Operator: The next question is coming from Roger Read of Wells Fargo.
Roger Read: Yes. Maybe to follow up on Mr. Gabelman’s question there. If we think about acquisitions, latest news says CITGO is potentially going to be on the [indiscernible] beginning of next year. So just curious how you think about greater footprint within refining as any kind of a possibility.
Lane Riggs: So Roger, this is Lane. So as you know our history, we were a big consolidator in the industry going back to 2000. That to really our last major acquisition was sort of circa 2013. That’s when our base became somewhat like it looks today. So we understand probably as well as any operator out there would it take to buy something or to merge something and get it on our system and all the costs associated with it. And we always get everything that we think within reason. I mean we always analyze everything and — we haven’t bought anything like I said, since 2013 on any refining assets. You never say never. We look at everything, and we’ll again, like I alluded to on Jason’s question, we’ll run it through our processes and figure out where there anything that makes sense for us or not.
Roger Read: Yes. I’d imagine the data.
Lane Riggs: Clear on that, Roger. They got to compete with everything else, including buyback, right? So.
Roger Read: Right, right. No. I mean the data room is going to have to be interesting at a minimum. Second question I have, it’s unrelated, but kind of a follow-up on some of the things going on the renewable fuel side. We’ve seen a lot of downward moves or we saw a strong downward move, I should say, in the D4, D6 RINs kind of latter part of Q3 and the early part of Q4. It looks like the market is more or less sort of adjusting to that on some of the feedstock and other issues. But I was just curious if you all have any read-throughs on what cause that decline and whether or not this decline sort of reflects current situation? Or is there more downside risk to RINs given the mandate versus production numbers and obviously an increasing volume of renewable diesel coming in ’24 from the industry?
Lane Riggs: Yes. I think as I mentioned before, there’s this kind of constant talk about oncoming production, increased rates, Arthurs [ph] projects that has always said at some point the D4 is going to be under pressure especially since the EPA did not raise the D4 obligation in their last set rule. So I think though, is — and then we combine that with there is this kind of a rush, I think, look like to me kind of a rush to sell RINs in the third quarter with that narrative, combined with that Russian announcement that they were going to ban exports, which kind of quickly evaporated. So there’s, I think, a kind of a more of a temporary view that the D4 [ph] was going to drop even more. And like you’ve observed, it’s kind of recovered and fat prices have also since adjusted.
We could see that biodiesel and veg oil RD is negative now. That’s one of the things we’ve always said is that the lower CI waste oil play was always going to be more advantageous. So even at these lower credit values, we’re still the advantage platform. So as you go into 2024, obviously, obligations already set. It’s hard to tell exactly where that’s going to go. There’s no doubt that R&D will continue to grow. We do see that for us, you’re going to see R&D continue to grow, as we talked before, Canada is a big outlet, which takes a lot of this RIN exposure away and then you also obviously have the SAP project come on, where we’ll diversify into a different market. And so — and then and if for some reason, SAP doesn’t work, that product also meets Arctic diesel grades that again, go to Nordic countries and Canada.
So there’s no doubt that there’s going to be a continued pressure on the RINs for both the D4 and D6 but our strategy has always been — there’s other markets that you can minimize the impact of that. And then with our platform, we’re still the most advantaged from a cost and CI standpoint.
Roger Read: I appreciate that coastal advantage as always.
Operator: Our last question for today is coming from Matthew Blair of Tudor, Pickering, Holt.
Matthew Blair: Circling back to the R&D margins in Q3, are you able to quantify the impact from DGD to fire on the reported $0.65 gallon EBITDA margin?
Lane Riggs: No, we usually don’t give that kind of detail. I would say it wasn’t large, just [indiscernible] at that.
Matthew Blair: Sounds good. And then on the refining side, could you talk about your product exports in Q3 and so far into Q4? And do you expect any negative impact from this announcement from Mexico a couple of days that you’re looking to restrict refined product imports into the country?
Gary Simmons: Yes, I’ll take the first part of it and then let Rich Walsh handle the second part. Yes, our exports, if you look at the exports in the third quarter, we did 389,000 barrels a day, 281 a distillate, 108 of gasoline. Based on second quarter, the volumes are up based on historic numbers, they trended up as well to our typical export locations. Most of the line went to Latin America, about 70% of the diesel in Latin America and about 30% to Europe. And those are remaining at those levels as we move into the fourth quarter.
Richard Walsh: This is Rich. I’ll just answer the second half of it. On this decree an issue, it’s actually rightly aimed at import smuggling that’s going on. So you have individuals that are trying to bring product gasoline diesel into Mexico, but describing it as something that has a lower tariff like a tariff, something like that and importing it in. And that’s resulting in them getting a lower tariff. So this decree is really focused in on that. For Valero, we’re properly importing all of our gasoline and products, and we’re paying the full and proper tariff for it. So — and then also all of our fuel comes out of our own system, and it’s all high-quality meet suspect [ph]. So we have a lot of interaction with the Mexican authorities. They’re aware of the legitimacy of our operation. And so we don’t expect this initiative to be an issue for us.
Operator: Thank you. At this time, I’d like to turn the floor back over to Mr. Bhullar for closing comments.
Homer Bhullar: Thanks, Donna. I appreciate everyone joining us today. And as always, if you have any further questions, please feel free to contact the IR team on the call. Thanks again, and everyone have a great day.
Operator: Ladies and gentlemen, thank you for your participation. This concludes today’s event. You may disconnect your lines or log off the webcast at this time, and enjoy the rest of your day.
