INCOME TAXES

Income tax expense for the three and nine months ended September 30, 2014 was $26 million and $126 million, respectively, compared to income tax expense of $55 million and $27 million for the three and nine months ended September 2013, respectively. The following table summarizes the difference between income tax expense at the United States statutory rate of 35% and the income tax expense at effective worldwide tax rates for the respective periods:



	Three Months Ended September 30,						Nine Months Ended September 30,
Millions of dollars	2014			2013			2014			2013
Earnings before income taxes	$	261		$	254		$	710		$	689
Income tax expense computed at United States statutory tax rate	$	91		$	89		$	249		$	241
U.S. government tax incentives, including Energy Tax Credits	—			(16		)	—			(127		)
U.S. foreign income items, net of credits	(34		)	3			(59		)	(19		)
Valuation allowance release	(25		)	—			(38		)	—
Foreign government tax incentive, including BEFIEX	(10		)	(16		)	(20		)	(45		)
Other	4			(5		)	(6		)	(23		)
Income tax expense computed at effective worldwide tax rates	$	26		$	55		$	126		$	27

At the end of each interim period, we make our best estimate of the effective tax rate expected to be applicable for the full fiscal year and the impact of discrete items, if any, and adjust the quarterly rate as necessary.