Mike Jennings: Yes. So I’d tell you that we’re older and wiser and — but for some operational issues, we’ve learned a lot. And I think we are more optimistic about what we see in the marketplace in respect of ability to place this product outside of California profitably, okay? So there are many other markets that we’ve become involved with. And certainly, with the current low LCFS price, that just opens the doors to placing these barrels otherwise. So much more opportunity to place the barrels than we initially understood. Beyond that, on the feedstock side, I think we found that maybe being a little more conservative relative to volumes and picking up the remainder in the spot market is probably the right strategy for us, given operational issues.
We really worn the scars of pushing forward excess inventory into further periods in a backward market structure. And that’s a big piece of cost in terms of our profitability. So probably a little different strategy on that front. With respect to the more strategic of what feedstocks are right for our plants, the PTU is operating like a gem. The yields coming off of that unit are higher than we anticipated and the reliability is good. The downstream units, I can’t say the same about, but we’ll fix that. But the PTU is great. And the ability to put new and lower CI feeds in is going to be strategically something that’s really important to us. We’re working on a venture at present that we can’t disclose, but really it’s a bit of a game changer if we can get it done, but it’s heavily dependent on having the PTU.
So I’d say, overall, well, diesel prices have softened recently, and that gets into the profitability. The overall market structure in terms of the ag oils has come down as well and the RIN price kind of bridges that gap. So we feel like the margin structure, if you will, or the market structure is there for us. The optimization will happen through improved operations, greater hydrogen availability and new or second-generation feedstocks.
Operator: Your next question comes from the line of Doug Leggate from Bank of America.
Doug Leggate : You caught me make coffee there, I apologize. Mike, I guess we only just got a short time to see each other recently, and you’re taking off again. So congratulations to both of you guys. Tim, looking forward to seeing what you’re going to do here. And that really is my kind of first question, if I may. Just at a high level, what should we expect as we look forward, continuity of strategy or something different? And I guess there’s maybe a part A and a part B to this, then that will be my 2 questions. The part A is, Mike, you — it seems to me you were never really bought in to the lubricants as a part of — at least a vertically integrated part of the portfolio, it seems. How does this position in the company going forward could be looking at potential monetization?
That’s number one. And number two is — and this is kind of a tough one, I guess, but the legacy reliability of the stand-alone HollyFrontier business was always the Achilles heel in the portfolio relative, let’s say, to your peers. And it now seems the same thing as kind of happening when you acquired Sinclair assets. What assurances can you give the market that those reliabilities are somewhat not structurally endemic to the portfolio or to the business that you can actually work on these going forward? And I’ll leave it there.
