Operating Segments (Notes)

6 Months Ended

Jun. 30, 2012

Segment Reporting [Abstract]

OPERATING SEGMENTS

OPERATING SEGMENTS

The Company's revenues are derived from two operating segments, refining and retail. We own and operate seven petroleum refineries located in California, Washington, Alaska, Hawaii, North Dakota and Utah. These refineries manufacture gasoline and gasoline blendstocks, jet fuel, diesel fuel, residual fuel oil and other refined products. We sell these refined products, together with refined products purchased from third-parties, at wholesale through terminal facilities and other locations. Our refining segment also sells refined products to unbranded marketers and occasionally exports refined products to foreign markets. Our retail segment sells gasoline, diesel fuel and convenience store items through company-operated retail stations and branded jobber/dealers in 18 states. We do not have significant operations in foreign countries. Therefore, revenue and long-lived assets located in foreign countries are not material to our operations.

We evaluate the performance of our segments based primarily on segment operating income. Segment operating income includes those revenues and expenses that are directly attributable to management of the respective segment. Intersegment sales from refining to retail are made at prevailing market rates. Income taxes, other income, foreign currency exchange loss, interest and financing costs, interest income, corporate depreciation and corporate general and administrative expenses are excluded from segment operating income. Identifiable assets are those used by the segments, whereas corporate assets are principally cash and other assets that are not associated with a specific operating segment.

Segment information is as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2012			2011			2012			2011
Revenues	(In millions)
Refining:
Refined products	$	7,780		$	7,635		$	15,342		$	13,905
Crude oil resales and other	135			186			291			341
Retail:
Fuel (a)	1,507			1,354			2,813			2,469
Merchandise and other	63			57			118			109
Intersegment sales from Refining to Retail	(1,380		)	(1,269		)	(2,639		)	(2,335		)
Total Revenues	$	8,105		$	7,963		$	15,925		$	14,489
Segment Operating Income
Refining (b)	$	645		$	399		$	836		$	702
Retail	74			38			70			40
Total Segment Operating Income	719			437			906			742
Corporate and unallocated costs	(38		)	(18		)	(91		)	(104		)
Operating Income (c)	681			419			815			638
Interest and financing costs	(34		)	(60		)	(70		)	(103		)
Other expense, net (d)	(18		)	—			(17		)	—
Foreign currency exchange loss	(1		)	(2		)	(1		)	(1		)
Earnings Before Income Taxes	$	628		$	357		$	727		$	534
Depreciation and Amortization Expense
Refining	$	94		$	94		$	185		$	185
Retail	9			10			19			19
Corporate	6			2			8			5
Total Depreciation and Amortization Expense	$	109		$	106		$	212		$	209
Capital Expenditures
Refining	$	121		$	55		$	212		$	93
Retail	24			4			32			7
Corporate	3			4			6			5
Total Capital Expenditures	$	148		$	63		$	250		$	105

______________

(a) Federal and state motor fuel taxes on sales by our retail segment are included in both revenues and cost of sales in our condensed statements of consolidated operations. These taxes, excluding credits, totaled $112 million and $92 million for the three months ended June 30, 2012 and 2011, respectively, and $211 million and $183 million for the six months ended June 30, 2012 and 2011, respectively.

(b) Includes impairment charges related to the change in scope of a capital project at our Wilmington refinery of $48 million for the three and six months ended June 30, 2011.

(c) Includes $37 million in business interruption and property damage recoveries for the three and six months ended June 30, 2011.

(d) Includes accruals related to certain legal matters partially offset by receipts associated with the settlement of a pipeline rate proceeding for the three and six months ended June 30, 2012.

	June 30,		December 31,
	2012		2011
Identifiable Assets:
Refining	$	8,143	$	8,152
Retail	733		644
Corporate	1,532		1,096
Total Assets	$	10,408	$	9,892