Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Evan Calio - Morgan Stanley.
Evan Calio - Morgan Stanley
I had a question. I know in January California transitions under the low carbon fuel standard to a higher ethanol blend at 10%, I just had two questions for you guys. Number one, if you are on track for January compliance in terms of blending infrastructure investment etcetera.
Secondly, given current market conditions pricing and sending discretionary blending, I mean how do you estimate the current blend maybe in your system or overall in California. Meaning, I’m sure we are currently at some point between that 5, 7 and 10% today currently. Then I will follow up.
Chuck Flag
This is Chuck Flag. We are very definitely on track to begin to producing CARB 4 on the first of the year, and to the second part of your question if I understand it right,. we are going to be going up by about 4% ethanol in our blends which has the BTU equivalent of about little under 3% increase in production.
Evan Calio - Morgan Stanley
Right. But I mean there is incentivize to discretionary blend now, is that correct?
Chuck Flag
Earlier in the year there was an incentive to blend ethanol to gasoline, but right now there is not.
Evan Calio - Morgan Stanley
Okay. My second question, maybe if you could just walk us through a little bit more your decision to return with a modest discretionary spent in 2010. I mean is this marginally more bullish view take some of your cash cushion and reinvest it into the business, at the same time cracks on the screen, as well as your 4Q guidance looked challenging, if you can discuss what led to that time to reinvest decision Bruce.
Bruce Smith
I think first of all, I was reading my script just in case I misspoke. Scott says I said $275 million of capital, I should have said $675 million of capital, so just to make sure everybody has got the right number, we’ll eliminate question. I can’t get the spending down to $275 million although that would be a nice number, and particularly with $50 million of quick added capital.
I think that these projects have, and hopefully this will answer anybody’s question about this. But these projects have been under review for the better part beginning in mid part of 2008, we’ve been developing the concepts around this.
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