Marathon Petroleum Corporation: 10-K Risk Factor Changes

Approximately 3,800 of our employees are covered by collective bargaining agreements with expiration dates ranging from 2027 to 2031. Approximately 700 of those hourly represented employees in California are covered by collective bargaining agreements that were set to expire on January 31, 2026. The parties agreed to continue those agreements beyond expiration, subject to a 24-hour termination notice by either party, while successor agreements are negotiated and ratified. These agreements may be renewed at an increased cost to us. In addition, we have experienced in the past, and may experience in the future, work stoppages as a result of labor disagreements. Any prolonged work stoppages disrupting operations could have a material adverse effect on our business, financial condition, results of operations and cash flows. In addition, some states in which we operate require refinery owners to pay prevailing wages to contract craft workers and restrict refiners’ ability to hire qualified employees to a limited pool of applicants. Legislation or changes in regulations could result in labor shortages, higher labor costs, and an increased risk that contract workers become joint employees, which could trigger bargaining issues, and wage and benefit consequences, especially during critical maintenance and construction periods.

Approximately 3,800 of our employees are covered by collective bargaining agreements with expiration dates ranging from 2026 to 2031. These agreements may be renewed at an increased cost to us. In addition, we have experienced in the past, and may experience in the future, work stoppages as a result of labor disagreements. Any prolonged work stoppages disrupting operations could have a material adverse effect on our business, financial condition, results of operations and cash flows. In addition, some states in which we operate require refinery owners to pay prevailing wages to contract craft workers and restrict refiners’ ability to hire qualified employees to a limited pool of applicants. Legislation or changes in regulations could result in labor shortages, higher labor costs, and an increased risk that contract workers become joint employees, which could trigger bargaining issues, and wage and benefit consequences, especially during critical maintenance and construction periods.

We expect to continue to incur substantial capital expenditures and operating costs to meet the requirements of evolving environmental and other laws or regulations. Changes to the federal government’s policies and operations could lead to increased regulatory uncertainty and volatility and increased state regulation, which may impact our business, financial condition and results of operations. Our business is subject to numerous environmental laws and regulations at the federal, state and local level. These laws and regulations continue to increase in both number and complexity and affect our business. Laws and regulations expected to become more stringent relate to the following: •the emission or discharge of materials into the environment; •solid and hazardous waste management; •the regulatory classification of materials currently or formerly used in our business; •pollution prevention; •climate change and GHG emissions; •characteristics and composition of transportation fuels, including the blending of renewable fuels into transportation fuels; •the production, importation, use, and disposal of specific chemicals; •public and employee safety and health; •permitting; •inherently safer technology; and 24 24 24 Table of Contents Table of Contents •facility security. The specific impact of laws and regulations on us and our competitors may vary depending on a number of factors, including the age and location of operating facilities, marketing areas, crude oil and feedstock sources, production processes and subsequent judicial interpretation of such laws and regulations. We have incurred and will continue to incur substantial capital, operating and maintenance, and remediation expenditures to modify operations, install pollution control equipment, perform site cleanups or curtail operations. We have incurred and may in the future incur liability for personal injury, property damage, natural resource damage or clean-up costs due to alleged contamination and/or exposure to chemicals such as benzene and methyl tert-butyl ether (“MTBE”). There is also increased regulatory interest in PFAS, which we expect will lead to increased monitoring and remediation obligations and potential liability related thereto. Such expenditures could materially and adversely affect our business, financial condition, results of operations and cash flows. In 2025, the U.S. presidential administration announced wide-ranging policy changes and issued numerous executive actions. The U.S. EPA and other federal agencies began proposing and promulgating regulations consistent with the administration’s policy changes. If the federal government relaxes or revokes certain environmental regulations, states may pass laws that vary in stringency and scope by state, creating a patchwork of regulation. For example, various states have passed laws regulating the use of materials containing PFAS and setting action levels for the remediation of certain PFAS. We cannot predict the extent to which states will pass such legislation, or the ultimate effect these state laws will have on our business, financial condition and results of operations.

Our business is subject to numerous environmental laws and regulations. These laws and regulations continue to increase in both number and complexity and affect our business. Laws and regulations expected to become more stringent relate to the following: •the emission or discharge of materials into the environment; •solid and hazardous waste management; 24 24 24 Table of Contents Table of Contents •the regulatory classification of materials currently or formerly used in our business; •pollution prevention; •climate change and GHG emissions; •characteristics and composition of transportation fuels, including the quantity of renewable fuels that must be blended into transportation fuels; •the production, importation, use, and disposal of specific chemicals; •public and employee safety and health; •permitting; •inherently safer technology; and •facility security. The specific impact of laws and regulations on us and our competitors may vary depending on a number of factors, including the age and location of operating facilities, marketing areas, crude oil and feedstock sources, production processes and subsequent judicial interpretation of such laws and regulations. We have incurred and will continue to incur substantial capital, operating and maintenance, and remediation expenditures to modify operations, install pollution control equipment, perform site cleanups or curtail operations. We have incurred and may in the future incur liability for personal injury, property damage, natural resource damage or clean-up costs due to alleged contamination and/or exposure to chemicals such as benzene and methyl tert-butyl ether (“MTBE”). There is also increased regulatory interest in PFAS, which we expect will lead to increased monitoring and remediation obligations and potential liability related thereto. Such expenditures could materially and adversely affect our business, financial condition, results of operations and cash flows. In early 2025, the new U.S. presidential administration announced wide-ranging policy changes and issued numerous executive actions on topics including international trade, energy resources, corporate taxes, global climate change initiatives, employment practices, corporate compliance programs, environmental regulations, as well as other matters. Further, the new presidential administration has indicated an intent to make structural changes to the executive branch of the federal government, including significant reductions in the federal workforce. Continuing legal challenges to many of the policy changes and executive actions are expected. Such actions may directly or indirectly impact our industry and could lead to increased regulatory uncertainty and volatility. We cannot predict how these policy changes and executive actions will be implemented and interpreted, or the ultimate effect they will have on our business, financial condition and results of operations.

Our operating results, cash flows, future rate of growth, the carrying value of our assets and our ability to execute share repurchases and pay our dividend at intended levels are highly dependent on the margins we realize on our refined products. Historically, refined product margins have been volatile, and we believe they will continue to be volatile. Our margins from the sale of refined products are influenced by a number of conditions, including the price of crude oil and other feedstocks. The prices of feedstocks and the prices at which we can sell our refined products fluctuate independently due to a variety of regional and global market factors that are beyond our control, including: •global and regional inventory levels and availability of and demand for feedstocks and refined products; •transportation infrastructure cost and availability; •temporary and permanent closures, utilization levels and capacities of other refineries in our markets and globally; •global and regional development by competitors of new refining or renewable conversion capacity; •natural gas and electricity availability and supply costs; •global and domestic political instability, threatened or actual terrorist incidents, armed conflict, economic activity and growth levels or lack thereof or other global political or economic conditions; •tariffs on goods, including crude oil and other feedstocks, imported into the United States; •local weather conditions; and •the occurrence of other risks described herein. Some of these factors can vary by region and may change quickly, adding to market volatility, while others may have longer-term effects. The longer-term effects of these and other factors on refined product margins are uncertain. We generally purchase our feedstocks weeks before we refine them and sell the refined products. Price level changes during the period between purchasing feedstocks and selling the refined products from these feedstocks can have a significant effect on our financial results. We also purchase refined products manufactured by others for resale to our customers. Price changes during the periods between purchasing and reselling those refined products can have a material and adverse effect on our business, financial condition, results of operations and cash flows. Lower refined product margins, including renewable diesel margins have in the past, and may in the future, lead us to reduce the amount of refined products we produce, which may reduce our revenues, income from operations and cash flows. Significant reductions in refined product margins could require us to reduce our capital expenditures, impair the carrying value of our assets (such as property, plant and equipment, inventory or goodwill), and require us to re-evaluate our capital allocation priorities, including our share repurchase activity, capital spending and dividends.

Our operating results, cash flows, future rate of growth, the carrying value of our assets and our ability to execute share repurchases and continue the payment of our base dividend are highly dependent on the margins we realize on our refined products. Historically, refining and marketing margins have been volatile, and we believe they will continue to be volatile. Our margins from the sale of gasoline and other refined products are influenced by a number of conditions, including the price of crude oil and other feedstocks. The prices of feedstocks and the prices at which we can sell our refined products fluctuate independently due to a variety of regional and global market factors that are beyond our control, including: •worldwide and domestic supplies of and demand for feedstocks and refined products; •transportation infrastructure cost and availability; •operation levels of other refineries in our markets; •the development by competitors of new refining or renewable conversion capacity; •natural gas and electricity supply costs; •political instability, threatened or actual terrorist incidents, armed conflict or other global political or economic conditions; •tariffs on goods, including crude oil and other feedstocks, imported into the United States; •local weather conditions; and •the occurrence of other risks described herein. Some of these factors can vary by region and may change quickly, adding to market volatility, while others may have longer-term effects. The longer-term effects of these and other factors on refining and marketing margins are uncertain. We generally purchase our feedstocks weeks before we refine them and sell the refined products. Price level changes during the period between purchasing feedstocks and selling the refined products from these feedstocks can have a significant effect on our financial results. We also purchase refined products manufactured by others for resale to our customers. Price changes during the periods between purchasing and reselling those refined products can have a material and adverse effect on our business, financial condition, results of operations and cash flows. In early 2025, the new U.S. presidential administration announced broad-based tariffs on goods imported from certain countries where we purchase feedstocks, including a ten percent tariff on energy resources such as crude oil, natural gas and NGLs imported from Canada. Some of these tariffs have been stayed for brief periods of at least 30 days. If the provisions of those tariffs are maintained as proposed, we would expect added market volatility, with the longer term impacts to our refining and marketing margin uncertain. In addition, retaliatory tariffs imposed by other countries or other potential government actions, would likely result in further adverse impacts. Lower refining and marketing margins have in the past, and may in the future, lead us to reduce the amount of refined products we produce, which may reduce our revenues, income from operations and cash flows. Significant reductions in refining and marketing margins could require us to reduce our capital expenditures, impair the carrying value of our assets (such as property, plant and equipment, inventory or goodwill), and require us to re-evaluate practices regarding our repurchase activity and dividends.

Our revolving credit facility has a variable interest rate. As a result, future interest rates on our debt could be higher than current levels, causing our financing costs to increase accordingly. In addition, we may in the future refinance outstanding borrowings under our revolving credit facility with fixed-rate indebtedness. Interest rates payable on fixed-rate indebtedness typically are higher than the short-term variable interest rates that we pay on borrowings under our revolving credit facility. We also have other fixed-rate indebtedness that we may need or desire to refinance in the future at or prior to the applicable stated maturity. A prolonged rising interest rate environment could have an adverse impact on our ability to issue equity, refinance existing debt or incur additional debt for acquisitions or other purposes on desirable terms, if at all. Accordingly, increases in interest rates could have a material adverse effect on our financial position, results of operations, cash flows and our ability to pay dividends at our intended levels.

Our revolving credit facility has a variable interest rate. As a result, future interest rates on our debt could be higher than current levels, causing our financing costs to increase accordingly. In addition, we may in the future refinance outstanding borrowings under our revolving credit facility with fixed-rate indebtedness. Interest rates payable on fixed-rate indebtedness typically are higher than the short-term variable interest rates that we pay on borrowings under our revolving credit facility. We also have other fixed-rate indebtedness that we may need or desire to refinance in the future at or prior to the applicable stated maturity. A rising interest rate environment could have an adverse impact on our share price and our ability to issue equity or incur debt for acquisitions or other purposes and to make dividends at our intended levels.

Significant acquisitions, including the Northwind Midstream Acquisition and the BANGL Acquisition, involving the addition of new assets or businesses will present risks, which may include, among others: •inaccurate assumptions about future synergies, revenues, capital expenditures and operating costs; •an inability to successfully integrate, or a delay in the successful integration of, assets or businesses we acquire; •a decrease in our liquidity resulting from using a portion of our available cash or borrowing capacity under our revolving credit agreement to finance transactions; •a significant increase in our interest expense or financial leverage if we incur additional debt to finance transactions; •the assumption of unknown environmental and other liabilities, losses or costs for which we are not indemnified or for which our indemnity is inadequate; •the diversion of management’s attention from other business concerns; •the loss of customers or key employees from the acquired business; and •the incurrence of other significant charges, such as impairment of goodwill or other intangible assets, asset devaluation or restructuring charges.

Future transactions involving the addition of new assets or businesses will present risks, which may include, among others: •inaccurate assumptions about future synergies, revenues, capital expenditures and operating costs; •an inability to successfully integrate, or a delay in the successful integration of, assets or businesses we acquire; •a decrease in our liquidity resulting from using a portion of our available cash or borrowing capacity under our revolving credit agreement to finance transactions; •a significant increase in our interest expense or financial leverage if we incur additional debt to finance transactions; •the assumption of unknown environmental and other liabilities, losses or costs for which we are not indemnified or for which our indemnity is inadequate; •the diversion of management’s attention from other business concerns; •the loss of customers or key employees from the acquired business; and •the incurrence of other significant charges, such as impairment of goodwill or other intangible assets, asset devaluation or restructuring charges.

Developments aimed at reducing vehicle emissions, increasing vehicle efficiency or reducing the sale of new internal combustion engine vehicles may decrease the demand and may increase the cost for our liquid transportation fuels. Government mandates or incentives, industry and technological developments and consumer sentiment with respect to liquid transportation fuels may alter fuels or energy preferences or make alternative fuel vehicles more desirable and result in greater market penetration of such vehicles or otherwise decrease demand for our liquid transportation fuels. For example, the federal government through NHTSA and the EPA promulgate rules that require vehicle manufacturers to increase the fuel efficiency standards of liquid transportation fuels vehicles. The EPA has finalized a rule that reduces its current vehicle standards by eliminating regulation of GHG emissions. The new, reduced standards have been challenged in court. In addition, California and several states have adopted regulations that require increased sales of electric vehicles. California, in particular, has passed several regulations mandating electric vehicles. These regulations include Advanced Clean Cars (“ACC”) I, ACC II, and Advanced Clean Trucks. The ACC II and Advanced Clean Trucks regulations are currently not enforceable in absence of federal waivers, but California filed litigation to reinstate the waivers. Moreover, consumer acceptance and market penetration of electric, hybrid and alternative fuel vehicles continues to increase. In 2021, several automobile manufacturers jointly announced their shared goal that 40-50 percent of their new vehicle sales be battery electric, fuel cell or plug-in hybrid vehicles by 2030. Other automobile manufacturers have similar, or more aggressive, goals with respect to vehicle electrification. Technological breakthroughs relating to renewable fuels or other fuel alternatives 18 18 18 Table of Contents Table of Contents such as hydrogen or ammonia, or efficiency improvements for internal combustion engines could reduce demand for liquid transportation fuels. Together, these developments have had and are expected to continue to have an adverse effect on sales of our liquid transportation fuels, which in turn could have a material and adverse effect on our business, financial condition, results of operations and cash flows.

Developments aimed at reducing vehicle emissions, increasing vehicle efficiency or reducing the sale of new internal combustion engine vehicles may decrease the demand and may increase the cost for our transportation fuels. EPA and NHTSA have promulgated separate rules setting more stringent requirements for vehicles. NHTSA’s current CAFE standards increase in stringency from model year 2023 levels by eight percent annually for model years 2024-2025 and ten percent annually for model year 2026. EPA’s model year 2023-2026 CO2 emission standards result in average fuel economy of 40 mpg in model year 2026. In addition, NHTSA and EPA finalized new rules setting even more stringent requirements for model years 2027-2032. NHTSA’s standards would require an increase in fuel efficiency of two percent annually. EPA’s standards would require a significant increase in electric vehicle production to meet the standards. In addition, California and several states have adopted regulations that require increased sales of electric vehicles. California, in particular, has passed several regulations mandating electric vehicles. These regulations include Advanced Clean Cars (“ACC”) 18 18 18 Table of Contents Table of Contents I, ACC II, and Advanced Clean Trucks. California has received Clean Air Act waivers from U.S. EPA to implement these programs. Moreover, consumer acceptance and market penetration of electric, hybrid and alternative fuel vehicles continues to increase. In 2021, several automobile manufacturers jointly announced their shared goal that 40-50 percent of their new vehicle sales be battery electric, fuel cell or plug-in hybrid vehicles by 2030. Other automobile manufacturers have similar, or more aggressive, goals with respect to vehicle electrification. Technological breakthroughs relating to renewable fuels or other fuel alternatives such as hydrogen or ammonia, or efficiency improvements for internal combustion engines could reduce demand for liquid transportation fuels. Together, these trends and developments have had and are expected to continue to have an adverse effect on sales of our liquid transportation fuels, which in turn could have a material and adverse effect on our business, financial condition, results of operations and cash flows.