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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.     )

      Payment of Filing Fee (Check the appropriate box):

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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

The Board of Directors has determined that a Special Meeting of Stockholders of Valero Energy Corporation will be held on Monday, September 13, 2004 at 10:00 a.m., Central Time, at Valero’s offices located at One Valero Way, San Antonio, Texas 78249 (near the southwest corner of the intersection of I.H. 10 and Loop 1604 West), for the following purposes:

Stockholders of Valero also may be asked to vote upon a proposal to adjourn or postpone the Special Meeting. Valero could use any adjournment or postponement of the Special Meeting for the purpose, among others, of allowing additional time for soliciting additional votes to approve the amendment of Valero’s Restated Certificate of Incorporation.

Valero Energy Corporation

One Valero Way

July 29, 2004

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VALERO ENERGY CORPORATION

SPECIAL MEETING OF STOCKHOLDERS

September 13, 2004

This Proxy Statement is being mailed to stockholders beginning on or about August 2, 2004 in connection with the solicitation of proxies by the Board of Directors of Valero Energy Corporation to be voted at the Special Meeting of Stockholders of Valero on September 13, 2004 and any adjournments or postponements thereof. The accompanying notice describes the time, place and purposes of the Special Meeting.

Holders of record of Valero’s Common Stock, par value $0.01 per share, at the close of business on July 27, 2004 are entitled to vote on the matters presented at the Special Meeting and any adjournments or postponements thereof. On the record date, 127,836,732 shares of Common Stock were issued and outstanding, and entitled to one vote per share.

Holders of record of Valero’s 2% Mandatory Convertible Preferred Stock (liquidation preference $25 per share) at the close of business on July 27, 2004 are entitled to vote on the matters presented at the Special Meeting and any adjournments or postponements thereof. On the record date, 10,000,000 shares of Preferred Stock were issued and outstanding, and entitled to 0.4955 of one vote per share.

Action may be taken at the Special Meeting on September 13, 2004 or on any date or dates to which the meeting may be adjourned or postponed. Holders of shares of Common Stock and Preferred Stock representing a majority of the voting power, present in person or represented by properly executed proxy, shall constitute a quorum. Stockholders may vote either by attending the meeting or by proxy. Even if you plan to attend the meeting, please sign, date and return the enclosed proxy card or submit your proxy using the Internet or telephone procedures described on the proxy card. If instructions to the contrary are not given, shares will be voted as indicated on the proxy card. A stockholder may revoke a proxy at any time before it is voted by submitting a written revocation to Valero, returning a subsequently dated proxy to Valero or by voting in person at the Special Meeting.

IF YOU MAKE NO SPECIFICATION ON YOUR PROXY, YOUR PROXY WILL BE VOTED IN FAVOR OF THE APPROVAL OF THE AMENDMENT TO VALERO’S RESTATED CERTIFICATE OF INCORPORATION.

Stockholders of Valero also may be asked to vote upon a proposal to adjourn or postpone the Special Meeting. Valero could use any adjournment or postponement of the Special Meeting for the purpose, among others, of allowing additional time for soliciting additional votes to approve the amendment of Valero’s Restated Certificate of Incorporation. No proxy that is voted against approval of the amendment to Valero’s Restated Certificate of Incorporation will be voted in favor of any adjournment or postponement of the Special Meeting for the purpose of soliciting additional proxies for such approval.

Brokers holding shares must vote according to specific instructions they receive from the beneficial owners. If specific instructions are not received, brokers may generally vote these shares in their discretion. However, the New York Stock Exchange precludes brokers from exercising voting discretion on certain proposals without specific instructions from the beneficial owner. This results in a “broker non-vote” on such a proposal. A broker non-vote is treated as “present” for purposes of determining the existence of a quorum, has the effect of a negative vote when a majority of the voting power of the issued and outstanding shares is required for approval of a particular proposal and has no effect when a majority of the voting power of the shares present in person or by proxy and entitled to vote or a plurality or majority of the votes cast is required for approval. Pursuant to the rules of the New York Stock Exchange, brokers will have discretion to vote on the item scheduled to be presented at the Special Meeting.

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Valero pays for the cost of soliciting proxies and the Special Meeting. In addition to the solicitation of proxies by mail, proxies may be solicited by personal interview, telephone and similar means by directors, officers or employees of Valero, none of whom will be specially compensated for such activities. Valero also intends to request that brokers, banks and other nominees solicit proxies from their principals and will pay such brokers, banks and other nominees certain expenses incurred by them for such activities. Valero has retained Georgeson Shareholder Communications, Inc., a proxy soliciting firm, to assist in the solicitation of proxies, for an estimated fee of $12,500, plus reimbursement of certain out-of-pocket expenses.

Participants in Valero Benefit Plans please note:

In the case of participants in Valero’s thrift plan, the proxy card will represent (in addition to any shares held individually of record) the number of shares allocated to the participant’s accounts under the thrift plan. For those shares held under the plan, the proxy card will constitute an instruction to the Trustee of the plan as to how those shares are to be voted. Shares for which instructions are not received may be voted by the Trustee in accordance with the terms of the plan.

PROPOSED AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION

Valero’s Restated Certificate of Incorporation currently authorizes the issuance of a total of 320,000,000 shares of stock, consisting of 300,000,000 shares of Common Stock, par value $0.01 per share, and 20,000,000 shares of Preferred Stock, par value $0.01 per share. The proposed amendment would increase the total number of authorized shares of Common Stock from 300,000,000 to 600,000,000 shares and is being proposed for approval at the Special Meeting.

The full text of the proposed amendment is set forth in Appendix A to this Proxy Statement. The newly authorized shares of Common Stock will constitute additional shares of the existing class of Common Stock and, if and when issued, will have the same rights and privileges as the shares of Common Stock currently authorized. The number of authorized shares of Preferred Stock would not be affected.

Reasons for the Proposed Amendment

On July 15, 2004, Valero’s Board of Directors voted to recommend to the stockholders that the number of authorized shares of the Common Stock of Valero be increased from 300,000,000 shares to 600,000,000 shares. At that meeting, the Board of Directors conditionally approved a two-for-one stock split to be effected in the form of a stock dividend of one share of Common Stock for each share of Common Stock outstanding on September 23, 2004, the proposed record date for the stock split. The stock split is conditioned upon approval by the stockholders of the proposed amendment.

As of July 27, 2004, 127,836,732 shares were issued and outstanding and 2,757,575 shares have been issued and are held as treasury shares. Additionally, approximately 23.5 million shares were reserved for issuance pursuant to stock option, incentive and director and employee benefit plans and upon conversion of Valero’s 2% Mandatory Convertible Preferred Stock, leaving only approximately 145.9 million authorized and unreserved shares of Common Stock available for future use. The current number of authorized and unreserved shares of Common Stock is insufficient to effect the stock split.

The proposed amendment will permit the Board of Directors to issue the additional shares to accommodate the stock split and afford the Board of Directors continued flexibility to issue Common Stock for valid corporate purposes, including acquisitions, financings and incentive compensation.

A stockholder vote against the proposed increase in the number of authorized shares of Valero Common Stock will have the effect of preventing the stock split.

Purpose of the Stock Split

The currently proposed stock split is intended to place the market price of Valero’s Common Stock in a range more attractive to investors, particularly individuals. The closing price of Valero’s Common Stock on the New York Stock Exchange on July 29, 2004 was $75.12, and trading prices in the month of June 2004 ranged from

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Stock Split Implementation

If the proposed amendment is approved, holders of record of Common Stock as of the close of business on the stock split record date will receive, as a stock dividend, one additional share of Common Stock for each share of Common Stock owned as of that date. In addition, immediately after the stock split record date, the conversion provisions of the shares of Valero’s 2% Mandatory Convertible Preferred Stock will be adjusted to reflect the stock split. The stockholders of Valero as of the stock split record date will not pay, and Valero will not receive, any payment or other consideration for the additional shares that will be issued or the adjustments that will be made pursuant to the stock split. A stockholder’s equity interest in Valero will not increase as a result of the stock split; however, any sale of the shares received as a result of the stock split by a stockholder will reduce such stockholder’s proportional equity in Valero.

Valero will apply to the New York Stock Exchange for listing of the additional shares of Common Stock to be issued if the proposed amendment is approved. If the proposed amendment is approved, all holders of record of Common Stock at 5:00 p.m., Central Time, on the proposed record date for the split, September 23, 2004, will receive one additional share for each share that they own of record on that date.

Holders of Common Stock should retain their Common Stock certificates issued prior to the stock split record date, and those certificates issued prior to that date will continue to represent the number of shares of Common Stock evidenced thereby. Computershare Investor Services, LLC, Valero’s transfer agent, will deliver the additional shares of Common Stock each holder of Common Stock is entitled to as a result of the stock split registered in uncertificated book-entry form (unless a holder of Common Stock requests a certificate representing such holder’s shares of Common Stock). As a result, instead of receiving Common Stock certificates, holders of Common Stock will receive account statements reflecting their ownership interest in shares of Common Stock. The book-entry shares will be held with Computershare Investor Services, which will serve as the record keeper for all shares of Common Stock being issued in connection with the stock split. Any stockholder who wants to receive a physical certificate evidencing shares of Common Stock issued in the stock split will be able to obtain a certificate at no charge by contacting Computershare Investor Services at (888) 470-2938.

Holders of Common Stock whose shares are held by a broker or other nominee in “street name” also will not receive certificates representing the new shares. Instead, their accounts will be credited with the new shares in accordance with the procedures used by their broker or nominee.

IMPORTANT NOTE: CERTIFICATES REPRESENTING SHARES OF COMMON STOCK ISSUED PRIOR TO THE STOCK SPLIT WILL CONTINUE TO REPRESENT THE SAME NUMBER OF SHARES OF COMMON STOCK AFTER THE EFFECTIVE DATE. THEREFORE, PLEASE DO NOT DESTROY OR RETURN YOUR EXISTING CERTIFICATES.

HOLDERS OF VALERO’S 2% MANDATORY CONVERTIBLE PREFERRED STOCK SHOULD RETAIN THEIR PREFERRED STOCK CERTIFICATES ISSUED PRIOR TO THE STOCK SPLIT RECORD DATE, AND THE NUMBER OF SHARES OF PREFERRED STOCK EVIDENCED THEREBY WILL NOT BE AFFECTED BY THE STOCK SPLIT. As required by the terms of the preferred stock, Valero will send notice of the adjusted conversion ratio and the stock split record date to each holder of record of the preferred stock.

Accounting Effects of the Proposed Stock Split

If the proposed amendment is approved, an amount equal to the par value of shares issued in the stock split will be transferred from Valero’s additional paid-in capital account to its common stock account. The $0.01 par value of the Common Stock will not change.

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Tax Effects of the Stock Split

Valero has been advised that the proposed stock split will result in no gain or loss or realization of taxable income to owners of Common Stock under existing United States federal income tax laws. The tax basis of each share of Common Stock held immediately before the stock split will be allocated pro rata between this original share and the new share of Common Stock distributed with respect to the original share. Each new share will be deemed to have been acquired at the same time as the original share with respect to which the new share was issued. The laws of jurisdictions other than the United States may impose income taxes on the issuance of the additional shares, and stockholders are urged to consult their own tax advisers.

Anti-Takeover Effects of the Proposed Amendment

The increase in the authorized number of shares of Common Stock and the subsequent issuance of such shares could have the effect of delaying or preventing a change of control of Valero without further action by the stockholders. Shares of authorized and unissued Common Stock could (within the limits imposed by applicable law) be issued in one or more transactions that would make a change of control of Valero more difficult, and therefore less likely. The additional authorized shares could be used to discourage persons from attempting to gain control of Valero, by diluting the voting power of shares then outstanding or increasing the voting power of persons who would support the Board of Directors in a potential takeover scenario.

In addition, the increased shares authorized by the proposed amendment could permit the Board of Directors to issue Common Stock to persons supportive of management’s position. Such persons might then be in a position to vote to prevent or delay a proposed business combination that is deemed unacceptable to the Board of Directors, although perceived to be desirable by some stockholders. Any such issuance could provide management with a means to block any vote that might be used to effect a business combination in accordance with the Restated Certificate of Incorporation.

Additional Effects of the Stock Split

Upon the effectiveness of the stock split, appropriate adjustments will be made to stock options and other stock-based instruments awarded and to be awarded under Valero’s compensation, incentive and benefit programs. Appropriate adjustments will also be made to the outstanding preferred share purchase rights attached to the shares of Common Stock currently outstanding and the rights to be attached to the shares of Common Stock issued pursuant to the stock split. The preferred share purchase rights are not currently exercisable.

Under Delaware law, Valero’s stockholders are not entitled to dissenters’ rights with respect to the proposed amendment to Valero’s Restated Certificate of Incorporation. Furthermore, Valero’s stockholders do not have preemptive rights, which means they do not have the right to purchase shares in any future issuance of Common Stock in order to maintain their proportionate equity interests in Valero.

Although the Board of Directors will authorize the further issuance of Common Stock after the stock split only when it considers such issuance to be in the best interests of Valero, stockholders should recognize that any such issuance of additional stock will have the effect of diluting the earnings per share and book value per share of outstanding shares of Common Stock and the equity and voting rights of holders of shares of Common Stock.

Recommendation of the Board of Directors

The Board of Directors has unanimously approved the proposed amendment and has determined that the increase in authorized Common Stock is in the best interests of Valero and its stockholders.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE PROPOSED AMENDMENT.

Holders of shares of Common Stock and Preferred Stock representing a majority of the voting power, present in person or represented by properly executed proxy, shall constitute a quorum. The inspector of elections

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The affirmative vote of (i) the holders of a majority of the outstanding shares of Common Stock and Preferred Stock and (ii) the holders of a majority of the outstanding shares of Common Stock, voting as a class, is required to approve the proposed amendment. Any shares not voted (whether by abstention or broker non-votes) will have the effect of a vote against the proposed amendment.

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BENEFICIAL OWNERSHIP OF VALERO SECURITIES

The following table sets forth information with respect to each entity known to Valero to be the beneficial owner of more than 5% of its Common Stock as of June 30, 2004 and of its Preferred Stock as of June 30, 2004, and with respect to its Common Stock, is based solely upon statements on Schedules 13G filed by such entities with the Securities and Exchange Commission (“SEC”).

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Except as otherwise indicated, the following table sets forth information as of June 30, 2004 regarding Common Stock beneficially owned (or deemed to be owned) by each current director, each named executive officer and all current directors and executive officers of Valero as a group. The persons listed below have furnished this information to Valero and accordingly this information cannot be independently verified by Valero.

OTHER BUSINESS

If any matters not referred to in this Proxy Statement properly come before the Special Meeting or any adjournments or postponements thereof, the enclosed proxies will be deemed to confer discretionary authority on the individuals named as proxies to vote the shares represented by proxy in accordance with their best judgment. The Board of Directors is not currently aware of any other matters that may be presented for action at the Special Meeting.

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ADDITIONAL INFORMATION — ADVANCE NOTICE REQUIRED

Under Valero’s bylaws, stockholders intending to bring any business before an Annual Meeting of Stockholders, including nominations of persons for election as directors, must give prior written notice to the Corporate Secretary regarding the business to be presented or persons to be nominated. The notice must be received at the principal executive office of Valero at the address shown on the cover page within the specified period and must be accompanied by the information and documents specified in the bylaws. A copy of the bylaws may be obtained by writing to the Corporate Secretary of Valero at the address shown on the cover page.

Recommendations by stockholders for directors to be nominated at the 2005 Annual Meeting of Stockholders must be in writing and include sufficient biographical and other relevant information such that an informed judgment as to the proposed nominee’s qualifications can be made. Recommendations must be accompanied by a notarized statement executed by the proposed nominee consenting to be named in the Proxy Statement, if nominated, and to serve as a director, if elected. Notice and the accompanying information must be received at the principal executive office of Valero at the address shown on the cover page not less than 60 days nor more than 90 days prior to the first anniversary of the preceding year’s annual meeting.

The provisions of the bylaws do not affect any stockholder’s right to request inclusion of proposals in the Proxy Statement pursuant to Rule 14a-8 under the Exchange Act. Rule 14a-8 of the federal proxy rules specifies what constitutes timely submission for a stockholder proposal to be included in the Company’s proxy statement. If a stockholder desires to bring business before the meeting which is not the subject of a proposal timely submitted for inclusion in the proxy statement, the stockholder must follow procedures outlined in the Company’s bylaws. A copy of these procedures is available upon request from the Corporate Secretary of the Company at the address shown on the cover page. One of the procedural requirements in the Company’s bylaws is timely notice in writing of the business the stockholder proposes to bring before the meeting. Notice must be received at the principal executive office of Valero at the address shown on the cover page not less than 60 days nor more than 90 days prior to the first anniversary of the preceding year’s annual meeting. It should be noted that those bylaw procedures govern proper submission of business to be put before a stockholder vote and do not preclude discussion by any stockholder of any business properly brought before the annual meeting. Under the SEC’s proxy solicitation rules, to be considered for inclusion in the proxy materials for the 2005 Annual Meeting of Stockholders, stockholder proposals must be received by the Corporate Secretary at Valero’s principal offices in San Antonio, Texas by November 26, 2004.

Stockholders are urged to review all applicable rules and, if questions arise, to consult their own legal counsel before submitting a nomination or proposal to Valero.

HOUSEHOLDING

The SEC has adopted rules that allow companies to send a single copy of annual reports, proxy statements, prospectuses and other disclosure documents to two or more stockholders sharing the same address, subject to certain conditions. These “householding” rules are intended to provide greater convenience for stockholders, as well as cost savings for companies by reducing the number of duplicate documents that stockholders receive. If your shares are held by an intermediary broker, dealer or bank in “street name,” your consent to householding may be sought, or may already have been sought, by or on behalf of the intermediary. If you wish to revoke a consent to householding obtained by a broker, dealer or bank which holds shares for your account, you may do so by calling toll free at (800) 542-1061, or you may contact your broker.

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MISCELLANEOUS

Computershare Investor Services, Chicago, Illinois, serves as transfer agent, registrar and dividend paying agent for Valero’s Common Stock. Correspondence relating to any stock accounts, dividends or transfers of stock certificates should be addressed to:

Computershare Investor Services

Valero Energy Corporation

One Valero Way

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PROPOSED TEXT OF FIRST PARAGRAPH OF ARTICLE IV OF

VALERO ENERGY CORPORATION

RESTATED CERTIFICATE OF INCORPORATION

The text of the proposed amended and restated first paragraph of Article IV of the Restated Certificate of Incorporation of Valero Energy Corporation is as follows:

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