Lane Riggs: Yes. The ethanol obviously has had a good year this year with lower corn prices and low natural gas prices. So the ethanol margins have been, I would say, higher than what we would call a mid-cycle but it’s not really exceptionally higher than mid-cycle. It’s actually been fairly strong. But I would say, looking back historically, ethanol is always kind of a steady drumbeat business. We do see that the biggest opportunity here is still this low-carbon opportunity and some of the growth in other markets in the world. Again, we are 30% of the export capability of ethanol for the U.S. And so we see this interest in the world, lowering its carbon footprint by increasing its ethanol blending. So Canada, has become an E10 country almost overnight.
There’s talk about that going to E15 next year. We’re seeing other countries that are starting to look at incremental ethanol blending. And then there’s a lot of interest in ethanol as a feedstock into chemicals and solvents and paints. And so I think we still see a lot of good opportunities for ethanol globally that I think will keep us in a very strong margin environment. And then obviously, I mean, so much of that depends on weather, ultimately. I mean, obviously, no one can control that. But the U.S. is a big ag country. We have a lot of capability to grow a lot of corn. And so as long as that holds up, then I think ethanol has got a good outlook.
Operator: The next question is coming from Paul Cheng of Scotiabank.
Paul Cheng: Two, hopefully, the quick question. First, maybe either is for Lane or Gary. Look like at branding economic why now is really good. With the wind — if we’re looking at your system, what is the incremental percentage of the gasoline supply will increase as a result of those branding for you versus less quarter third quarter the level over the fourth quarter last year, whatever is the comparison you want to use? And secondly, that I want to see what is — if you can you give us any color that how’s the turnaround cycle look like for you next year and whether that compared to this year, going to be about the same, lighter, heavier also? And also that whether you think the industry is going to have a normal cycle next year after the catch up this year or that the catch-up is going to continue into next year?
Gary Simmons: So if I understand correctly, the first was how much really does the gasoline pool well as you go to higher RVP gasoline. Is that what you were asking, Paul?
Paul Cheng: Yes. I mean that every year that when we go to the wind grade, obviously, you see more branding, but that with the economics of light is actually very active for the branding. And I assume that given the winter grade, it will also allow you to have more flexibility than your brand the strict late into the system and it looks like it’s very economic also.
Greg Bram: Yes, Paul, this is Greg. So you’re right. You definitely increase the amount of primarily butane that you blend into the gasoline. It ranges depending on which region ring and the change in specs, it’s in the 5% to 10% range. And then you’re right that to the extent that butane has a higher octane than the pool, it does allow you to put more of the lower octane component into the blend [indiscernible] one of those right now that looks pretty attractive.
Paul Cheng: Sorry. Please go ahead.
Lane Riggs: No, I was just going to answer you — I think it was your same question around turnarounds. We sort of have a policy for a while that we don’t give any real outlook on our turnaround or the industry turnaround behavior. So.
Paul Cheng: And if I can just go back into the earlier question about — great answer. Any kind of, say, because that when it is more economic, it tends to brand more, but on the other hand, gasoline is not great right now. So I’m trying to understand that how the 2 years going to be impacting in your thinking or your accident here.
Lane Riggs: I think — if I understand, Paul, back to winter blending. Obviously, [indiscernible], butane is relatively cheap. And we always look at economic signals to try to determine how much gasoline are produced and that compares to sort of the reformulated grade, they might require less butane. And then there are specs that you hit, I mean you would think you would get near 10% in butane in full, but a lot of times we hit other specifications and the finished gasoline besides RVP. And so I mean, it’s a fair.
Operator: The next question is coming from Jason Gabelman of TD Cowen.
Jason Gabelman: I wanted to first go back to uses of cash or returns of cash, I should say. And I know Valero has a 40% to 50% payout ratio. It seems like you’re returning a majority of the excess cash post dividends via buyback, maybe 2/3 of that excess cash. Is that kind of how we should think about return of cash moving forward essentially all of the excess cash or the majority of it beyond what you pay out in the dividend is going to be going towards the buyback for the foreseeable future. And I think some color around that could help the market bring some of that potential future buyback value forward? And I have a follow-up.
Lane Riggs: Jason, this is Lane. Look — directionally correct, but we still have to — some of our cash obviously goes to sustaining our asset. So that’s something that we’re committed to. So we want to make sure that we’re, a, that we are — we had the earnings potential, our assets stay in a posture that we can always generate the right earnings with the market conditions and second, we maintain the dividend. And then we do believe we still have this sort of $0.5 billion to $1 billion of strategic capital in all that’s done, all the excess cash will go to buybacks.
Jason Gabelman: All right, great. And my second one is kind of on the strategic growth outlook. We’ve seen some of your larger peers use equity to buy up comped recently? And if I think about some of the potential areas you could expand into like chems, like low carbon fuels, those valuations have come down relative to where Valero trades. I don’t know Valero doesn’t typically use the equity to acquire other companies. But given what’s going on with Navigator Pipeline and looking at your potential future growth opportunities, are you taking a closer look at strategic M&A and using equity given your stock and refiners in general have held up pretty well relative to other potential step-out opportunities?
Lane Riggs: This is Lane again. I would say that we look at all these opportunities and all the business lines that I alluded earlier. And we have an entire group, our innovation group that’s constantly looking at how can we bolt on and leverage our existing footprint, which, obviously, we have a big footprint in ethanol, we have a pretty big footprint renewable diesel. And we’re also looking at everything else. Everything is on the table. We’re always looking at it, but we are also very careful in terms of how we talk about it and how we’re going to announce things. In terms of how we finance it, it’s just a matter of when we — as the world evolves, we’ll come up with the best way that we think to finance something. But obviously, all these things have to go through sort of our investment gated process.
