of expected exercise or other expected settlement. The expected life for each of the years in the table below was calculated using the safe harbor provisions of SEC Staff Accounting Bulletin No. 107 and No. 110 related to share‑based payments. Because the stock options granted in 2012 and later contain a market condition, historical exercise patterns did not provide a reasonable basis for estimating the expected life. Expected volatility is based on closing prices of our common stock for periods corresponding to the expected life of options granted. Expected dividend yield is based on annualized dividends at the date of grant. The risk-free interest rate used is the implied yield currently available from the U.S. Treasury zero‑coupon issues with a remaining term equal to the expected life of the options at the grant date.

A summary of the weighted-average assumptions used in our fair value measurements is presented in the table below.

	Year Ended December 31,
	2014		2013		2012
Expected life in years	6.0		6.0		6.0
Expected volatility	43.21	%	49.63	%	49.11	%
Expected dividend yield	2.27	%	2.27	%	2.39	%
Risk-free interest rate	1.74	%	1.77	%	0.85	%

A summary of the status of our stock option awards is presented in the table below.

	Number of Stock Options		Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
					(in years)	(in millions)
Outstanding as of January 1, 2014	8,558,093		$	27.88
Granted	126,095		48.57
Exercised	(2,564,125	)	18.64
Expired	(1,449,986	)	66.67
Forfeited	(856	)	17.68
Outstanding as of December 31, 2014	4,669,221		21.48		4.5	$	131
Exercisable as of December 31, 2014	4,315,414		19.99		4.2	127

The following table reflects activity related to our stock options granted (in millions, except per share data):

	Year Ended December 31,
	2014		2013		2012
Weighted average grant-date fair value price per share	$	17.31	$	15.83	$	10.98
Intrinsic value of stock options exercised	85		101		78
Cash received from stock option exercises	47		59		59

As of December 31, 2014, there was $1 million of unrecognized compensation cost related to outstanding unvested stock option awards, which is expected to be recognized over a weighted-average period of approximately two years.

Restricted Stock

Restricted stock is granted to employees and non-employee directors. Restricted stock granted to employees vests in accordance with individual written agreements between the participants and us, usually in equal annual installments over a period of three years beginning one year after the date of grant. Restricted stock granted to our non-employee directors generally vests in three years following the date of grant. A summary of the status of our restricted stock awards is presented in the table below.

	Number of Shares		Weighted- Average Grant-Date Fair Value Per Share
Nonvested shares as of January 1, 2014	2,205,314		$	32.23
Granted	969,671		49.40
Vested	(1,402,753	)	31.90
Forfeited	(14,082	)	32.56
Nonvested shares as of December 31, 2014	1,758,150		41.96

As of December 31, 2014, there was $45 million of unrecognized compensation cost related to outstanding unvested restricted stock awards, which is expected to be recognized over a weighted-average period of approximately two years. The total fair value of restricted stock that vested during the years ended December 31, 2014, 2013, and 2012 was $60 million, $74 million, and $47 million, respectively.

Performance Awards

Performance awards are issued to certain of our key employees and represent rights to receive shares of our common stock upon the achievement by us of an objective performance measure. The objective performance measure is our total shareholder return, which is ranked among the total shareholder returns of a defined peer group of companies. Our ranking determines the rate at which the performance awards convert into our common shares. Conversion rates can range from zero to 200 percent.

Performance awards vest in equal one-third increments (tranches) on an annual basis. Our compensation committee establishes the peer group of companies for each tranche of awards at the beginning of the one year vesting period for that tranche. Therefore, performance awards are not considered to be granted for accounting purposes until our compensation committee establishes the peer group of companies for each tranche of awards. The fair value of each tranche of awards is determined at the time the awards are considered to be granted and is based on the expected conversion rate for those awards and the fair value per share. The fair value per share for awards granted during 2014 is equal to the market price of our common stock on the grant date as these grants include DERs. The fair value per share for awards granted prior to 2014 was equal to the market price of our common stock on the grant date reduced by expected dividends over that tranche’s vesting period as these grants did not include DERs.

A summary of the status of our performance awards considered granted is presented below.

	Nonvested Awards		Vested Awards
Awards outstanding as of January 1, 2014	947,165		—
Granted	225,829		—
Vested	(534,028	)	534,028
Converted	—		(534,028	)
Forfeited	(24,576	)	—
Awards outstanding as of December 31, 2014	614,390		—

There were three tranches of performance awards granted during the year ended December 31, 2014 as follows:

	Awards Granted	Expected Conversion Rate	Fair Value Per Share
Third tranche of 2012 awards	99,023	100%	$	47.47
Second tranche of 2013 awards	76,232	100%	47.47
First tranche of 2014 awards	50,574	100%	48.57
Total	225,829

As of December 31, 2014, there was $11 million of unrecognized compensation cost related to outstanding unvested performance awards, which will be recognized during 2015. The total fair value of performance awards that vested during the years ended December 31, 2014, 2013, and 2012 was $15 million, $12 million, and $3 million, respectively.

Performance awards converted during the year ended December 31, 2014 were as follows:

	Vested Awards Converted	Actual Conversion Rate	Number of Shares Issued
2010 awards	201,422	100%	201,422
2011 awards	227,571	200%	455,142
2012 awards	102,855	200%	205,710
2013 awards	2,180	200%	4,360
Total	534,028		866,634

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Accrued Expenses and Other Long-Term Liabilities (Tables)

12 Months Ended

Dec. 31, 2014

Accrued Expenses and Other Long-Term Liabilities [Abstract]

Accrued expenses and other long-term liabilities

Accrued expenses and other long-term liabilities consisted of the following (in millions):

	Accrued Expenses				Other Long- Term Liabilities
	December 31,
	2014		2013		2014		2013
Defined benefit plan liabilities (see Note 14)	$	48	$	30	$	792	$	507
Wage and other employee-related liabilities	294		257		104		97
Uncertain income tax position liabilities, including related penalties and interest (see Note 16) (a)	—		—		316		205
Environmental liabilities	26		24		269		277
Accrued interest expense	88		90		—		—
Derivative liabilities	—		13		—		—
Asset retirement obligations	20		5		71		26
Other accrued liabilities	120		103		387		217
Accrued expenses and other long-term liabilities	$	596	$	522	$	1,939	$	1,329

^{___________________________} 

^(a) As of December 31, 2014, our total liability for uncertain tax positions, including related penalties and interest, was $484 million, with $168 million classified as a current liability and reflected in “Income taxes payable” and the remaining $316 million classified as a long-term liability and reflected in “Other long-term liabilities” as detailed in this table. As of December 31, 2013, our total liability for uncertain tax positions, including related penalties and interest, was $443 million, with $238 million classified as a current liability and reflected in “Income taxes payable” and the remaining $205 million classified as a long-term liability and reflected in “Other long-term liabilities” as detailed in this table.

Changes in environmental liabilities

Changes in our environmental liabilities were as follows (in millions):

	Year Ended December 31,
	2014			2013			2012
Balance as of beginning of year	$	301		$	269		$	274
Additions to liability	26			67			23
Reductions to liability	—			(1		)	(1		)
Payments, net of third-party recoveries	(27		)	(28		)	(29		)
Separation of retail business	—			(4		)	—
Foreign currency translation	(5		)	(2		)	2
Balance as of end of year	$	295		$	301		$	269

Changes in asset retirement obligations

Changes in our asset retirement obligations were as follows (in millions).

	Year Ended December 31,
	2014			2013			2012
Balance as of beginning of year	$	31		$	108		$	87
Additions to accrual	60			2			14
Revisions in estimated cash flows	—			—			13
Accretion expense	1			2			5
Settlements	(1		)	(1		)	(11		)
Separation of retail business	—			(80		)	—
Balance as of end of year	$	91		$	31		$	108

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Earnings Per Common Share

12 Months Ended

Dec. 31, 2014

Earnings Per Share [Abstract]

EARNINGS PER COMMON SHARE

17. EARNINGS PER COMMON SHARE

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

	Year Ended December 31,
	2014				2013				2012
	Restricted Stock		Common Stock		Restricted Stock		Common Stock		Restricted Stock		Common Stock
Earnings per common share from continuing operations:
Net income attributable to Valero stockholders from continuing operations			$	3,694			$	2,714			$	3,117
Less dividends paid:
Common stock			552				460				358
Nonvested restricted stock			2				2				2
Undistributed earnings			$	3,140			$	2,252			$	2,757
Weighted-average common shares outstanding	2		526		3		542		3		550
Earnings per common share from continuing operations:
Distributed earnings	$	1.05	$	1.05	$	0.85	$	0.85	$	0.65	$	0.65
Undistributed earnings	5.95		5.95		4.13		4.13		4.99		4.99
Total earnings per common share from continuing operations	$	7.00	$	7.00	$	4.98	$	4.98	$	5.64	$	5.64
Earnings per common share from continuing operations – assuming dilution:
Net income attributable to Valero stockholders from continuing operations			$	3,694			$	2,714			$	3,117
Weighted-average common shares outstanding			526				542				550
Common equivalent shares:
Stock options			2				4				4
Performance awards and nonvested restricted stock			2				2				2
Weighted-average common shares outstanding – assuming dilution			530				548				556
Earnings per common share from continuing operations – assuming dilution			$	6.97			$	4.96			$	5.61

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Equity, Income Tax Effects on Other Comprehensive Income (Loss) (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Income Tax Effects Related to Components of Other Comprehensive Income (Loss)
Foreign currency translation adjustment, before-tax amount	$ (407)	$ (98)	$ 164
Pension and other postretirement benefits:
Net actuarial gain (loss) arising during the year, before-tax amount	(471)	367	(228)
Plan amendments, before tax amount		371
Prior service cost arising during the year, before tax amount	(1)		(9)
(Gain) loss reclassified into income related to:
Net actuarial loss, before-tax amount	34	57	34
Prior service credit, before-tax amount	(40)	(33)	(20)
Curtailment and settlement, before-tax amount	3	1	12
Net gain (loss) on pension and other postretirement benefits, before-tax amount	(475)	763	(211)
Derivative instruments designated and qualifying as cash flow hedges:
Net gain (loss) arising during the year, before-tax amount	(1)	(4)	45
Net (gain) loss reclassified into income, before-tax amount	2	2	(73)
Net gain (loss) on cash flow hedges, before-tax amount	1	(2)	(28)
Other comprehensive income (loss) before income tax expense (benefit)	(881)	663	(75)
Foreign currency translation adjustment, tax expense (benefit)	0	0	0
Pension and other postretirement benefits:
Net actuarial gain (loss) arising during the year, tax expense (benefit)	(162)	125	(79)
Plan amendments, tax expense		130
Prior service cost arising during the year, tax benefit	(1)		(3)
(Gain) loss reclassified into income related to:
Net actuarial loss, tax expense	12	20	12
Prior service credit, tax benefit	(14)	(12)	(7)
Curtailment and settlement, tax expense (benefit)	0	0	0
Net gain (loss) on pension and other postretirement benefits, tax expense (benefit)	(165)	263	(77)
Derivative instruments designated and qualifying as cash flow hedges:
Net gain (loss) arising during the year, tax expense (benefit)	0	(2)	16
Net (gain) loss reclassified into income, tax expense (benefit)	1	1	(26)
Net gain (loss) on cash flow hedges, tax expense (benefit)	1	(1)	(10)
Other comprehensive income (loss), tax expense (benefit)	(164)	262	(87)
Foreign currency translation adjustment, net	(407)	(98)	164
Pension and other postretirement benefits:
Net actuarial gain (loss) arising during the year, net	(309)	242	(149)
Plan amendments, net		241
Prior service cost arising during the year, net	0		(6)
(Gain) loss reclassified into income related to:
Net actuarial loss, net	22	37	22
Prior service credit, net	(26)	(21)	(13)
Curtailment and settlement, net	3	1	12
Net gain (loss) on pension and other postretirement benefits, net	(310)	500	(134)
Derivative instruments designated and qualifying as cash flow hedges:
Net gain (loss) arising during the year, net	(1)	(2)	29
Net (gain) loss reclassified into income, net	1	1	(47)
Net gain (loss) on cash flow hedges, net	0	(1)	(18)
Other comprehensive income (loss)	$ (717)	$ 401	$ 12

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Consolidated Statements of Cash Flows (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Cash flows from operating activities:
Net income	$ 3,711	$ 2,728	$ 2,080
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	1,690	1,720	1,574
Aruba Refinery asset retirement expense and other	63	0	0
Gain on disposition of retained interest in CST Brands, Inc.	0	(325)	0
Asset impairment losses	0	0	1,014
Stock-based compensation expense	60	64	58
Deferred income tax expense	445	501	963
Changes in current assets and current liabilities	(1,810)	922	(302)
Changes in deferred charges and credits and other operating activities, net	82	(46)	(117)
Net cash provided by operating activities	4,241	5,564	5,270
Cash flows from investing activities:
Capital expenditures	(2,153)	(2,121)	(2,931)
Deferred turnaround and catalyst costs	(649)	(634)	(479)
Proceeds from the sale of the Paulsboro Refinery	0	0	160
Other investing activities, net	(42)	(57)	(101)
Net cash used in investing activities	(2,844)	(2,812)	(3,351)
Cash flows from financing activities:
Proceeds from debt borrowings	28	0	2,900
Repayments of debt	(200)	(480)	(3,612)
Proceeds from the exercise of stock options	47	59	59
Purchase of common stock for treasury	(1,296)	(928)	(281)
Common stock dividends	(554)	(462)	(360)
Net proceeds from initial public offering of common units of Valero Energy Partners LP	0	369	0
Contributions from noncontrolling interests	12	45	44
Distributions to public unitholders of Valero Energy Partners LP	(12)	0	0
Disposition of retail business:
Proceeds from short-term debt in anticipation of separation	0	550	0
Cash distributed to Valero by CST Brands, Inc.	0	500	0
Cash held and retained by CST Brands, Inc. upon separation	0	(315)	0
Proceeds from short-term debt related to disposition of retained interest	0	525	0
Repayments of short-term debt related to disposition of retained interest	0	(58)	0
Other financing activities, net	45	32	17
Net cash used in financing activities	(1,930)	(163)	(1,233)
Effect of foreign exchange rate changes on cash	(70)	(20)	13
Net increase (decrease) in cash and temporary cash investments	(603)	2,569	699
Cash and temporary cash investments at beginning of year	4,292	1,723	1,024
Cash and temporary cash investments at end of year	$ 3,689	$ 4,292	$ 1,723

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Consolidated Balance Sheets (Parenthetical) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Valero Energy Corporation stockholders’ equity:
Common stock, par value (in usd per share)	$ 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	159,202,872	137,932,138

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Accrued Expenses and Other Long-Term Liabilities

12 Months Ended

Dec. 31, 2014

Accrued Expenses and Other Long-Term Liabilities [Abstract]

ACCRUED EXPENSES AND OTHER LONG-TERM LIABILITIES

10. ACCRUED EXPENSES AND OTHER LONG-TERM LIABILITIES

Accrued expenses and other long-term liabilities consisted of the following (in millions):

	Accrued Expenses				Other Long- Term Liabilities
	December 31,
	2014		2013		2014		2013
Defined benefit plan liabilities (see Note 14)	$	48	$	30	$	792	$	507
Wage and other employee-related liabilities	294		257		104		97
Uncertain income tax position liabilities, including related penalties and interest (see Note 16) (a)	—		—		316		205
Environmental liabilities	26		24		269		277
Accrued interest expense	88		90		—		—
Derivative liabilities	—		13		—		—
Asset retirement obligations	20		5		71		26
Other accrued liabilities	120		103		387		217
Accrued expenses and other long-term liabilities	$	596	$	522	$	1,939	$	1,329

^{___________________________} 

^(a) As of December 31, 2014, our total liability for uncertain tax positions, including related penalties and interest, was $484 million, with $168 million classified as a current liability and reflected in “Income taxes payable” and the remaining $316 million classified as a long-term liability and reflected in “Other long-term liabilities” as detailed in this table. As of December 31, 2013, our total liability for uncertain tax positions, including related penalties and interest, was $443 million, with $238 million classified as a current liability and reflected in “Income taxes payable” and the remaining $205 million classified as a long-term liability and reflected in “Other long-term liabilities” as detailed in this table.

Environmental Liabilities

Changes in our environmental liabilities were as follows (in millions):

	Year Ended December 31,
	2014			2013			2012
Balance as of beginning of year	$	301		$	269		$	274
Additions to liability	26			67			23
Reductions to liability	—			(1		)	(1		)
Payments, net of third-party recoveries	(27		)	(28		)	(29		)
Separation of retail business	—			(4		)	—
Foreign currency translation	(5		)	(2		)	2
Balance as of end of year	$	295		$	301		$	269

See Note 12 for further information regarding environmental matters.

Asset Retirement Obligations

We have asset retirement obligations with respect to certain of our refinery assets due to various legal obligations to clean and/or dispose of various component parts of each refinery at the time they are retired. However, these component parts can be used for extended and indeterminate periods of time as long as they are properly maintained and/or upgraded. It is our practice and current intent to maintain our refinery assets and continue making improvements to those assets based on technological advances. As a result, we believe that our refineries have indeterminate lives for purposes of estimating asset retirement obligations because dates or ranges of dates upon which we would retire refinery assets cannot reasonably be estimated at this time. When a date or range of dates can reasonably be estimated for the retirement of any component part of a refinery, we estimate the cost of performing the retirement activities and record a liability for the fair value of that cost using established present value techniques.

Prior to the separation of our retail business, we also had asset retirement obligations for the removal of underground storage tanks (USTs) at owned and leased retail sites. There is no legal obligation to remove USTs while they remain in service. However, environmental laws in the U.S. and Canada require that unused USTs be removed within certain periods of time after the USTs are no longer in service, usually one to two years depending on the jurisdiction in which the USTs are located. We had previously estimated that USTs at our formerly owned retail sites would remain in service approximately 20 years and that we would then have an obligation to remove those USTs. For our formerly leased retail sites, our lease agreements generally required that we remove certain improvements, primarily USTs and signage, upon termination of the lease. All of the USTs and the related asset retirement obligations were retained by CST after the separation from us. Therefore, we have no asset retirement obligations in connection with the USTs subsequent to the separation of our retail business on May 1, 2013.

Changes in our asset retirement obligations were as follows (in millions).

	Year Ended December 31,
	2014			2013			2012
Balance as of beginning of year	$	31		$	108		$	87
Additions to accrual	60			2			14
Revisions in estimated cash flows	—			—			13
Accretion expense	1			2			5
Settlements	(1		)	(1		)	(11		)
Separation of retail business	—			(80		)	—
Balance as of end of year	$	91		$	31		$	108

See Note 2 for further information regarding the 2014 additions to accrual related to our Aruba Refinery.

There are no assets that are legally restricted for purposes of settling our asset retirement obligations.

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Price Risk Management Activities (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended			1 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Jan. 31, 2015
Price Risk Management Activities (Textual)
Compliance program costs	$ 372	$ 517	$ 250
Foreign Currency Contract [Member]
Price Risk Management Activities (Textual)
Monetary notional amount of derivative liabilities	377
Foreign Currency Contract [Member] | Subsequent Event [Member]
Price Risk Management Activities (Textual)
Foreign currency commitments maturity date				Jan. 31, 2015
Gain (loss) recognized in income on derivatives				$ 12
Fair Value Hedging [Member]
Volume of Outstanding Contracts
Nonmonetary notional amount of price risk derivatives	0
Cash Flow Hedging [Member]
Volume of Outstanding Contracts
Nonmonetary notional amount of price risk derivatives	0
Economic Hedging [Member] | Swap [Member] | Long (Purchases) [Member] | Maturity Year Two [Member] | Crude Oil (In thousands of barrels) [Member]
Volume of Outstanding Contracts
Nonmonetary notional amount of price risk derivatives	7,532
Economic Hedging [Member] | Swap [Member] | Long (Purchases) [Member] | Maturity Year Three [Member] | Crude Oil (In thousands of barrels) [Member]
Volume of Outstanding Contracts
Nonmonetary notional amount of price risk derivatives	0
Economic Hedging [Member] | Swap [Member] | Short (Sales) [Member] | Maturity Year Two [Member] | Crude Oil (In thousands of barrels) [Member]
Volume of Outstanding Contracts
Nonmonetary notional amount of price risk derivatives	5,676
Economic Hedging [Member] | Swap [Member] | Short (Sales) [Member] | Maturity Year Three [Member] | Crude Oil (In thousands of barrels) [Member]
Volume of Outstanding Contracts
Nonmonetary notional amount of price risk derivatives	0
Economic Hedging [Member] | Future [Member] | Long (Purchases) [Member] | Maturity Year Two [Member] | Crude Oil (In thousands of barrels) [Member]
Volume of Outstanding Contracts
Nonmonetary notional amount of price risk derivatives	46,886
Economic Hedging [Member] | Future [Member] | Long (Purchases) [Member] | Maturity Year Two [Member] | Grain (In bushels) [Member]
Volume of Outstanding Contracts
Nonmonetary notional amount of price risk derivatives	20,815,000
Economic Hedging [Member] | Future [Member] | Long (Purchases) [Member] | Maturity Year Two [Member] | Soybean Oil (in pounds) [Member]
Volume of Outstanding Contracts
Nonmonetary notional amount of price risk derivatives	94,920,000
Economic Hedging [Member] | Future [Member] | Long (Purchases) [Member] | Maturity Year Three [Member] | Crude Oil (In thousands of barrels) [Member]
Volume of Outstanding Contracts
Nonmonetary notional amount of price risk derivatives	0
Economic Hedging [Member] | Future [Member] | Long (Purchases) [Member] | Maturity Year Three [Member] | Grain (In bushels) [Member]
Volume of Outstanding Contracts
Nonmonetary notional amount of price risk derivatives	80,000
Economic Hedging [Member] | Future [Member] | Long (Purchases) [Member] | Maturity Year Three [Member] | Soybean Oil (in pounds) [Member]
Volume of Outstanding Contracts
Nonmonetary notional amount of price risk derivatives	0
Economic Hedging [Member] | Future [Member] | Short (Sales) [Member] | Maturity Year Two [Member] | Crude Oil (In thousands of barrels) [Member]
Volume of Outstanding Contracts
Nonmonetary notional amount of price risk derivatives	67,600
Economic Hedging [Member] | Future [Member] | Short (Sales) [Member] | Maturity Year Two [Member] | Grain (In bushels) [Member]
Volume of Outstanding Contracts
Nonmonetary notional amount of price risk derivatives	46,585,000
Economic Hedging [Member] | Future [Member] | Short (Sales) [Member] | Maturity Year Two [Member] | Soybean Oil (in pounds) [Member]
Volume of Outstanding Contracts
Nonmonetary notional amount of price risk derivatives	178,920,000
Economic Hedging [Member] | Future [Member] | Short (Sales) [Member] | Maturity Year Three [Member] | Crude Oil (In thousands of barrels) [Member]
Volume of Outstanding Contracts
Nonmonetary notional amount of price risk derivatives	0
Economic Hedging [Member] | Future [Member] | Short (Sales) [Member] | Maturity Year Three [Member] | Grain (In bushels) [Member]
Volume of Outstanding Contracts
Nonmonetary notional amount of price risk derivatives	1,155,000
Economic Hedging [Member] | Future [Member] | Short (Sales) [Member] | Maturity Year Three [Member] | Soybean Oil (in pounds) [Member]
Volume of Outstanding Contracts
Nonmonetary notional amount of price risk derivatives	0
Economic Hedging [Member] | Options Held [Member] | Long (Purchases) [Member] | Maturity Year Two [Member] | Natural Gas (In millions of btus) [Member]
Volume of Outstanding Contracts
Nonmonetary notional amount of price risk derivatives	1,250,000
Economic Hedging [Member] | Options Held [Member] | Long (Purchases) [Member] | Maturity Year Three [Member] | Natural Gas (In millions of btus) [Member]
Volume of Outstanding Contracts
Nonmonetary notional amount of price risk derivatives	0
Economic Hedging [Member] | Forward Contracts [Member] | Long (Purchases) [Member] | Maturity Year Two [Member] | Grain (In bushels) [Member]
Volume of Outstanding Contracts
Nonmonetary notional amount of price risk derivatives	25,327,000
Economic Hedging [Member] | Forward Contracts [Member] | Long (Purchases) [Member] | Maturity Year Three [Member] | Grain (In bushels) [Member]
Volume of Outstanding Contracts
Nonmonetary notional amount of price risk derivatives	1,081,000
Trading Derivatives [Member] | Swap [Member] | Long (Purchases) [Member] | Maturity Year Two [Member] | Crude Oil (In thousands of barrels) [Member]
Volume of Outstanding Contracts
Nonmonetary notional amount of price risk derivatives	645
Trading Derivatives [Member] | Swap [Member] | Long (Purchases) [Member] | Maturity Year Three [Member] | Crude Oil (In thousands of barrels) [Member]
Volume of Outstanding Contracts
Nonmonetary notional amount of price risk derivatives	0
Trading Derivatives [Member] | Swap [Member] | Short (Sales) [Member] | Maturity Year Two [Member] | Crude Oil (In thousands of barrels) [Member]
Volume of Outstanding Contracts
Nonmonetary notional amount of price risk derivatives	645
Trading Derivatives [Member] | Swap [Member] | Short (Sales) [Member] | Maturity Year Three [Member] | Crude Oil (In thousands of barrels) [Member]
Volume of Outstanding Contracts
Nonmonetary notional amount of price risk derivatives	0
Trading Derivatives [Member] | Future [Member] | Long (Purchases) [Member] | Maturity Year Two [Member] | Crude Oil (In thousands of barrels) [Member]
Volume of Outstanding Contracts
Nonmonetary notional amount of price risk derivatives	95,709
Trading Derivatives [Member] | Future [Member] | Long (Purchases) [Member] | Maturity Year Two [Member] | Natural Gas (In millions of btus) [Member]
Volume of Outstanding Contracts
Nonmonetary notional amount of price risk derivatives	6,200,000
Trading Derivatives [Member] | Future [Member] | Long (Purchases) [Member] | Maturity Year Three [Member] | Crude Oil (In thousands of barrels) [Member]
Volume of Outstanding Contracts
Nonmonetary notional amount of price risk derivatives	5,116
Trading Derivatives [Member] | Future [Member] | Long (Purchases) [Member] | Maturity Year Three [Member] | Natural Gas (In millions of btus) [Member]
Volume of Outstanding Contracts
Nonmonetary notional amount of price risk derivatives	0
Trading Derivatives [Member] | Future [Member] | Short (Sales) [Member] | Maturity Year Two [Member] | Crude Oil (In thousands of barrels) [Member]
Volume of Outstanding Contracts
Nonmonetary notional amount of price risk derivatives	96,897
Trading Derivatives [Member] | Future [Member] | Short (Sales) [Member] | Maturity Year Two [Member] | Natural Gas (In millions of btus) [Member]
Volume of Outstanding Contracts
Nonmonetary notional amount of price risk derivatives	4,200,000
Trading Derivatives [Member] | Future [Member] | Short (Sales) [Member] | Maturity Year Three [Member] | Crude Oil (In thousands of barrels) [Member]
Volume of Outstanding Contracts
Nonmonetary notional amount of price risk derivatives	4,341
Trading Derivatives [Member] | Future [Member] | Short (Sales) [Member] | Maturity Year Three [Member] | Natural Gas (In millions of btus) [Member]
Volume of Outstanding Contracts
Nonmonetary notional amount of price risk derivatives	0
Trading Derivatives [Member] | Options Held [Member] | Long (Purchases) [Member] | Maturity Year Two [Member] | Crude Oil (In thousands of barrels) [Member]
Volume of Outstanding Contracts
Nonmonetary notional amount of price risk derivatives	1,900
Trading Derivatives [Member] | Options Held [Member] | Long (Purchases) [Member] | Maturity Year Three [Member] | Crude Oil (In thousands of barrels) [Member]
Volume of Outstanding Contracts
Nonmonetary notional amount of price risk derivatives	0
Trading Derivatives [Member] | Options Held [Member] | Short (Sales) [Member] | Maturity Year Two [Member] | Crude Oil (In thousands of barrels) [Member]
Volume of Outstanding Contracts
Nonmonetary notional amount of price risk derivatives	1,200
Trading Derivatives [Member] | Options Held [Member] | Short (Sales) [Member] | Maturity Year Three [Member] | Crude Oil (In thousands of barrels) [Member]
Volume of Outstanding Contracts
Nonmonetary notional amount of price risk derivatives	0

XML

Fair Value Measurements, Nonrecurring (Details) (Fair Value, Measurements, Nonrecurring [Member], USD $) In Millions, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Fair Value, Measurements, Nonrecurring [Member]
Fair Value Measurements (Textual)
Assets measured at fair value, nonrecurring	$ 0	$ 0
Liabilities measured at fair value, nonrecurring	$ 0	$ 0

XML

Document and Entity Information (USD $) In Billions, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Jan. 30, 2015	Jun. 30, 2014
Entity Information [Line Items]
Entity Registrant Name	VALERO ENERGY CORP/TX
Entity Central Index Key	0001035002
Document Type	10-K
Document Period End Date	Dec. 31, 2014
Amendment Flag	false
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	FY
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 Public Float			$ 26.5
Entity Common Stock, Shares Outstanding		514,888,348

XML

Debt and Capital Lease Obligations

12 Months Ended

Dec. 31, 2014

Debt and Capital Lease Obligations [Abstract]

DEBT AND CAPITAL LEASE OBLIGATIONS

11. DEBT AND CAPITAL LEASE OBLIGATIONS

Debt, at stated values, and capital lease obligations consisted of the following (in millions):

	Final Maturity	December 31,
		2014			2013
Bank credit facilities	Various	$	—		$	—
Senior Notes:
4.5%	2015	400			400
4.75%	2014	—			200
6.125%	2017	750			750
6.125%	2020	850			850
6.625%	2037	1,500			1,500
6.75%	2037	24			24
7.2%	2017	200			200
7.45%	2097	100			100
7.5%	2032	750			750
8.75%	2030	200			200
9.375%	2019	750			750
10.5%	2039	250			250
Debentures:
7.65%	2026	100			100
8.75%	2015	75			75
Gulf Opportunity Zone Revenue Bonds, Series 2010, 4.0%	2040	300			300
Accounts receivable sales facility	2015	100			100
Other debt	2015	26			—
Net unamortized discount, including fair value adjustments		(21		)	(24		)
Total debt		6,354			6,525
Capital lease obligations, including unamortized fair value adjustments		32			39
Total debt and capital lease obligations		6,386			6,564
Less current portion		(606		)	(303		)
Debt and capital lease obligations, less current portion		$	5,780		$	6,261

Credit Facilities

Revolver

We have a $3 billion revolving credit facility (the Revolver) with a group of financial institution lenders that has a maturity date of November 2018. We have the option to increase the aggregate commitments under the Revolver to $4.5 billion, subject to, among other things, the consent of the existing lenders whose commitments will be increased or any additional lenders providing such additional capacity. We may request additional one-year extensions, subject to certain conditions, including the consent of the lenders holding the majority of the commitments and each lender extending its individual commitment. The Revolver includes sub-facilities for swingline loans and letters of credit.

Outstanding borrowings under the Revolver bear interest, at our option, at either (a) the adjusted LIBO rate (as defined in the Revolver) for the applicable interest period in effect from time to time plus the applicable margin or (b) the alternate base rate (as defined in the Revolver) plus the applicable margin. The interest rate and fees under the Revolver are subject to adjustment based upon the credit ratings assigned to our senior unsecured debt. We are also charged various fees and expenses in connection with the Revolver, including facility fees and letter of credit fees. The Revolver has certain restrictive covenants, including a maximum debt-to-capitalization ratio of 60 percent. Our debt-to-capitalization ratio, calculated in accordance with the terms of the Revolver, was 12 percent as of December 31, 2014 and 2013.

VLP Revolver

VLP has a $300 million senior unsecured revolving credit facility agreement (the VLP Revolver) with a group of lenders that has a maturity date of December 2018. The VLP Revolver is available only to the operations of VLP, and creditors of VLP do not have recourse against Valero. VLP has the option to increase the aggregate commitments under the VLP Revolver to $500 million, subject to, among other things, the consent of the existing lenders whose commitments will be increased or any additional lenders providing such additional capacity. VLP may request two additional one-year extensions, subject to certain conditions. VLP may terminate the VLP Revolver with notice to the lenders of at least three business days prior to termination. The VLP Revolver includes sub-facilities for swingline loans and letters of credit. VLP’s obligations under the VLP Revolver will be jointly and severally guaranteed by all of VLP’s directly owned material subsidiaries. As of December 31, 2014, the only guarantor under the VLP Revolver was Valero Partners Operating Co. LLC.

Outstanding borrowings under the VLP Revolver bear interest, at VLP’s option, at either (a) the adjusted LIBO rate (as defined in the VLP Revolver) for the applicable interest period in effect from time to time plus the applicable margin or (b) the alternate base rate (as defined in the VLP Revolver) plus the applicable margin. The VLP Revolver also provides for customary fees, including administrative agent fees, participation fees, and commitment fees. The VLP Revolver contains certain restrictive covenants, including a ratio of total debt to EBITDA (as defined in the VLP Revolver) for the prior four fiscal quarters of not greater than 5.0 to 1.0 as of the last day of each fiscal quarter, and limitations on VLP’s ability to pay distributions to its unitholders.

Canadian Revolver

One of our Canadian subsidiaries has a C$50 million committed revolving credit facility (the Canadian Revolver) under which it may borrow and obtain letters of credit that has a maturity date of November 2015.

Activities Under Our Credit Facilities

During the years ended December 31, 2014 and 2013, we had no borrowings or repayments under the Revolver, the VLP Revolver, or the Canadian Revolver. During the year ended December 31, 2012, we borrowed and repaid $1.1 billion under the Revolver and had no borrowings or repayments under the Canadian Revolver.

Letters of Credit

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

				Amounts Outstanding
	Borrowing Capacity		Expiration	December 31,
				2014		2013
Letter of credit facilities	$	550	June 2015	$	56	$	278
Revolver	$	3,000	November 2018	$	54	$	59
VLP Revolver	$	300	December 2018	$	—	$	—
Canadian Revolver	C$	50	November 2015	C$	10	C$	10

We also have various other uncommitted short-term bank credit facilities. As of December 31, 2014 and 2013, we had no borrowings outstanding under our uncommitted short-term bank credit facilities; however, there were letters of credit outstanding under such facilities of $80 million and $189 million, respectively, for which we are charged letter of credit issuance fees. The uncommitted credit facilities have no commitment fees or compensating balance requirements.

Bank Debt

On March 20, 2013, in anticipation of the separation of our retail business as described in Note 3, CST entered into an $800 million senior secured credit agreement. This credit agreement was 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.

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.

On October 24, 2013, we borrowed $525 million under a short-term debt agreement with a third-party financial institution in anticipation of liquidating our retained interest in CST. This liquidation was completed on November 14, 2013 by transferring all remaining shares of CST common stock owned by us to the financial institution in exchange for $467 million of our short-term debt, and we paid the remaining $58 million of short-term debt in cash. After paying $19 million of fees, we recognized a $325 million nontaxable gain.

Non-Bank Debt

In February 2015, we made a scheduled debt repayment of $400 million related to our 4.5% senior notes.

During the year ended December 31, 2014, we made a scheduled debt repayment of $200 million related to our 4.75% senior notes.

During the year ended December 31, 2013, we made scheduled debt repayments of $180 million related to our 6.7% senior notes and $300 million related to our 4.75% senior notes.

During the year ended December 31, 2012,

• we redeemed 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, or 100% of their outstanding stated values;

• 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

• we received proceeds of $300 million from the remarketing of 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.

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 2014, we amended this facility to extend the maturity date to July 2015. 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.

As of December 31, 2014 and 2013, $1.7 billion and $3.3 billion, respectively, of our accounts receivable composed the designated pool of accounts receivable included in the program. All amounts outstanding under the accounts receivable sales facility are reflected as debt on our balance sheets and proceeds and repayments are reflected as cash flows from financing activities on the statements of cash flows. Changes in the amounts outstanding under our accounts receivable sales facility were as follows (in millions):

	Year Ended December 31,
	2014		2013		2012
Balance as of beginning of year	$	100	$	100	$	250
Proceeds from the sale of receivables	—		—		1,500
Repayments	—		—		(1,650		)
Balance as of end of year	$	100	$	100	$	100

Capitalized Interest

For the years ended December 31, 2014, 2013, and 2012, capitalized interest was $70 million, $118 million, and $220 million, respectively.

Other Disclosures

In addition to the maximum debt-to-capitalization ratio applicable to the Revolver discussed above under “Credit Facilities,” our bank credit facilities and other debt arrangements contain various customary restrictive covenants, including cross-default and cross-acceleration clauses.

Principal payments on our debt obligations and future minimum rentals on capital lease obligations as of December 31, 2014 were as follows (in millions):

	Debt			Capital Lease Obligations
2015	$	601		$	8
2016	—			8
2017	950			6
2018	—			6
2019	750			6
Thereafter	4,074			18
Net unamortized discount and fair value adjustments	(21		)	1
Less interest expense	—			(21		)
Total	$	6,354		$	32

XML

Employee Benefit Plans, Fair Value of Assets Qualified Plans (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	1,978		$ 1,909
Fair Value, Inputs, Level 1 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	1,155		1,135
Fair Value, Inputs, Level 2 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	823		774
Fair Value, Inputs, Level 3 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	0		0
Other US Companies [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	541	[1]	529	[1]
Other US Companies [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	541	[1]	529	[1]
Other US Companies [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	0	[1]	0	[1]
Other US Companies [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	0	[1]	0	[1]
International Companies [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	144		155
International Companies [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	144		155
International Companies [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	0		0
International Companies [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	0		0
Preferred Stock [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	2		3
Preferred Stock [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	1		2
Preferred Stock [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	1		1
Preferred Stock [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	0		0
International Growth [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	119		131
International Growth [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	119		131
International Growth [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	0		0
International Growth [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	0		0
Index Funds [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	199	[2]	160	[2]
Index Funds [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	199	[2]	160	[2]
Index Funds [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	0	[2]	0	[2]
Index Funds [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	0	[2]	0	[2]
Corporate Debt Instruments [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	263		260
Corporate Debt Instruments [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	0		0
Corporate Debt Instruments [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	263		260
Corporate Debt Instruments [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	0		0
US Treasury Securities [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	71		81
US Treasury Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	71		81
US Treasury Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	0		0
US Treasury Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	0		0
Other Government Securities [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	100		79
Other Government Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	0		0
Other Government Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	100		79
Other Government Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	0		0
Common Collective Trusts [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	379		373
Common Collective Trusts [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	0		0
Common Collective Trusts [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	379		373
Common Collective Trusts [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	0		0
Private Fund [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	40		38
Private Fund [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	0		0
Private Fund [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	40		38
Private Fund [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	0		0
Insurance Contracts [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	18		17
Insurance Contracts [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	0		0
Insurance Contracts [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	18		17
Insurance Contracts [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	0		0
Interest and Dividends Receivable [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	5		5
Interest and Dividends Receivable [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	5		5
Interest and Dividends Receivable [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	0		0
Interest and Dividends Receivable [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	0		0
Cash and Cash Equivalents [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	97		78
Cash and Cash Equivalents [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	75		72
Cash and Cash Equivalents [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	22		6
Cash and Cash Equivalents [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Values of Qualified Pension Plan Assets
Fair value of qualified pension plan assets	0		$ 0
Equity Securities [Member]
Employee Benefit Plans (Textual)
Defined benefit plan, actual plan asset allocations	60.00%
Percentage of equity securities in target allocations for plan assets	70.00%
Debt Securities [Member]
Employee Benefit Plans (Textual)
Defined benefit plan, actual plan asset allocations	40.00%
Percentage of equity securities in target allocations for plan assets	30.00%

[1] Equity securities are held in a wide range of industrial sectors, including consumer goods, information technology, healthcare, industrials, and financial services.

[2] This class includes primarily investments in approximately 60 percent equities and 40 percent bonds.

XML

Fair Value Measurements, Level 3 Reconciliation (Details) (Fair Value, Measurements, Recurring [Member], USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Fair Value, Measurements, Recurring [Member]
Fair Value Measurements (Textual)
Activity related to fair value amounts categorized in level 3	$ 0	$ 0	$ 0

XML

Consolidated Statements of Income (USD $) In Millions, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Consolidated Statements of Income
Operating revenues	$ 130,844	$ 138,074	$ 138,393
Costs and expenses:
Cost of sales	118,141	127,316	126,485
Operating expenses:
Refining	3,900	3,710	3,513
Retail	0	226	686
Ethanol	487	387	332
General and administrative expenses	724	758	698
Depreciation and amortization expense	1,690	1,720	1,549
Asset impairment losses	0	0	86
Total costs and expenses	124,942	134,117	133,349
Operating income	5,902	3,957	5,044
Gain on disposition of retained interest in CST Brands, Inc.	0	325	0
Other income, net	47	59	10
Interest and debt expense, net of capitalized interest	(397)	(365)	(314)
Income from continuing operations before income tax expense	5,552	3,976	4,740
Income tax expense	1,777	1,254	1,626
Income from continuing operations	3,775	2,722	3,114
Income (loss) from discontinued operations	(64)	6	(1,034)
Net income	3,711	2,728	2,080
Less: Net income (loss) attributable to noncontrolling interests	81	8	(3)
Net income attributable to Valero Energy Corporation stockholders	3,630	2,720	2,083
Net income attributable to Valero Energy Corporation stockholders:
Continuing operations	3,694	2,714	3,117
Discontinued operations	(64)	6	(1,034)
Net income attributable to Valero Energy Corporation stockholders	$ 3,630	$ 2,720	$ 2,083
Earnings per common share:
Continuing operations	$ 7.00	$ 4.98	$ 5.64
Discontinued operations	$ (0.12)	$ 0.01	$ (1.87)
Total	$ 6.88	$ 4.99	$ 3.77
Weighted-average common shares outstanding (in millions)	526	542	550
Earnings per common share – assuming dilution:
Continuing operations	$ 6.97	$ 4.96	$ 5.61
Discontinued operations	$ (0.12)	$ 0.01	$ (1.86)
Total	$ 6.85	$ 4.97	$ 3.75
Weighted-average common shares outstanding – assuming dilution (in millions)	530	548	556
Dividends per common share	$ 1.05	$ 0.85	$ 0.65

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Valero Energy Partners LP

12 Months Ended

Dec. 31, 2014

Noncontrolling Interest [Abstract]

VALERO ENERGY PARTNERS LP

5. VALERO ENERGY PARTNERS LP

In July 2013, we formed VLP, a master limited partnership, to own, operate, develop, and acquire crude oil and refined petroleum products pipelines, terminals, and other transportation and logistics assets. On December 16, 2013, VLP completed its initial public offering (the Offering) of 17,250,000 common units at a price of $23.00 per unit. VLP received $369 millionin net proceeds from the sale of the units, after deducting underwriting fees, structuring fees, and other offering costs. As of December 31, 2014, VLP’s assets included crude oil and refined petroleum products pipeline and terminal systems in the U.S. Gulf Coast and U.S. Mid-Continent regions that are integral to the operations of our Ardmore, McKee, Memphis, Port Arthur, and Three Rivers Refineries.

As of December 31, 2014 and 2013, we owned a 68.6 percent limited partner interest and a 2 percent general partner interest in VLP, and the public owned a 29.4 percent limited partner interest. VLP’s cash and temporary cash investments were $237 million and $375 million as of December 31, 2014 and 2013, respectively. Valero consolidates the financial statements of VLP into its financial statements and as such, VLP’s cash and temporary cash investments are included in Valero’s consolidated cash and temporary cash investments. However, VLP’s cash and temporary cash investments can be used to settle only its obligations. In addition, VLP’s partnership capital attributable to the public’s ownership interest in VLP of $375 million and $370 million as of December 31, 2014 and 2013, respectively, is reflected in noncontrolling interests.

We have agreements with VLP that establish fees for certain general and administrative services and operational and maintenance services provided by us. In addition, we have a master transportation services agreement and a master terminal services agreement with VLP under which VLP provides commercial transportation and terminaling services to us. These transactions are eliminated in consolidation.

On July 1, 2014, we sold our Texas Crude Systems Business to VLP. That business is engaged in transporting, terminaling, and storing crude oil and refined petroleum products through various pipeline and terminal systems that compose the McKee Crude System, the Three Rivers Crude System, and the Wynnewood Products System. We sold the Texas Crude Systems Business for total cash consideration of $154 million. Because we consolidate the financial statements of VLP into our financial statements, this transaction was eliminated in consolidation and did not impact our consolidated financial position or cash flows.

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Impairments

12 Months Ended

Dec. 31, 2014

Property, Plant and Equipment Impairment or Disposal [Abstract]

IMPAIRMENTS

4. IMPAIRMENTS

Cancelled Capital Projects

During 2012, we wrote down the carrying value of equipment associated with permanently cancelled capital projects at several of our refineries and recognized asset impairment losses of $65 million.

Retail Stores

During 2012, we evaluated certain of our convenience stores operated by our former retail segment for potential impairment and concluded that they were impaired, and we wrote down the carrying values of these stores to their estimated fair values and recognized asset impairment losses of $21 million.

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Income Taxes

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

INCOME TAXES

16. INCOME TAXES

Income Tax Expense

Income from continuing operations before income tax expense was as follows (in millions):

	Year Ended December 31,
	2014		2013		2012
U.S. operations	$	4,677	$	3,531	$	4,015
International operations	875		445		725
Income from continuing operations before income tax expense	$	5,552	$	3,976	$	4,740

The following is a reconciliation of income tax expense computed by applying the U.S. federal statutory income tax rate (35 percent for all years presented) to actual income tax expense related to continuing operations (in millions):

	Year Ended December 31,
	2014			2013			2012
Federal income tax expense at the U.S. federal statutory rate	$	1,943		$	1,392		$	1,659
U.S. state income tax expense, net of U.S. federal income tax effect	62			62			64
U.S. manufacturing deduction	(74		)	(36		)	(33		)
International operations	(88		)	(69		)	(96		)
Permanent differences	(16		)	(104		)	20
Change in tax law	—			(32		)	—
Other, net	(50		)	41			12
Income tax expense	$	1,777		$	1,254		$	1,626

The variation in the customary relationship between income tax expense and income from continuing operations before income tax expense for the year ended December 31, 2014 was primarily due to an increase in income from continuing operations from our international operations that was taxed at statutory rates that are lower than in the U.S. and an increase in our U.S. manufacturing deduction. The variation in the customary relationship between income tax expense and income from continuing operations before income tax expense for the year ended December 31, 2013 was primarily due to the $325 million nontaxable gain on the disposition of our retained interest in CST as described in Notes 3 and 11.

There was no income tax expense or benefit related to discontinued operations for the years ended December 31, 2014, 2013, and 2012.

Components of income tax expense related to continuing operations were as follows (in millions):

	Year Ended December 31,
	2014		2013			2012
Current:
U.S. federal	$	1,196	$	635		$	515
U.S. state	59		36			22
International	77		82			126
Total current	1,332		753			663
Deferred:
U.S. federal	268		459			854
U.S. state	36		59			77
International	141		(17		)	32
Total deferred	445		501			963
Income tax expense	$	1,777	$	1,254		$	1,626

Deferred Income Tax Assets and Liabilities

The tax effects of significant temporary differences representing deferred income tax assets and liabilities were as follows (in millions):

	December 31,
	2014			2013
Deferred income tax assets:
Tax credit carryforwards	$	37		$	48
Net operating losses (NOLs)	436			338
Inventories	160			264
Property, plant, and equipment	—			8
Compensation and employee benefit liabilities	358			178
Environmental liabilities	92			92
Other	178			187
Total deferred income tax assets	1,261			1,115
Less: Valuation allowance	(393		)	(347		)
Net deferred income tax assets	868			768
Deferred income tax liabilities:
Property, plant, and equipment	6,682			6,536
Deferred turnaround costs	356			331
Inventories	426			310
Investments	152			94
Other	73			81
Total deferred income tax liabilities	7,689			7,352
Net deferred income tax liabilities	$	6,821		$	6,584

We had the following income tax credit and loss carryforwards as of December 31, 2014 (in millions):

	Amount		Expiration
U.S. state income tax credits	$	53	2015 through 2027
U.S. state NOLs (gross amount)	6,574		2015 through 2034
International NOLs	1,630		Unlimited

We have recorded a valuation allowance as of December 31, 2014 and 2013 due to uncertainties related to our ability to utilize some of our deferred income tax assets, primarily consisting of certain U.S. state income tax credits and NOLs, and international NOLs, before they expire. The valuation allowance is based on our estimates of taxable income in the various jurisdictions in which we operate and the period over which deferred income tax assets will be recoverable. During 2014, the valuation allowance increased by $46 million, primarily due to increases in U.S. state NOLs. The realization of net deferred income tax assets recorded as of December 31, 2014 is primarily dependent upon our ability to generate future taxable income in certain U.S. states and international jurisdictions.

Should we ultimately recognize tax benefits related to the valuation allowance for deferred income tax assets as of December 31, 2014, such amounts will be allocated as follows (in millions):

Income tax benefit	$	386
Additional paid-in capital	7
Total	$	393

Deferred income taxes have not been provided on the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and the respective tax bases of our international subsidiaries based on the determination that such differences are essentially permanent in duration in that the earnings of these subsidiaries are expected to be indefinitely reinvested in the international operations. As of December 31, 2014, the cumulative undistributed earnings of these subsidiaries were approximately $2.9 billion. If those earnings were not considered indefinitely reinvested, deferred income taxes would have been recorded after consideration of U.S. foreign tax credits. It is not practicable to estimate the amount of additional tax that might be payable on those earnings, if distributed.

Unrecognized Tax Benefits

The following is a reconciliation of the change in unrecognized tax benefits, excluding related penalties, interest (net of the U.S. federal and state income tax effects), and the U.S. federal income tax effect of state unrecognized tax benefits (in millions):

	Year Ended December 31,
	2014			2013			2012
Balance as of beginning of year	$	950		$	341		$	326
Additions based on tax positions related to the current year	35			64			11
Additions for tax positions related to prior years	118			576			40
Reductions for tax positions related to prior years	(67		)	(26		)	(36		)
Reductions for tax positions related to the lapse of applicable statute of limitations	(1		)	(4		)	—
Settlements	(46		)	(1		)	—
Balance as of end of year	$	989		$	950		$	341

The reconciliation of the change in unrecognized tax benefits for the year ended December 31, 2013 includes $556 million of additions for tax positions primarily related to prior years for tax refunds that we intend to claim by amending our income tax returns for 2005 through 2012. We intend to propose that incentive payments received from the U.S. federal government for blending biofuels into refined products be excluded from taxable income during these periods. However, due to the complexity of this matter and uncertainties with respect to the interpretation of the Internal Revenue Code, we concluded that the refund claims included in the reconciliation below cannot be recognized in our financial statements. As a result, these amounts are not included in our uncertain tax position liabilities as of December 31, 2014 and 2013, even though they are reflected in the table above.

The following is a reconciliation of unrecognized tax benefits reflected in the table above to our uncertain tax position liabilities as of December 31, 2014 and 2013 that are reflected in Note 10 (in millions):

	December 31,
	2014			2013
Unrecognized tax benefits	$	989		$	950
Tax refund claim not recognized in our financial statements	(554		)	(556		)
Penalties, interest (net of U.S. federal and state income tax effect), and the U.S. federal income tax effect of state unrecognized tax benefits	49			49
Uncertain tax position liabilities	$	484		$	443

As of December 31, 2014 and 2013, there were $768 million and $763 million, respectively, of unrecognized tax benefits that if recognized would affect our annual effective tax rate. During the next 12 months, it is reasonably possible that tax audit resolutions could reduce unrecognized tax benefits, excluding interest, by $133 million, either because the tax positions are sustained on audit or because we agree to their disallowance. We do not expect these reductions to have a significant impact on our financial statements because such reductions would not significantly affect our annual effective rate.

Penalties and interest, which are reflected within income tax expense, were immaterial for the year ended December 31, 2014. During the years ended December 31, 2013 and 2012, we recognized $12 million and $23 million, respectively, in penalties and interest. Accrued penalties and interest totaled $141 million and $145 million as of December 31, 2014 and 2013, respectively, excluding the U.S. federal and state income tax effects related to interest.

Tax Returns Under Audit

As of December 31, 2014,our tax years for 2004 through 2011 were under audit by the IRS. The IRS has proposed adjustments to our taxable income for certain open years. We are protesting the proposed adjustments and do not expect that the ultimate disposition of these adjustments will result in a material change to our financial position, results of operations, or liquidity. We are continuing to work with the IRS to resolve these matters and we believe that they will be resolved for amounts consistent with recorded amounts of unrecognized tax benefits associated with these matters.

In December 2014, we paid the final IRS assessment for our tax years 2002 and 2003 and closed the audit related to all proposed adjustments. The amount paid was consistent with the recorded amount of unrecognized tax benefits associated with that audit.

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

12. COMMITMENTS AND CONTINGENCIES

Operating Leases

We have long-term operating lease commitments for land, office facilities and equipment, transportation equipment, time charters for ocean-going tankers and coastal vessels, dock facilities, and various facilities and equipment used in the storage, transportation, production, and sale of refinery feedstock, refined product and corn inventories.

Certain leases for processing equipment and feedstock and refined product storage facilities provide for various contingent payments based on, among other things, throughput volumes in excess of a base amount. Certain leases for vessels contain renewal options and escalation clauses, which vary by charter, and provisions for the payment of chartering fees, which either vary based on usage or provide for payments, in addition to established minimums, that are contingent on usage. In most cases, we expect that in the normal course of business, our leases will be renewed or replaced by other leases.

As of December 31, 2014, our future minimum rentals and minimum rentals to be received under subleases for leases having initial or remaining noncancelable lease terms in excess of one year were as follows (in millions):

2015	$	314
2016	229
2017	159
2018	131
2019	75
Thereafter	275
Total minimum rental payments	$	1,183
Minimum rentals to be received under subleases	$	14

Rental expense was as follows (in millions):

	Year Ended December 31,
	2014		2013		2012
Minimum rental expense	$	618	$	588	$	512
Contingent rental expense	43		47		67
Total rental expense	661		635		579
Less sublease rental income	—		—		(2		)
Net rental expense	$	661	$	635	$	577

Purchase Obligations

We have various purchase obligations under certain industrial gas and chemical supply arrangements (such as hydrogen supply arrangements), crude oil and other feedstock supply arrangements, and various throughput and terminalling agreements. We enter into these contracts to ensure an adequate supply of utilities and feedstock and adequate storage capacity to operate our refineries. Substantially all of our purchase obligations are based on market prices or adjustments based on market indices. Certain of these purchase obligations include fixed or minimum volume requirements, while others are based on our usage requirements. None of these obligations are associated with suppliers’ financing arrangements. These purchase obligations are not reflected as liabilities.

Environmental Matters

Hartford Matters

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. We have been conducting initial mitigation and cleanup with other companies pursuant to an administrative order issued by the U.S. Environmental Protection Agency (EPA). The U.S. EPA is seeking further cleanup obligations from us and other potentially responsible parties (PRPs) for the Village. In parallel with the Village cleanup, we are in litigation with the Illinois EPA and other PRPs 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 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.

Regulation of Greenhouse Gases

The U.S. EPA began regulating greenhouse gases (GHG) on January 2, 2011, under the Clean Air Act Amendments of 1990 (Clean Air Act). The U.S. EPA is developing refinery-specific GHG regulations and performance standards that are expected to impose GHG emission limits and/or technology requirements on new and modified operations. These control requirements may affect a wide range of refinery operations but have not yet been delineated. Any such controls, however, could result in material increased compliance costs, additional operating restrictions for our business, and an increase in the cost of the products we produce, which could have a material adverse effect on our financial position, results of operations, and liquidity.

Certain states and foreign governments have pursued regulation of GHG independent of the U.S. EPA. For example, the California Global Warming Solutions Act, also known as AB 32, directs the California Air Resources Board (CARB) to develop and issue regulations to reduce GHG emissions in California to 1990 levels by 2020. CARB has issued a variety of regulations aimed at reaching this goal, including a Low Carbon Fuel Standard (LCFS) as well as a statewide cap-and-trade program. The cap-and-trade program costs are expected to increase significantly beginning in 2015 with the inclusion of transportation fuels in the program. Complying with AB 32, including the LCFS and the cap-and-trade program, could result in material increased compliance costs for us, increased capital expenditures, increased operating costs, and additional operating restrictions for our business, resulting in an increase in the cost of, and decreases in the demand for, the products we produce. To the degree we are unable to recover these increased compliance costs, these matters could have a material adverse effect on our financial position, results of operations, and liquidity.

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, results of operations, or liquidity.

Tax Matters

General

We are subject to extensive tax liabilities imposed by multiple jurisdictions, including income taxes, indirect taxes (excise/duty, sales/use, gross receipts, and value-added taxes), payroll taxes, franchise taxes, withholding taxes, and ad valorem taxes. New tax laws and regulations and changes in existing tax laws and regulations are continuously being enacted or proposed that could result in increased expenditures for tax liabilities in the future. Many of these liabilities are subject to periodic audits by the respective taxing authority. Subsequent changes to our tax liabilities as a result of these audits may subject us to interest and penalties.

IRS Audits

As of December 31, 2014, the Internal Revenue Service (IRS) has ongoing tax audits related to our U.S. federal tax returns from 2004 through 2011, as discussed in Note 16. We have received Revenue Agent Reports on our tax years for 2004 through 2009 and we are vigorously contesting many of the tax positions and assertions from the IRS. We are continuing to work with the IRS to resolve these matters and we believe that they will be resolved for amounts consistent with the recorded amounts of unrecognized tax benefits associated with these matters. During the year ended December 31, 2014, we settled the audit related to our 2002 and 2003 tax years and the audit related to a group of our subsidiaries for their 2004 and 2005 tax years consistent with the recorded amounts of uncertain tax position liabilities associated with those audits.

Self-Insurance

We are self-insured for certain medical and dental, workers’ compensation, automobile liability, general liability, and property liability claims up to applicable retention limits. Liabilities are accrued for self-insured claims, or when estimated losses exceed coverage limits, and when sufficient information is available to reasonably estimate the amount of the loss. These liabilities are included in accrued expenses and other long-term liabilities.

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Segment Information (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended									12 Months Ended			1 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013		Mar. 31, 2013	Dec. 31, 2014 segments	Dec. 31, 2013	Dec. 31, 2012	Mar. 31, 2014
Segment information for our three reportable segments
Operating revenues	$ 27,859	$ 34,408	$ 34,914	$ 33,663	$ 34,429	$ 36,137	$ 34,034	[1]	$ 33,474	$ 130,844	$ 138,074	$ 138,393
Depreciation and amortization expense										1,690	1,720	1,549
Operating income (loss)	1,796	1,670	1,085	1,351	1,562	532	805	[1]	1,058	5,902	3,957	5,044
Total expenditures for long-lived assets										2,822	2,757	3,413
Segment Information (Textual)
Number of reportable segments										2
Mount Vernon Ethanol Plant [Member]
Segment Information (Textual)
Payments to acquire idled corn ethanol plant													34
Refining [Member]
Segment information for our three reportable segments
Operating revenues										126,004	129,064	122,068
Ethanol [Member]
Segment information for our three reportable segments
Operating revenues										4,840	5,114	4,317
Retail [Member]
Segment information for our three reportable segments
Operating revenues										0	3,896	12,008
Corporate, Non-Segment [Member] | Corporate and Other [Member]
Segment information for our three reportable segments
Operating revenues										0	0	0
Depreciation and amortization expense										44	68	43
Operating income (loss)										(768)	(826)	(741)
Total expenditures for long-lived assets										30	65	66
Operating Segments [Member] | Refining [Member]
Segment information for our three reportable segments
Operating revenues										126,004	129,064	122,068
Depreciation and amortization expense										1,597	1,566	1,345
Operating income (loss)										5,884	4,211	5,484
Total expenditures for long-lived assets										2,750	2,597	3,147
Operating Segments [Member] | Ethanol [Member]
Segment information for our three reportable segments
Operating revenues										4,840	5,114	4,317
Depreciation and amortization expense										49	45	42
Operating income (loss)										786	491	(47)
Total expenditures for long-lived assets										42	33	36
Operating Segments [Member] | Retail [Member]
Segment information for our three reportable segments
Operating revenues										0	3,896	12,008
Depreciation and amortization expense										0	41	119
Operating income (loss)										0	81	348
Total expenditures for long-lived assets										0	62	164
Intersegment Eliminations [Member]
Segment information for our three reportable segments
Operating revenues										100	3,004	9,061
Intersegment Eliminations [Member] | Refining [Member]
Segment information for our three reportable segments
Operating revenues										0	2,876	8,946
Intersegment Eliminations [Member] | Ethanol [Member]
Segment information for our three reportable segments
Operating revenues										100	128	115
Intersegment Eliminations [Member] | Retail [Member]
Segment information for our three reportable segments
Operating revenues										$ 0	$ 0	$ 0

[1] The separation of our retail business was completed on May 1, 2013.

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Property, Plant, and Equipment

12 Months Ended

Dec. 31, 2014

Property, Plant and Equipment [Abstract]

PROPERTY, PLANT, AND EQUIPMENT

8. PROPERTY, PLANT, AND EQUIPMENT

Major classes of property, plant, and equipment, which include capital lease assets, consisted of the following (in millions):

	December 31,
	2014			2013
Land	$	396		$	404
Crude oil processing facilities	28,054			27,260
Pipeline and terminal facilities	1,955			1,513
Grain processing equipment	779			719
Administrative buildings	800			800
Other	2,596			2,109
Construction in progress	1,353			1,128
Property, plant, and equipment, at cost	35,933			33,933
Accumulated depreciation	(9,198		)	(8,226		)
Property, plant, and equipment, net	$	26,735		$	25,707

We have various assets under capital leases that primarily support our refining operations totaling $72 million and $74 million as of December 31, 2014 and 2013, respectively. Accumulated amortization on assets under capital leases was $40 million and $35 million as of December 31, 2014 and 2013, respectively.

Depreciation expense for the years ended December 31, 2014, 2013, and 2012 was $1.2 billion, $1.2 billion, and $1.1 billion, respectively.

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Accrued Expenses and Other Long-Term Liabilities, Asset Retirement Obligations (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Asset Retirement Obligations Rollforward Analysis
Balance as of beginning of year	$ 31	$ 108	$ 87
Additions to accrual	60	2	14
Revisions in estimated cash flows	0	0	13
Accretion expense	1	2	5
Settlements	(1)	(1)	(11)
Separation of retail business	0	(80)	0
Balance as of end of year	$ 91	$ 31	$ 108
Retail Location [Member]
Asset Retirement Obligations (Textual)
Property, plant, and equipment, useful life	20 years

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Receivables

12 Months Ended

Dec. 31, 2014

Receivables [Abstract]

RECEIVABLES

6. RECEIVABLES

Receivables consisted of the following (in millions):

	December 31,
	2014			2013
Accounts receivable	$	5,509		$	8,582
Commodity derivative and foreign currency contract receivables	151			98
Other receivables	256			117
	5,916			8,797
Allowance for doubtful accounts	(37		)	(46		)
Receivables, net	$	5,879		$	8,751

Changes in the allowance for doubtful accounts consisted of the following (in millions):

	Year Ended December 31,
	2014			2013			2012
Balance as of beginning of year	$	46		$	56		$	48
Increase in allowance charged to expense	7			13			21
Accounts charged against the allowance, net of recoveries	(15		)	(23		)	(13		)
Foreign currency translation	(1		)	—			—
Balance as of end of year	$	37		$	46		$	56

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Inventories

12 Months Ended

Dec. 31, 2014

Inventory Disclosure [Abstract]

INVENTORIES

7. INVENTORIES

Inventories consisted of the following (in millions):

	December 31,
	2014		2013
Refinery feedstocks	$	2,269	$	2,135
Refined products and blendstocks	3,926		3,231
Ethanol feedstocks and products	195		166
Materials and supplies	233		226
Inventories	$	6,623	$	5,758

As of December 31, 2014, the volumes of our refinery feedstocks and refined products and blendstocks held as inventory increased, which resulted in a LIFO increment. During the years ended December 31, 2013 and 2012, we had net liquidations of LIFO inventory layers that decreased cost of sales in each of those years by $17 million and $134 million, respectively.

As of December 31, 2014 and 2013, the replacement cost (market value) of LIFO inventories exceeded their LIFO carrying amounts by approximately $857 million and $6.9 billion, respectively. As of December 31, 2014 and 2013, our non-LIFO inventories accounted for $906 million and $681 million, respectively, of our total inventories.

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Deferred Charges and Other Assets

12 Months Ended

Dec. 31, 2014

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

DEFERRED CHARGES AND OTHER ASSETS

9. DEFERRED CHARGES AND OTHER ASSETS

“Deferred charges and other assets, net” primarily includes turnaround and catalyst costs, which are deferred and amortized as discussed in Note 1. Amortization expense for deferred refinery turnaround and catalyst costs and other assets was $489 million, $498 million, and $447 million for the years ended December 31, 2014, 2013, and 2012, respectively.

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Debt, Accounts Receivable Sales Facility and Capitalized Interest (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Capitalized Interest (Textual)
Interest costs incurred, capitalized	$ 70,000,000	$ 118,000,000	$ 220,000,000
A/R Sales Facility [Member]
Accounts Receivable Sales Facility
Balance as of beginning of year				250,000,000
Balance as of end of year	100,000,000	100,000,000	100,000,000	250,000,000
Credit Facilities [Member] | A/R Sales Facility [Member]
Accounts Receivable Sales Facility
Proceeds from the sale of receivables	0	0	1,500,000,000
Repayments	0	0	(1,650,000,000)
Accounts Receivable Sales Facility (Textual)
Line of credit facility, maximum borrowing capacity	1,500,000,000
Extended term of accounts receivable sales facility	Jul. 31, 2015
Designated pool of accounts receivable	$ 1,700,000,000	$ 3,300,000,000

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Segment Information, Revenue by Product (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended									12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013		Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Revenue from External Customer [Line Items]
Operating revenues	$ 27,859	$ 34,408	$ 34,914	$ 33,663	$ 34,429	$ 36,137	$ 34,034	[1]	$ 33,474	$ 130,844	$ 138,074	$ 138,393
Refining [Member]
Revenue from External Customer [Line Items]
Operating revenues										126,004	129,064	122,068
Refining [Member] | Gasoline and Blendstocks [Member]
Revenue from External Customer [Line Items]
Operating revenues										56,846	57,806	55,647
Refining [Member] | Distillates [Member]
Revenue from External Customer [Line Items]
Operating revenues										57,521	56,921	51,095
Refining [Member] | Petrochemicals [Member]
Revenue from External Customer [Line Items]
Operating revenues										3,759	4,281	3,908
Refining [Member] | Lubes and Asphalts [Member]
Revenue from External Customer [Line Items]
Operating revenues										1,397	1,643	2,033
Refining [Member] | Other Product Revenues [Member]
Revenue from External Customer [Line Items]
Operating revenues										6,481	8,413	9,385
Ethanol [Member]
Revenue from External Customer [Line Items]
Operating revenues										4,840	5,114	4,317
Ethanol [Member] | Ethanol Product [Member]
Revenue from External Customer [Line Items]
Operating revenues										4,192	4,245	3,545
Ethanol [Member] | Distillers Grains [Member]
Revenue from External Customer [Line Items]
Operating revenues										648	869	772
Retail [Member]
Revenue from External Customer [Line Items]
Operating revenues										0	3,896	12,008
Retail [Member] | Fuel Sales Gasoline and Diesel [Member]
Revenue from External Customer [Line Items]
Operating revenues										0	3,226	10,045
Retail [Member] | Merchandise Sales and Other [Member]
Revenue from External Customer [Line Items]
Operating revenues										0	524	1,649
Retail [Member] | Heating Oil [Member]
Revenue from External Customer [Line Items]
Operating revenues										$ 0	$ 146	$ 314

[1] The separation of our retail business was completed on May 1, 2013.

XML

Commitments and Contingencies (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Future Minimum Rental Payments
2015	$ 314
2016	229
2017	159
2018	131
2019	75
Thereafter	275
Total minimum rental payments under operating leases	1,183
Minimum rentals to be received under subleases	14
Rental Expense
Minimum rental expense	618	588	512
Contingent rental expense	43	47	67
Total rental expense	661	635	579
Less sublease rental income	0	0	(2)
Net rental expense	661	635	577
Commitments and Contingencies (Textual)
Minimum range of possible loss contingency	0
Maximum range of possible loss contingency	$ 200

XML

Debt, Non-Bank Debt (Details) (USD $)	12 Months Ended			1 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Feb. 26, 2015
Senior Notes [Member] | Senior Notes Due In 2015 [Member]
Non-Bank Debt (Textual)
Interest rate of notes in percentage	4.50%
Debt instrument, maturity date (month, day, year)	Dec. 31, 2015
Senior Notes [Member] | Senior Notes Due In 2014 [Member]
Non-Bank Debt (Textual)
Debt repayments	200,000,000
Interest rate of notes in percentage	4.75%
Debt instrument, maturity date (month, day, year)	Dec. 31, 2014
Senior Notes [Member] | Senior Notes Due In January 2013 [Member]
Non-Bank Debt (Textual)
Debt repayments		180,000,000
Interest rate of notes in percentage		6.70%
Senior Notes [Member] | Senior Notes Due In June 2013 [Member]
Non-Bank Debt (Textual)
Debt repayments		300,000,000
Interest rate of notes in percentage		4.75%
Revenue Bonds [Member] | Tax Exempt Industrial Revenue Bonds Series 1997 [Member]
Non-Bank Debt (Textual)
Interest rate of notes in percentage			5.60%
Revenue Bonds [Member] | Tax Exempt Industrial Revenue Bonds Series 1998 [Member]
Non-Bank Debt (Textual)
Interest rate of notes in percentage			5.60%
Revenue Bonds [Member] | Tax Exempt Industrial Revenue Bonds Series 1999 [Member]
Non-Bank Debt (Textual)
Interest rate of notes in percentage			5.70%
Revenue Bonds [Member] | Tax Exempt Industrial Revenue Bonds Series 2001 [Member]
Non-Bank Debt (Textual)
Interest rate of notes in percentage			6.65%
Revenue Bonds [Member] | Tax Exempt Industrial Revenue Bonds Series 1997A [Member]
Non-Bank Debt (Textual)
Debt repayments			4,000,000
Interest rate of notes in percentage			5.45%
Revenue Bonds [Member] | Tax Exempt Industrial Revenue Bonds [Member]
Non-Bank Debt (Textual)
Debt repayments			108,000,000
Redemption value in percentage			100.00%
Revenue Bonds [Member] | Gulf Opportunity Zone Revenue Bonds Series 2010 [Member]
Non-Bank Debt (Textual)
Interest rate of notes in percentage	4.00%		4.00%
Proceeds from advances for construction			300,000,000
Debt instrument, maturity date (month, day, year)	Dec. 01, 2040		Dec. 01, 2040
Debt instrument, mandatory tender date			Jun. 01, 2022
Notes [Member] | Notes Due In 2012 [Member]
Non-Bank Debt (Textual)
Debt repayments			750,000,000
Interest rate of notes in percentage			6.875%
Subsequent Event [Member] | Senior Notes [Member] | Senior Notes Due In 2015 [Member]
Non-Bank Debt (Textual)
Debt repayments				$ 400,000,000
Interest rate of notes in percentage				4.50%

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Fair Value Measurements, Other Financial Instruments (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Financial assets:
Cash and temporary cash investments, at carrying amount	$ 3,689	$ 4,292	$ 1,723	$ 1,024
Financial liabilities:
Debt (excluding capital leases), at carrying amount	6,354	6,525
Fair Value, Inputs, Level 1 [Member]
Financial assets:
Cash and temporary cash investments, at fair value	3,689	4,292
Fair Value, Inputs, Level 2 [Member]
Financial liabilities:
Debt (excluding capital leases), at fair value	$ 7,562	$ 7,659

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Inventories (Tables)

12 Months Ended

Dec. 31, 2014

Inventory Disclosure [Abstract]

Schedule of inventories

Inventories consisted of the following (in millions):

	December 31,
	2014		2013
Refinery feedstocks	$	2,269	$	2,135
Refined products and blendstocks	3,926		3,231
Ethanol feedstocks and products	195		166
Materials and supplies	233		226
Inventories	$	6,623	$	5,758

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Separation of Retail Business (Details) (USD $)	12 Months Ended			0 Months Ended			3 Months Ended	0 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Nov. 14, 2013	May 01, 2013	Apr. 30, 2013	Jun. 30, 2013	Apr. 16, 2013	Dec. 31, 2011
Assets
Cash and temporary cash investments	$ 3,689,000,000	$ 4,292,000,000	$ 1,723,000,000						$ 1,024,000,000
Inventories	6,623,000,000	5,758,000,000
Deferred income taxes	162,000,000	266,000,000
Prepaid expenses and other	164,000,000	138,000,000
Total current assets	16,614,000,000	19,277,000,000
Property, plant, and equipment, at cost	35,933,000,000	33,933,000,000
Accumulated depreciation	(9,198,000,000)	(8,226,000,000)
Property, plant, and equipment, net	26,735,000,000	25,707,000,000
Deferred charges and other assets, net	2,201,000,000	2,276,000,000
Total assets	45,550,000,000	47,260,000,000
Liabilities
Current portion of capital lease obligations	606,000,000	303,000,000
Accrued expenses	596,000,000	522,000,000
Taxes other than income taxes	1,209,000,000	1,345,000,000
Total current liabilities	9,980,000,000	13,123,000,000
Debt and capital lease obligations, less current portion	5,780,000,000	6,261,000,000
Deferred income taxes	6,607,000,000	6,601,000,000
Other long-term liabilities	1,939,000,000	1,329,000,000
Separation of Retail Business (Textual)
Proceeds from short-term debt in anticipation of separation	0	550,000,000	0
Cash distributed to Valero by CST Brands, Inc.	0	500,000,000	0
Senior unsecured bonds of CST Brands, Inc. issued to us	256,000,000	117,000,000
Cash held and retained by CST Brands, Inc. upon separation	0	315,000,000	0
Gain on disposition of retained interest in CST Brands, Inc.	0	325,000,000	0
Spinoff [Member]
Assets
Cash and temporary cash investments					315,000,000
Credit card receivables from Valero					44,000,000
Other receivables, net					109,000,000
Inventories					170,000,000
Deferred income taxes					14,000,000
Prepaid expenses and other					13,000,000
Total current assets					665,000,000
Property, plant, and equipment, at cost					1,891,000,000
Accumulated depreciation					(611,000,000)
Property, plant, and equipment, net					1,280,000,000
Intangible assets, net					38,000,000
Deferred charges and other assets, net					191,000,000
Total assets					2,174,000,000
Liabilities
Current portion of capital lease obligations					2,000,000
Trade payable to Valero					242,000,000
Other accounts payable					96,000,000
Accrued expenses					31,000,000
Taxes other than income taxes					20,000,000
Total current liabilities					391,000,000
Debt and capital lease obligations, less current portion					1,053,000,000
Deferred income taxes					83,000,000
Other long-term liabilities					112,000,000
Total liabilities					1,639,000,000
Separation of Retail Business (Textual)
Spinoff transaction, ownership percentage by Valero stockholders					80.00%
Aggregate proceeds received related to separation of CST Brands, Inc					1,050,000,000
Cash distributed to Valero by CST Brands, Inc.					500,000,000
Senior unsecured bonds of CST Brands, Inc. issued to us					550,000,000
Cash held and retained by CST Brands, Inc. upon separation						315,000,000
Cost of separation in general and administrative expenses							30,000,000
Retained ownership percentage disposed				20.00%
Gain on disposition of retained interest in CST Brands, Inc.				325,000,000
Spinoff [Member] | Notes Payable to Banks [Member]
Separation of Retail Business (Textual)
Proceeds from short-term debt in anticipation of separation								550,000,000
CST Brands, Inc. securities exchanged in settlement of short-term borrowings				$ 467,000,000	$ 550,000,000

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Employee Benefit Plans

12 Months Ended

Dec. 31, 2014

Compensation and Retirement Disclosure [Abstract]

EMPLOYEE BENEFIT PLANS

14. EMPLOYEE BENEFIT PLANS

Defined Benefit Plans

We have defined benefit pension plans, some of which are subject to collective bargaining agreements, that cover most of our employees. These plans provide eligible employees with retirement income based primarily on years of service and compensation during specific periods under final average pay and cash balance formulas. We fund our pension plans as required by local regulations. In the U.S., all qualified pension plans are subject to the Employee Retirement Income Security Act (ERISA) minimum funding standard. We typically do not fund or fully fund U.S. nonqualified and certain international pension plans that are not subject to funding requirements because contributions to these pension plans may be less economic and investment returns may be less attractive than our other investment alternatives.

In February 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 changed from a final average pay formula to a cash balance formula with staged effective dates that commenced either on July 1, 2013 or January 1, 2015 depending on the age and service of the affected employees. All final average pay benefits were 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 year ended December 31, 2013. The benefit of this remeasurement will be amortized into income through 2025.

We also provide health care and life insurance benefits for certain retired employees through our postretirement benefit plans. Most of our employees become eligible for these benefits if, while still working for us, they reach normal retirement age or take early retirement. These plans are unfunded, and retired employees share the cost with us. Individuals who became our employees as a result of an acquisition became eligible for other postretirement benefits under our plans as determined by the terms of the relevant acquisition agreement.

In October 2013, we announced changes to our U.S. retiree health care plans to utilize more efficient insurance products for Medicare eligible retirees. These plan changes resulted in a $43 million decrease to our benefit obligations for other postretirement benefit plans and a related increase to other comprehensive income during the year ended December 31, 2013.

The changes in benefit obligation related to all of our defined benefit plans, the changes in fair value of plan assets^(a), and the funded status of our defined benefit plans as of and for the years ended were as follows (in millions):

	Pension Plans						Other Postretirement Benefit Plans
	December 31,						December 31,
	2014			2013			2014			2013
Changes in benefit obligation:
Benefit obligation as of beginning of year	$	1,914		$	2,307		$	324		$	436
Service cost	120			137			7			12
Interest cost	91			86			15			18
Participant contributions	—			—			7			15
Plan amendments	2			(274		)	—			(43		)
Curtailment gain	—			(6		)	—			—
Benefits paid	(109		)	(170		)	(30		)	(37		)
Actuarial (gain) loss	440			(169		)	37			(77		)
Other	(8		)	3			1			—
Benefit obligation as of end of year	$	2,450		$	1,914		$	361		$	324
Changes in plan assets(a):
Fair value of plan assets as of beginning of year	$	1,909		$	1,729		$	—		$	—
Actual return on plan assets	139			306			—			—
Valero contributions	46			41			20			19
Participant contributions	—			—			7			15
Benefits paid	(109		)	(170		)	(30		)	(37		)
Other	(7		)	3			3			3
Fair value of plan assets as of end of year	$	1,978		$	1,909		$	—		$	—
Reconciliation of funded status(a):
Fair value of plan assets as of end of year	$	1,978		$	1,909		$	—		$	—
Less benefit obligation as of end of year	2,450			1,914			361			324
Funded status as of end of year	$	(472	)	$	(5	)	$	(361	)	$	(324	)
Accumulated benefit obligation	$	2,354		$	1,811		n/a			n/a

^{___________________________} 

^(a)  Plan assets include only the assets associated with pension plans subject to legal minimum funding standards. Plan assets associated with U.S. nonqualified pension plans are not included here because they are not protected from our creditors and therefore cannot be reflected as a reduction from our obligations under the pension plans. As a result, the reconciliation of funded status does not reflect the effect of plan assets that exist for all of our defined benefit plans. See Note 20 for the assets associated with certain U.S. nonqualified pension plans.

For the year ended December 31, 2014, the funded status of our pension and other postretirement benefit plans were negatively impacted by a combined actuarial loss of $477 million primarily due to approximately $300 million related to the change in the discount rates of our pension plans to 4.10% from 4.92% and our other postretirement benefit plans to 4.13% from 4.88% as of December 31, 2014 and 2013, respectively, and approximately $100 million related to our adoption of the updated mortality table that reflects longer life expectancies.

Amounts recognized in our balance sheet for our pension and other postretirement benefits plans as of December 31, 2014 and 2013 include (in millions):

	Pension Plans						Other Postretirement Benefit Plans
	2014			2013			2014			2013
Deferred charges and other assets, net	$	7		$	208		$	—		$	—
Accrued expenses	(28		)	(11		)	(20		)	(19		)
Other long-term liabilities	(451		)	(202		)	(341		)	(305		)
	$	(472	)	$	(5	)	$	(361	)	$	(324	)

The accumulated benefit obligations for certain of our pension plans exceed the fair values of the assets of those plans. For those plans, the table below presents the total projected benefit obligation, accumulated benefit obligation, and fair value of the plan assets (in millions).

	December 31,
	2014		2013
Projected benefit obligation	$	2,288	$	215
Accumulated benefit obligation	2,217		168
Fair value of plan assets	1,812		3

Benefit payments that we expect to pay, including amounts related to expected future services, and the anticipated Medicare subsidies that we expect to receive are as follows for the years ending December 31 (in millions):

	Pension Benefits		Other Postretirement Benefits
2015	$	131	$	20
2016	127		20
2017	132		21
2018	142		21
2019	189		21
2020-2024	845		108

We plan to contribute approximately $47 million to our pension plans and $20 million to our other postretirement benefit plans during 2015.

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

	Pension Plans									Other Postretirement Benefit Plans
	Year Ended December 31,									Year Ended December 31,
	2014			2013			2012			2014			2013			2012
Components of net periodic benefit cost:
Service cost	$	120		$	137		$	140		$	7		$	12		$	12
Interest cost	91			86			93			15			18			21
Expected return on plan assets	(133		)	(131		)	(125		)	—			—			—
Amortization of:
Prior service cost (credit)	(22		)	(19		)	3			(18		)	(14		)	(23		)
Net actuarial (gain) loss	35			57			33			(1		)	—			1
Special charges (credits)	3			(5		)	(3		)	—			—			—
Net periodic benefit cost	$	94		$	125		$	141		$	3		$	16		$	11

Amortization of prior service cost (credit) shown in the above table was based on a straight-line amortization of the cost over the average remaining service period of employees expected to receive benefits under each respective plan. Amortization of the net actuarial loss shown in the above table was based on the straight-line amortization of the excess of the unrecognized loss over 10 percent of the greater of the projected benefit obligation or market-related value of plan assets (smoothed asset value) over the average remaining service period of active employees expected to receive benefits under each respective plan.

Pre-tax amounts recognized in other comprehensive income were as follows (in millions):

	Pension Plans									Other Postretirement Benefit Plans
	Year Ended December 31,									Year Ended December 31,
	2014			2013			2012			2014			2013			2012
Net gain (loss) arising during the year:
Net actuarial gain (loss)	$	(434	)	$	290		$	(245	)	$	(37	)	$	77		$	17
Prior service cost	(1		)	—			(9		)	—			—			—
Remeasurement due to plan amendments	—			328			—			—			43			—
Net (gain) loss reclassified into income:
Net actuarial (gain) loss	35			57			33			(1		)	—			1
Prior service cost (credit)	(22		)	(19		)	3			(18		)	(14		)	(23		)
Curtailment and settlement loss	3			1			12			—			—			—
Total changes in other comprehensive income (loss)	$	(419	)	$	657		$	(206	)	$	(56	)	$	106		$	(5	)

The pre-tax amounts in accumulated other comprehensive income as of December 31, 2014 and 2013 that have not yet been recognized as components of net periodic benefit cost were as follows (in millions):

	Pension Plans						Other Postretirement Benefit Plans
	2014			2013			2014			2013
Prior service credit	$	(210	)	$	(233	)	$	(92	)	$	(110	)
Net actuarial (gain) loss	876			479			(6		)	(44		)
Total	$	666		$	246		$	(98	)	$	(154	)

The following pre-tax amounts included in accumulated other comprehensive income as of December 31, 2014 are expected to be recognized as components of net periodic benefit cost during the year ending December 31, 2015 (in millions):

	Pension Plans			Other Postretirement Benefit Plans
Amortization of prior service credit	$	(22	)	$	(18	)
Amortization of net actuarial loss	63			—
Total	$	41		$	(18	)

The weighted-average assumptions used to determine the benefit obligations as of December 31, 2014 and 2013 were as follows:

	Pension Plans				Other Postretirement Benefit Plans
	2014		2013		2014		2013
Discount rate	4.10	%	4.92	%	4.13	%	4.88	%
Rate of compensation increase	3.78	%	3.81	%	—	%	—	%

The discount rate assumption used to determine the benefit obligations as of December 31, 2014 and 2013 for the majority of our pension plans and other postretirement benefit plans was based on the Aon Hewitt AA Only Above Median yield curve and considered the timing of the projected cash outflows under our plans. This curve was designed by Aon Hewitt to provide a means for plan sponsors to value the liabilities of their pension plans or postretirement benefit plans. It is a hypothetical double-A yield curve represented by a series of annualized individual discount rates with maturities from one-half year to 99 years. Each bond issue underlying the curve is required to have an average rating of double-A when averaging all available ratings by Moody’s Investor Services, Standard and Poor’s Ratings Service, and Fitch Ratings. Only the bonds representing the 50 percent highest yielding issuances among those with average ratings of double-A are included in this yield curve.

We based our December 31, 2014, 2013, and 2012 discount rate assumption on the Aon Hewitt AA Only Above Median yield curve because we believe it is representative of the types of bonds we would use to settle our pension and other postretirement benefit plan liabilities as of those dates. We believe that the yields associated with the bonds used to develop this yield curve reflect the current level of interest rates.

The weighted-average assumptions used to determine the net periodic benefit cost for the years ended December 31, 2014, 2013, and 2012 were as follows:

	Pension Plans						Other Postretirement Benefit Plans
	2014		2013		2012		2014		2013		2012
Discount rate	4.92	%	4.33	%	5.08	%	4.88	%	4.19	%	4.97	%
Expected long-term rate of return on plan assets	7.61	%	7.62	%	7.67	%	—	%	—	%	—	%
Rate of compensation increase	3.81	%	3.73	%	3.68	%	—	%	—	%	—	%

The assumed health care cost trend rates as of December 31, 2014 and 2013 were as follows:

	2014		2013
Health care cost trend rate assumed for the next year	7.36	%	7.39	%
Rate to which the cost trend rate was assumed to decline (the ultimate trend rate)	5.00	%	5.00	%
Year that the rate reaches the ultimate trend rate	2020		2020

Assumed health care cost trend rates impact the amounts reported for retiree health care plans. A one percentage-point change in assumed health care cost trend rates would have the following effects on other postretirement benefits (in millions):

	1% Increase		1% Decrease
Effect on total of service and interest cost components	$	—	$	—
Effect on accumulated postretirement benefit obligation	5		(4		)

The tables below present the fair values of the assets of our pension plans (in millions) as of December 31, 2014 and 2013 by level of the fair value hierarchy. Assets categorized in Level 1 of the hierarchy are measured at fair value using a market approach based on quotations from national securities exchanges. Assets categorized in Level 2 of the hierarchy are measured at net asset value as a practical expedient for fair value. As previously noted, we do not fund or fully fund U.S. nonqualified and certain international pension plans that are not subject to funding requirements, and we do not fund our other postretirement benefit plans.

	Fair Value Measurements Using						Total as of December 31, 2014
	Level 1		Level 2		Level 3
Equity securities:
U.S. companies(a)	$	541	$	—	$	—	$	541
International companies	144		—		—		144
Preferred stock	1		1		—		2
Mutual funds:
International growth	119		—		—		119
Index funds(b)	199		—		—		199
Corporate debt instruments	—		263		—		263
Government securities:
U.S. Treasury securities	71		—		—		71
Other government securities	—		100		—		100
Common collective trusts	—		379		—		379
Private fund	—		40		—		40
Insurance contracts	—		18		—		18
Interest and dividends receivable	5		—		—		5
Cash and cash equivalents	75		22		—		97
Total	$	1,155	$	823	$	—	$	1,978

______________________

See notes on page 98.

	Fair Value Measurements Using						Total as of December 31, 2013
	Level 1		Level 2		Level 3
Equity securities:
U.S. companies(a)	$	529	$	—	$	—	$	529
International companies	155		—		—		155
Preferred stock	2		1		—		3
Mutual funds:
International growth	131		—		—		131
Index funds(b)	160		—		—		160
Corporate debt instruments	—		260		—		260
Government securities:
U.S. Treasury securities	81		—		—		81
Other government securities	—		79		—		79
Common collective trusts	—		373		—		373
Private fund	—		38		—		38
Insurance contracts	—		17		—		17
Interest and dividends receivable	5		—		—		5
Cash and cash equivalents	72		6		—		78
Total	$	1,135	$	774	$	—	$	1,909

^{__________________________________} 

^(a)  Equity securities are held in a wide range of industrial sectors, including consumer goods, information technology, healthcare, industrials, and financial services.

^(b)  This class includes primarily investments in approximately 60 percent equities and 40 percent bonds.

The investment policies and strategies for the assets of our pension plans incorporate a well-diversified approach that is expected to earn long-term returns from capital appreciation and a growing stream of current income. This approach recognizes that assets are exposed to risk and the market value of the pension plans’ assets may fluctuate from year to year. Risk tolerance is determined based on our financial ability to withstand risk within the investment program and the willingness to accept return volatility. In line with the investment return objective and risk parameters, the pension plans’ mix of assets includes a diversified portfolio of equity and fixed-income investments. As of December 31, 2014, the target allocations for plan assets are 70 percent equity securities and 30 percent fixed income investments. Equity securities include international stocks and a blend of U.S. growth and value stocks of various sizes of capitalization. Fixed income securities include bonds and notes issued by the U.S. government and its agencies, corporate bonds, and mortgage-backed securities. The aggregate asset allocation is reviewed on an annual basis.

The expected long-term rate of return on plan assets is based on a forward-looking expected asset return model. This model derives an expected rate of return based on the target asset allocation of a plan’s assets. The underlying assumptions regarding expected rates of return for each asset class reflect Aon Hewitt’s best expectations for these asset classes. The model reflects the positive effect of periodic rebalancing among diversified asset classes. We select an expected asset return that is supported by this model.

Defined Contribution Plans

We have defined contribution plans that cover most of our employees. Our contributions to these plans are based on employees’ compensation and/or a partial match of employee contributions to the plans. Our contributions to these defined contribution plans were $61 million, $62 million, and $61 million for the years ended December 31, 2014, 2013, and 2012, respectively.

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Supplemental Cash Flow Information

12 Months Ended

Dec. 31, 2014

Supplemental Cash Flow Information [Abstract]

SUPPLEMENTAL CASH FLOW INFORMATION

19. 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):

	Year Ended December 31,
	2014			2013			2012
Decrease (increase) in current assets:
Receivables, net	$	2,753		$	(753	)	$	437
Inventories	(1,014		)	(13		)	(282		)
Income taxes receivable	(23		)	10			51
Prepaid expenses and other	(32		)	2			(28		)
Increase (decrease) in current liabilities:
Accounts payable	(3,149		)	977			(113		)
Accrued expenses	38			53			13
Taxes other than income taxes	(64		)	337			(260		)
Income taxes payable	(319		)	309			(120		)
Changes in current assets and current liabilities	$	(1,810	)	$	922		$	(302	)

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 year ended December 31, 2013 exclude the change in current assets and current liabilities resulting from the separation of our retail business as described in Note 3;

• 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 years ended December 31, 2014, 2013 and 2012.

Noncash financing activities for the year ended December 31, 2013 included the exchange of CST’s senior unsecured bonds and the exchange of all of our remaining shares of CST common stock with third-party financial institutions in satisfaction of our short-term debt agreements as described in Note 11. There were no significant noncash financing activities for the years ended December 31, 2014 and 2012.

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

	Year Ended December 31,
	2014		2013		2012
Interest paid in excess of amount capitalized	$	392	$	361	$	302
Income taxes paid, net	1,624		387		705

Cash flows related to the discontinued operations of the Aruba Refinery were immaterial for the years ended December 31, 2014, 2013, and 2012.

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Price Risk Management Activities, Gain (Loss) by Income Statement Location (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Effect of Derivative Instruments on Income and OCI (Textual)
Gain from hedged firm commitment not qualifying as fair value hedge, net			$ 28,000,000
Accumulated other comprehensive income, cumulative after-tax gains or losses on cash flow hedges	0
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	(42,000,000)	(12,000,000)	(250,000,000)
Gain recognized in income on hedged item	42,000,000	18,000,000	183,000,000
Gain (loss) recognized in income on derivatives (ineffective portion)	0	6,000,000	(67,000,000)
Cash Flow Hedging [Member] | Commodity Contract [Member]
Effect of Derivative Instruments on Income and OCI
Gain (loss) recognized in OCI on derivatives (effective portion)	(1,000,000)	(4,000,000)	45,000,000
Cash Flow Hedging [Member] | Commodity Contract [Member] | Cost of Sales [Member]
Effect of Derivative Instruments on Income and OCI
Gain (loss) reclassified from accumulated OCI into income (effective portion)	(2,000,000)	(2,000,000)	73,000,000
Gain (loss) recognized in income on derivatives (ineffective portion)	(1,000,000)	21,000,000	48,000,000
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	693,000,000	193,000,000	1,000,000
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	40,000,000	14,000,000	(38,000,000)
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	38,000,000	21,000,000	(16,000,000)
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	$ 0	$ (20,000,000)	$ 0

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Basis of Presentation and Summary of Significant Accounting Policies (Details)	12 Months Ended
	Dec. 31, 2014 plants refineries branded_wholesale_sites
Basis of Presentation and Summary of Significant Accounting Policies (Textual)
Number of refineries owned	15
Combined total throughput capacity of petroleum refining (barrels per day)	2,900,000
Number of branded wholesale sites	7,400
Number of ethanol plants owned	11
Combined capacity of ethanol (gallons per year)	1,300,000,000
Minimum [Member]
Basis of Presentation and Summary of Significant Accounting Policies (Textual)
Property, plant, and equipment, useful life	25 years
Maximum [Member]
Basis of Presentation and Summary of Significant Accounting Policies (Textual)
Property, plant, and equipment, useful life	30 years

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Stock-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of stock-based compensation expense and tax benefits

The following table reflects activity related to our stock-based compensation arrangements (in millions):

	Year Ended December 31,
	2014		2013		2012
Stock-based compensation expense	$	60	$	64	$	58
Tax benefit recognized on stock-based compensation expense	21		22		20
Tax benefit realized for tax deductions resulting from exercises and vestings	64		66		45
Effect of tax deductions in excess of recognized stock-based compensation expense reported as a financing cash flow	47		47		27

Summary of weighted-average assumptions used in fair value measurements

A summary of the weighted-average assumptions used in our fair value measurements is presented in the table below.

	Year Ended December 31,
	2014		2013		2012
Expected life in years	6.0		6.0		6.0
Expected volatility	43.21	%	49.63	%	49.11	%
Expected dividend yield	2.27	%	2.27	%	2.39	%
Risk-free interest rate	1.74	%	1.77	%	0.85	%

Summary of stock option awards

A summary of the status of our stock option awards is presented in the table below.

	Number of Stock Options		Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
					(in years)	(in millions)
Outstanding as of January 1, 2014	8,558,093		$	27.88
Granted	126,095		48.57
Exercised	(2,564,125	)	18.64
Expired	(1,449,986	)	66.67
Forfeited	(856	)	17.68
Outstanding as of December 31, 2014	4,669,221		21.48		4.5	$	131
Exercisable as of December 31, 2014	4,315,414		19.99		4.2	127

The following table reflects activity related to our stock options granted (in millions, except per share data):

	Year Ended December 31,
	2014		2013		2012
Weighted average grant-date fair value price per share	$	17.31	$	15.83	$	10.98
Intrinsic value of stock options exercised	85		101		78
Cash received from stock option exercises	47		59		59

Summary of restricted stock awards

A summary of the status of our restricted stock awards is presented in the table below.

	Number of Shares		Weighted- Average Grant-Date Fair Value Per Share
Nonvested shares as of January 1, 2014	2,205,314		$	32.23
Granted	969,671		49.40
Vested	(1,402,753	)	31.90
Forfeited	(14,082	)	32.56
Nonvested shares as of December 31, 2014	1,758,150		41.96

Summary of performance awards

Performance awards converted during the year ended December 31, 2014 were as follows:

	Vested Awards Converted	Actual Conversion Rate	Number of Shares Issued
2010 awards	201,422	100%	201,422
2011 awards	227,571	200%	455,142
2012 awards	102,855	200%	205,710
2013 awards	2,180	200%	4,360
Total	534,028		866,634

A summary of the status of our performance awards considered granted is presented below.

	Nonvested Awards		Vested Awards
Awards outstanding as of January 1, 2014	947,165		—
Granted	225,829		—
Vested	(534,028	)	534,028
Converted	—		(534,028	)
Forfeited	(24,576	)	—
Awards outstanding as of December 31, 2014	614,390		—

There were three tranches of performance awards granted during the year ended December 31, 2014 as follows:

	Awards Granted	Expected Conversion Rate	Fair Value Per Share
Third tranche of 2012 awards	99,023	100%	$	47.47
Second tranche of 2013 awards	76,232	100%	47.47
First tranche of 2014 awards	50,574	100%	48.57
Total	225,829

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Consolidated Statements of Comprehensive Income (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Net income	$ 3,711	$ 2,728	$ 2,080
Other comprehensive income (loss):
Foreign currency translation adjustment	(407)	(98)	164
Net gain (loss) on pension and other postretirement benefits	(475)	763	(211)
Net gain (loss) on derivative instruments designated and qualifying as cash flow hedges	1	(2)	(28)
Other comprehensive income (loss) before income tax expense (benefit)	(881)	663	(75)
Income tax expense (benefit) related to items of other comprehensive income (loss)	(164)	262	(87)
Other comprehensive income (loss)	(717)	401	12
Comprehensive income	2,994	3,129	2,092
Less: Comprehensive income (loss) attributable to noncontrolling interests	81	8	(3)
Comprehensive income attributable to Valero Energy Corporation stockholders	$ 2,913	$ 3,121	$ 2,095

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Supplemental Cash Flow Information (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Decrease (increase) in current assets:
Receivables, net	$ 2,753	$ (753)	$ 437
Inventories	(1,014)	(13)	(282)
Income taxes receivable	(23)	10	51
Prepaid expenses and other	(32)	2	(28)
Increase (decrease) in current liabilities:
Accounts payable	(3,149)	977	(113)
Accrued expenses	38	53	13
Taxes other than income taxes	(64)	337	(260)
Income taxes payable	(319)	309	(120)
Changes in current assets and current liabilities	(1,810)	922	(302)
Cash Flows Related to Interest and Income Taxes
Interest paid in excess of amount capitalized	392	361	302
Income taxes paid, net	$ 1,624	$ 387	$ 705

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Separation of Retail Business

12 Months Ended

Dec. 31, 2014

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

SEPARATION OF RETAIL BUSINESS

3. 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. 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.

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 11 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. We also incurred $30 million in costs during the three months ended June 30, 2013 to effect the separation, which were included in general and administrative expenses.

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.

On November 14, 2013, we disposed of our 20 percent retained interest in CST by transferring all remaining shares of CST common stock owned by us to a third-party financial institution in exchange for $467 million of our short-term debt and recognized a $325 million nontaxable gain, as further described in Note 11.

Selected historical results of operations of our retail business prior to the separation are disclosed in Note 18. Subsequent to May 1, 2013 and through November 14, 2013, our share of CST’s results of operations was reflected in “other income, net.” Our share of income taxes incurred directly by CST during this period was reported in the equity in earnings from CST, and as such was 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 were excluded from our consolidated balance sheet as of December 31, 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	191
Total assets	$	2,174
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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Accrued Expenses and Other Long-Term Liabilities (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2014		Dec. 31, 2013
Accrued Expenses
Defined benefit plan liabilities, current	$ 48		$ 30
Wage and other employee-related liabilities, current	294		257
Environmental liabilities, current	26		24
Accrued interest expense, current	88		90
Derivative liabilities, current	0		13
Asset retirement obligations, current	20		5
Other accrued liabilities, current	120		103
Accrued expenses	596		522
Other Long-Term Liabilities
Defined benefit plan liabilities, noncurrent	792		507
Wage and other employee-related liabilities, noncurrent	104		97
Uncertain income tax position liabilities, including related penalties and interest	316	[1]	205	[1]
Environmental liabilities, noncurrent	269		277
Derivative liabilities, noncurrent	0		0
Asset retirement obligations, noncurrent	71		26
Other accrued liabilities, noncurrent	387		217
Other long-term liabilities	1,939		1,329
Uncertain tax position liabilities	484		443
Income Taxes Payable [Member]
Other Long-Term Liabilities
Uncertain tax position liabilities, current	$ 168		$ 238

[1] As of December 31, 2014, our total liability for uncertain tax positions, including related penalties and interest, was $484 million, with $168 million classified as a current liability and reflected in “Income taxes payable” and the remaining $316 million classified as a long-term liability and reflected in “Other long-term liabilities” as detailed in this table. As of December 31, 2013, our total liability for uncertain tax positions, including related penalties and interest, was $443 million, with $238 million classified as a current liability and reflected in “Income taxes payable” and the remaining $205 million classified as a long-term liability and reflected in “Other long-term liabilities” as detailed in this table.

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Income Taxes (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Income from Continuing Operations Before Income Tax Expense from Domestic and Foreign Operations
U.S. operations	$ 4,677,000,000	$ 3,531,000,000	$ 4,015,000,000
International operations	875,000,000	445,000,000	725,000,000
Income from continuing operations before income tax expense	5,552,000,000	3,976,000,000	4,740,000,000
Reconciliation of Income Tax Expense Related to Income from Continuing Operations Before Income Tax Expense
Federal income tax expense at the U.S. federal statutory rate	1,943,000,000	1,392,000,000	1,659,000,000
U.S. state income tax expense, net of U.S. federal income tax effect	62,000,000	62,000,000	64,000,000
U.S. manufacturing deduction	(74,000,000)	(36,000,000)	(33,000,000)
International operations	(88,000,000)	(69,000,000)	(96,000,000)
Permanent differences	(16,000,000)	(104,000,000)	20,000,000
Change in tax law	0	(32,000,000)	0
Other, net	(50,000,000)	41,000,000	12,000,000
Income tax expense	1,777,000,000	1,254,000,000	1,626,000,000
Current:
U.S. federal	1,196,000,000	635,000,000	515,000,000
U.S. state	59,000,000	36,000,000	22,000,000
International	77,000,000	82,000,000	126,000,000
Total current	1,332,000,000	753,000,000	663,000,000
Deferred:
U.S. federal	268,000,000	459,000,000	854,000,000
U.S. state	36,000,000	59,000,000	77,000,000
International	141,000,000	(17,000,000)	32,000,000
Total deferred	445,000,000	501,000,000	963,000,000
Income tax expense	1,777,000,000	1,254,000,000	1,626,000,000
Deferred income tax assets:
Tax credit carryforwards	37,000,000	48,000,000
Net operating losses (NOLs)	436,000,000	338,000,000
Inventories	160,000,000	264,000,000
Property, plant, and equipment	0	8,000,000
Compensation and employee benefit liabilities	358,000,000	178,000,000
Environmental liabilities	92,000,000	92,000,000
Other	178,000,000	187,000,000
Total deferred income tax assets	1,261,000,000	1,115,000,000
Less: Valuation allowance	(393,000,000)	(347,000,000)
Net deferred income tax assets	868,000,000	768,000,000
Deferred income tax liabilities:
Property, plant, and equipment	6,682,000,000	6,536,000,000
Deferred turnaround costs	356,000,000	331,000,000
Inventories	426,000,000	310,000,000
Investments	152,000,000	94,000,000
Other	73,000,000	81,000,000
Total deferred income tax liabilities	7,689,000,000	7,352,000,000
Net deferred income tax liabilities	6,821,000,000	6,584,000,000
Valuation Allowance Allocation
Deferred tax assets valuation allowance	393,000,000	347,000,000
Reconciliation of the Change in Unrecognized Tax Benefits RollForward
Balance as of beginning of year	950,000,000	341,000,000	326,000,000
Additions based on tax positions related to the current year	35,000,000	64,000,000	11,000,000
Additions for tax positions related to prior years	118,000,000	576,000,000	40,000,000
Reductions for tax positions related to prior years	(67,000,000)	(26,000,000)	(36,000,000)
Reductions for tax positions related to the lapse of applicable statute of limitations	(1,000,000)	(4,000,000)	0
Settlements	(46,000,000)	(1,000,000)	0
Balance as of end of year	989,000,000	950,000,000	341,000,000
Reconciliation of Unrecognized Tax Benefits to Uncertain Tax Position Liabilities
Unrecognized tax benefits	989,000,000	950,000,000	341,000,000
Tax refund claim not recognized in our financial statements	(118,000,000)	(576,000,000)	(40,000,000)
Penalties, interest (net of U.S. federal and state income tax effect), and the U.S. federal income tax effect of state unrecognized tax benefits	49,000,000	49,000,000
Uncertain tax position liabilities	484,000,000	443,000,000
Income Taxes (Textual)
Statutory federal income tax rate	35.00%	35.00%	35.00%
Gain on disposition of retained interest in CST Brands, Inc.	0	325,000,000	0
Income tax benefit related to discontinued operations	0	0	0
Increase in valuation allowance	46,000,000
Cumulative undistributed earnings of foreign subsidiaries	2,900,000,000
Additions for tax positions related to prior years	118,000,000	576,000,000	40,000,000
Income tax benefits if recognized that would impact the effective tax rate	768,000,000	763,000,000
Possible reduction to unrecognized tax benefit	133,000,000
Interest expense and penalties recognized		12,000,000	23,000,000
Interest expense and penalties accrued	141,000,000	145,000,000
Tax Years 2005 to 2012 [Member]
Reconciliation of the Change in Unrecognized Tax Benefits RollForward
Additions for tax positions related to prior years	554,000,000	556,000,000
Reconciliation of Unrecognized Tax Benefits to Uncertain Tax Position Liabilities
Tax refund claim not recognized in our financial statements	(554,000,000)	(556,000,000)
Income Taxes (Textual)
Additions for tax positions related to prior years	554,000,000	556,000,000
Consolidated Statement Of Income [Member]
Deferred income tax assets:
Less: Valuation allowance	(386,000,000)
Valuation Allowance Allocation
Deferred tax assets valuation allowance	386,000,000
Additional Paid-in Capital [Member]
Deferred income tax assets:
Less: Valuation allowance	(7,000,000)
Valuation Allowance Allocation
Deferred tax assets valuation allowance	7,000,000
State and Local Jurisdiction [Member]
Income Tax Credit and Loss Carryforwards
NOL	6,574,000,000
State and Local Jurisdiction [Member] | Minimum [Member]
Income Tax Credit and Loss Carryforwards
NOL, expiration	Dec. 31, 2015
State and Local Jurisdiction [Member] | Maximum [Member]
Income Tax Credit and Loss Carryforwards
NOL, expiration	Dec. 31, 2034
State and Local Jurisdiction [Member] | U S State Income Tax Credits Limited [Member]
Income Tax Credit and Loss Carryforwards
U.S. state income tax credits	53,000,000
State and Local Jurisdiction [Member] | U S State Income Tax Credits Limited [Member] | Minimum [Member]
Income Tax Credit and Loss Carryforwards
Income tax credits, expiration	Dec. 31, 2015
State and Local Jurisdiction [Member] | U S State Income Tax Credits Limited [Member] | Maximum [Member]
Income Tax Credit and Loss Carryforwards
Income tax credits, expiration	Dec. 31, 2027
Foreign Tax Authority [Member]
Income Tax Credit and Loss Carryforwards
NOL	$ 1,630,000,000

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Equity, Changes in Accumulated Other Comprehensive Income (Loss) (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Changes in Accumulated Other Comprehensive Income (Loss) by Component, Net of Tax
Accumulated other comprehensive income (loss), net of tax	$ 350
Other comprehensive income (loss)	(717)	401	12
Separation of retail business		(479)
Accumulated other comprehensive income (loss), net of tax	(367)	350
Accumulated Other Comprehensive Income (Loss) [Member]
Changes in Accumulated Other Comprehensive Income (Loss) by Component, Net of Tax
Accumulated other comprehensive income (loss), net of tax	350	108	96
Other comprehensive income (loss)	(717)	401	12
Other comprehensive income (loss), before reclassifications, net of tax	(717)	383
Amounts reclassified from accumulated other comprehensive income (loss)	0	18
Separation of retail business		(159)
Accumulated other comprehensive income (loss), net of tax	(367)	350	108
Accumulated Translation Adjustment [Member]
Changes in Accumulated Other Comprehensive Income (Loss) by Component, Net of Tax
Accumulated other comprehensive income (loss), net of tax	408	665	501
Other comprehensive income (loss)	(407)	(98)	164
Other comprehensive income (loss), before reclassifications, net of tax	(407)	(98)
Amounts reclassified from accumulated other comprehensive income (loss)	0	0
Separation of retail business		(159)
Accumulated other comprehensive income (loss), net of tax	1	408	665
Accumulated Defined Benefit Plans Adjustment [Member]
Changes in Accumulated Other Comprehensive Income (Loss) by Component, Net of Tax
Accumulated other comprehensive income (loss), net of tax	(58)	(558)	(424)
Other comprehensive income (loss)	(310)	500	(134)
Other comprehensive income (loss), before reclassifications, net of tax	(309)	483
Amounts reclassified from accumulated other comprehensive income (loss)	(1)	17
Separation of retail business		0
Accumulated other comprehensive income (loss), net of tax	(368)	(58)	(558)
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges [Member]
Changes in Accumulated Other Comprehensive Income (Loss) by Component, Net of Tax
Accumulated other comprehensive income (loss), net of tax	0	1	19
Other comprehensive income (loss)	0	(1)	(18)
Other comprehensive income (loss), before reclassifications, net of tax	(1)	(2)
Amounts reclassified from accumulated other comprehensive income (loss)	1	1
Separation of retail business		0
Accumulated other comprehensive income (loss), net of tax	$ 0	$ 0	$ 1

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Fair Value Measurements

12 Months Ended

Dec. 31, 2014

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

20. FAIR VALUE MEASUREMENTS

General

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

U.S. 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.”

U.S. 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 December 31, 2014 and 2013.

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.

	December 31, 2014
							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	$	3,096	$	36	$	—	$	3,132	$	(2,907	)	$	(99	)	$	126	$	—
Physical purchase contracts	—		1		—		1		n/a			n/a			1		n/a
Investments of certain benefit plans	97		—		11		108		n/a			n/a			108		n/a
Total	$	3,193	$	37	$	11	$	3,241	$	(2,907	)	$	(99	)	$	235
Liabilities:
Commodity derivative contracts	$	2,886	$	34	$	—	$	2,920	$	(2,907	)	$	(13	)	$	—	$	(25	)
Biofuels blending obligation	—		14		—		14		n/a			n/a			14		n/a
Physical purchase contracts	—		5		—		5		n/a			n/a			5		n/a
Total	$	2,886	$	53	$	—	$	2,939	$	(2,907	)	$	(13	)	$	19

	December 31, 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	$	499	$	38	$	—	$	537	$	(505	)	$	(7	)	$	25	$	—
Investments of certain benefit plans	98		—		11		109		n/a			n/a			109		n/a
Total	$	597	$	38	$	11	$	646	$	(505	)	$	(7	)	$	134
Liabilities:
Commodity derivative contracts	$	492	$	24	$	—	$	516	$	(505	)	$	(6	)	$	5	$	(76	)
Biofuels blending obligation	—		11		—		11		n/a			n/a			11		n/a
Physical purchase contracts	—		5		—		5		n/a			n/a			5		n/a
Foreign currency contracts	8		—		—		8		n/a			n/a			8		n/a
Total	$	500	$	40	$	—	$	540	$	(505	)	$	(6	)	$	29

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 21, 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 21, 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.

• 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 for 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 21 under “Compliance Program Price 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 December 31, 2014 and 2013 that were measured at fair value on a recurring basis.

There was no activity during the years ended December 31, 2014, 2013, and 2012 related to the fair value amounts categorized in Level 3 as of December 31, 2014, 2013, and 2012.

Nonrecurring Fair Value Measurements

There were no assets or liabilities that were measured at fair value on a nonrecurring basis as of December 31, 2014 and 2013.

Other Financial Instruments

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

	December 31, 2014				December 31, 2013
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Cash and temporary cash investments	$	3,689	$	3,689	$	4,292	$	4,292
Financial liabilities:
Debt (excluding capital leases)	6,354		7,562		6,525		7,659

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 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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Employee Benefit Plans, Components of Net Periodic Benefit Costs (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Employee Benefit Plans (Textual)
The percentage of the higher of the projected benefit obligation or market-related value of plan assets in excess of which net actuarial losses are amortized	10.00%
Pension Plans [Member]
Components of net periodic benefit cost:
Service cost	$ 120	$ 137	$ 140
Interest cost	91	86	93
Expected return on plan assets	(133)	(131)	(125)
Amortization of:
Prior service cost (credit)	(22)	(19)	3
Net actuarial (gain) loss	35	57	33
Special charges (credits)	3	(5)	(3)
Net periodic benefit cost	94	125	141
Other Postretirement Benefit Plans [Member]
Components of net periodic benefit cost:
Service cost	7	12	12
Interest cost	15	18	21
Expected return on plan assets	0	0	0
Amortization of:
Prior service cost (credit)	(18)	(14)	(23)
Net actuarial (gain) loss	(1)	0	1
Special charges (credits)	0	0	0
Net periodic benefit cost	$ 3	$ 16	$ 11

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Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

Future minimum rentals and minimum rentals to be received under subleases for leases having initial or remaining noncancelable lease terms in excess of one year

As of December 31, 2014, our future minimum rentals and minimum rentals to be received under subleases for leases having initial or remaining noncancelable lease terms in excess of one year were as follows (in millions):

2015	$	314
2016	229
2017	159
2018	131
2019	75
Thereafter	275
Total minimum rental payments	$	1,183
Minimum rentals to be received under subleases	$	14

Rental expense for all operating leases

Rental expense was as follows (in millions):

	Year Ended December 31,
	2014		2013		2012
Minimum rental expense	$	618	$	588	$	512
Contingent rental expense	43		47		67
Total rental expense	661		635		579
Less sublease rental income	—		—		(2		)
Net rental expense	$	661	$	635	$	577

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Equity

12 Months Ended

Dec. 31, 2014

Equity [Abstract]

EQUITY

13. EQUITY

Share Activity

For the years ended December 31, 2014, 2013, and 2012, activity in the number of shares of common stock and treasury stock was as follows (in millions):

	Common Stock	Treasury Stock
Balance as of December 31, 2011	673	(117	)
Transactions in connection with stock-based compensation plans:
Stock issuances	—	6
Stock repurchases	—	(6	)
Stock repurchases under buyback program	—	(4	)
Balance as of December 31, 2012	673	(121	)
Transactions in connection with stock-based compensation plans:
Stock issuances	—	6
Stock repurchases	—	(6	)
Stock repurchases under buyback program	—	(17	)
Balance as of December 31, 2013	673	(138	)
Transactions in connection with stock-based compensation plans:
Stock issuances	—	4
Stock repurchases	—	(2	)
Stock repurchases under buyback program	—	(23	)
Balance as of December 31, 2014	673	(159	)

Preferred Stock

We have 20 million shares of preferred stock authorized with a par value of $0.01 per share. No shares of preferred stock were outstanding as of December 31, 2014 or 2013.

Treasury Stock

We purchase shares of our common stock in open market transactions to meet our obligations under employee stock-based compensation plans. We also purchase shares of our common stock 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.

On February 28, 2008, our board of directors approved a $3 billion common stock purchase program, which was in addition to a $6 billion program previously authorized. This additional $3 billion program has no expiration date. During 2013, we completed the $6 billion program. During the years ended December 31, 2014, 2013, and 2012, we purchased $1.2 billion, $692 million, and $118 million, respectively, of our common stock under our programs. As of December 31, 2014, we have approvals under the $3 billion program to purchase approximately $1.5 billion of our common stock. Year to date through February 20, 2015, we have purchased one million shares for $57 million.

Common Stock Dividends

On January 23, 2015, our board of directors declared a quarterly cash dividend of $0.40 per common share payable March 3, 2015 to holders of record at the close of business on February 11, 2015.

Income Tax Effects Related to Components of Other Comprehensive Income (Loss)

The following table reflects the tax effects allocated to each component of other comprehensive income (loss) for the years ended December 31, 2014, 2013, and 2012 (in millions):

	Before-Tax  Amount			Tax Expense (Benefit)			Net Amount
Year Ended December 31, 2014:
Foreign currency translation adjustment	$	(407	)	$	—		$	(407	)
Pension and other postretirement benefits:
Loss arising during the year related to:
Net actuarial loss	(471		)	(162		)	(309		)
Prior service cost	(1		)	(1		)	—
(Gain) loss reclassified into income related to:
Net actuarial loss	34			12			22
Prior service credit	(40		)	(14		)	(26		)
Curtailment and settlement	3			—			3
Net loss on pension and other postretirement benefits	(475		)	(165		)	(310		)
Derivative instruments designated and qualifying as cash flow hedges:
Net loss arising during the year	(1		)	—			(1		)
Net loss reclassified into income	2			1			1
Net gain on cash flow hedges	1			1			—
Other comprehensive loss	$	(881	)	$	(164	)	$	(717	)

	Before-Tax Amount			Tax Expense (Benefit)			Net Amount
Year Ended December 31, 2013:
Foreign currency translation adjustment	$	(98	)	$	—		$	(98	)
Pension and other postretirement benefits:
Gain arising during the year related to:
Net actuarial gain	367			125			242
Plan amendments	371			130			241
(Gain) loss reclassified into income related to:
Net actuarial loss	57			20			37
Prior service credit	(33		)	(12		)	(21		)
Settlement	1			—			1
Net gain on pension and other postretirement benefits	763			263			500
Derivative instruments designated and qualifying as cash flow hedges:
Net loss arising during the year	(4		)	(2		)	(2		)
Net loss reclassified into income	2			1			1
Net loss on cash flow hedges	(2		)	(1		)	(1		)
Other comprehensive income	$	663		$	262		$	401

Year Ended December 31, 2012:
Foreign currency translation adjustment	$	164		$	—		$	164
Pension and other postretirement benefits:
Loss arising during the year related to:
Net actuarial loss	(228		)	(79		)	(149		)
Prior service cost	(9		)	(3		)	(6		)
(Gain) loss reclassified into income related to:
Net actuarial loss	34			12			22
Prior service credit	(20		)	(7		)	(13		)
Settlement	12			—			12
Net loss on pension and other postretirement benefits	(211		)	(77		)	(134		)
Derivative instruments designated and qualifying as cash flow hedges:
Net gain arising during the year	45			16			29
Net gain reclassified into income	(73		)	(26		)	(47		)
Net loss on cash flow hedges	(28		)	(10		)	(18		)
Other comprehensive income (loss)	$	(75	)	$	(87	)	$	12

Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss) by component, net of tax, were as follows (in millions):

	Foreign Currency Translation Adjustment			Defined Benefit Plan Items			Gains and (Losses) on Cash Flow Hedges			Total
Balance as of December 31, 2011	$	501		$	(424	)	$	19		$	96
Other comprehensive income (loss)	164			(134		)	(18		)	12
Balance as of December 31, 2012	665			(558		)	1			108
Other comprehensive income (loss) before reclassifications	(98		)	483			(2		)	383
Amounts reclassified from accumulated other comprehensive income (loss)	—			17			1			18
Net other comprehensive income (loss)	(98		)	500			(1		)	401
Separation of retail business	(159		)	—			—			(159		)
Balance as of December 31, 2013	408			(58		)	—			350
Other comprehensive loss before reclassifications	(407		)	(309		)	(1		)	(717		)
Amounts reclassified from accumulated other comprehensive income (loss)	—			(1		)	1			—
Net other comprehensive loss	(407		)	(310		)	—			(717		)
Balance as of December 31, 2014	$	1		$	(368	)	$	—		$	(367	)

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							Affected Line Item in the Statement of Income
	Year Ended December 31,
	2014			2013
Amortization of items related to defined benefit pension plans:
Net actuarial loss	$	(34	)	$	(57	)	(a)
Prior service credit	40			33			(a)
Curtailment and settlement	(3		)	(1		)	(a)
	3			(25		)	Total before tax
	(2		)	8			Tax (expense) benefit
	$	1		$	(17	)	Net of tax
Losses on cash flow hedges:
Commodity contracts	$	(2	)	$	(2	)	Cost of sales
	(2		)	(2		)	Total before tax
	1			1			Tax benefit
	$	(1	)	$	(1	)	Net of tax
Total reclassifications for the year	$	—		$	(18	)	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 14. Net periodic benefit cost is reflected in operating expenses and general and administrative expenses.