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    Valero Sees Progress on Tennessee Gasoline Proposal

    Law would require the oil refiner to produce gas without ethanol to supply wholesalers.

    HOUSTON -- Valero Energy Corp. is making headway in its attempt to modify a proposed Tennessee law that would threaten the future of the company's 195,000 barrel per day (bpd) refinery in Memphis, Reuters reported.

    As originally proposed, the law would require Valero to produce gas without ethanol to fuel wholesalers in the state who supply retail fuel stations, according to the report.

    Valero argued unblended gasoline would require the refinery to add between $130 million and $150 million in storage and transfer systems to keep the unblended separate from blended fuels.

    "It looks like those concerns will be alleviated and that will help assure the long-term viability of the refinery," Valero spokesman Bill Day told the news service. "There's no way that refinery could bear that cost."

    Meanwhile, fuel wholesalers have pushed for the bill, which would require them to blend ethanol with the gas, and would allow them to get the tax credit Valero now earns for adding ethanol, according to the report.

    Valero and wholesalers have been negotiating changes in the proposal, but the parties have not disclosed the details of the compromise, the report stated.

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