• Financial Highlights
• Management's Discussion and Analysis
  • Key Financial Results
  • Income by Major Operating Area
  • Business Environment and Outlook
  • Operating Developments
  • Results of Operations
  • Consolidated Statement of Income
  • Selected Operating Data
  • Liquidity and Capital Resources
  • Financial Ratios
  • Guarantees, Off-Balance-Sheet Arrangements and Contractual Obligations, and Other Contingencies
  • Financial and Derivative Instruments
  • Transactions with Related Parties
  • Litigation and Other Contingencies
  • Environmental Matters
  • Critical Accounting Estimates and Assumptions
  • New Accounting Standards
• Consolidated Financial Statements
• Notes to the Consolidated Financial Statements
• Five-Year Operating Summary
• Five-Year Financial Summary
• Supplemental Information on Oil and Gas Producing Activities

Environmental Matters

Virtually all aspects of the businesses in which the company engages are subject to various federal, state and local environmental, health and safety laws and regulations. These regulatory requirements continue to increase in both number and complexity over time and govern not only the manner in which the company conducts its operations, but also the products it sells. Most of the costs of complying with laws and regulations pertaining to company operations and products are embedded in the normal costs of doing business.

Accidental leaks and spills requiring cleanup may occur in the ordinary course of business. In addition to the costs for environmental protection associated with its ongoing operations and products, the company may incur expenses for corrective actions at various owned and previously owned facilities and at third-party-owned waste-disposal sites used by the company. An obligation may arise when operations are closed or sold or at non-Chevron sites where company products have been handled or disposed of. Most of the expenditures to fulfill these obligations relate to facilities and sites where past operations followed practices and procedures that were considered acceptable at the time but now require investigative or remedial work or both to meet current standards.

Using definitions and guidelines established by the American Petroleum Institute, Chevron estimated its worldwide environmental spending in 2007 at approximately $2.7 billion for its consolidated companies. Included in these expenditures were approximately $900 million of environmental capital expenditures and $1.8 billion of costs associated with the prevention, control, abatement or elimination of hazardous substances and pollutants from operating, closed or divested sites and the abandonment and restoration of sites.

For 2008, total worldwide environmental capital expenditures are estimated at $1.9 billion. These capital costs are in addition to the ongoing costs of complying with environmental regulations and the costs to remediate previously contaminated sites.

It is not possible to predict with certainty the amount of additional investments in new or existing facilities or amounts of incremental operating costs to be incurred in the future to: prevent, control, reduce or eliminate releases of hazardous materials into the environment; comply with existing and new environmental laws or regulations; or remediate and restore areas damaged by prior releases of hazardous materials. Although these costs may be significant to the results of operations in any single period, the company does not expect them to have a material effect on the company's liquidity or financial position.