10 percent from $2 billion in 2004 but was up about $1.1 billion from 2003. The decrease from the 2004 period was due mainly to lower sales volumes, higher costs for fuel and transportation, expenses associated with an explosion and fire at a 40 percent-owned, nonoperated terminal in the United Kingdom, and tax adjustments in various countries. These items more than offset an improvement in average refined-product margins between periods. The $1.3 billion increase in income from 2003 to 2004 reflected significantly higher average refined-product margins in most of the company’s operating areas and higher earnings from international shipping operations. Earnings in 2003 also included special-item charges (discussed below) and foreign currency losses that totaled more than $300 million.

     Total international refined products sales volumes were 2.3 million barrels per day in 2005, about 4 percent lower than 2004. The sales decline was primarily the result of lower gasoline trading activity and lower fuel-oil sales. Refined product sales volume of 2.4 million barrels per day in 2004 was about 4 percent higher than 2.3 million in 2003. Refer to the “Selected Operating Data” table, on page FS-12, for the three-year comparative refined-product sales volumes in the international areas.

     The special-item charges of $189 million in 2003 included the write-down of the Batangas Refinery in the Philippines in advance of its conversion to a product terminal facility, employee severance costs associated with the global downstream restructuring and reorganization, the recognition of the impairment of certain assets in anticipation of their sale and the company’s share of losses from an asset sale and asset impairment by an equity affiliate.

The chemicals segment includes the company’s Oronite subsidiary and the company’s 50 percent share of its equity investment in Chevron Phillips Chemical Company LLC (CPChem). In 2005, results for the company’s Oronite subsidiary were down due to significantly higher costs for feedstocks and adverse effects from the shut-down of operations in the U.S. Gulf Coast due to hurricanes. Earnings in 2005 for CPChem were higher than 2004 on improved margins for commodity chemicals. Results for both businesses in 2005 were dampened by the effects of the U.S. hurricanes. Significantly lower earnings in 2003 reflected weak demand for commodity chemicals and industry oversupply conditions in the period.  All Other consists of the company’s interest in Dynegy, mining operations of coal and other minerals, power generation businesses, worldwide cash management and debt financing activities, corporate administrative functions, insurance operations, real estate activities and technology companies.

     The net charges of $689 million in 2005 increased significantly from $20 million in 2004. Approximately $400 million of the change related to larger benefits in 2004 from corporate-level tax adjustments. Higher charges in 2005 were associated with environmental remediation of properties that had been sold or idled and ongoing Unocal corporate-level activities. Interest expense also was higher in 2005 due to an increase in