EXHIBIT 12.1 TESORO PETROLEUM CORPORATION COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (DOLLARS IN THOUSANDS) Pro Forma as Adjusted for the Tesoro Historical Transactions --------------------------------------------------------- ------------ Years Ended December 31, ----------------------------------------------------------------------- 1997 1998 1999 2000 2001 2001 ----------------------------------------------------------------------- EARNINGS: Earnings (Loss) from continuing operations before income taxes and extraordinary loss ........ $ 3,400 $ 12,100 $ 51,200 $ 123,500 $ 146,900 $ 270,900 Interest expense, net of capitalized interest (a) ... 8,100 24,790 36,710 31,720 51,630 185,845 Amortization of debt discount ....................... -- 100 215 235 260 260 Amortization of debt issuance costs ................. -- 310 675 745 910 2,595 Estimated interest portion of rents (b) ............. 12,400 17,400 22,400 19,800 17,010 17,010 --------- --------- --------- --------- --------- --------- Total Earnings ................................ $ 23,900 $ 54,700 $ 111,200 $ 176,000 $ 216,710 $ 476,610 --------- --------- --------- --------- --------- --------- FIXED CHARGES: Interest expense whether expensed or capitalized (a).. $ 8,500 $ 24,890 $ 37,310 $ 32,420 $ 56,730 $ 190,945 Amortization of debt discount ........................ -- 100 215 235 260 260 Amortization of debt issuance costs .................. -- 310 675 745 910 2,595 Estimated interest portion of rents (b) .............. 12,400 17,400 22,400 19,800 17,010 17,010 --------- --------- --------- --------- --------- --------- Total Fixed Charges ............................ $ 20,900 $ 42,700 $ 60,600 $ 53,200 $ 74,910 $ 210,810 --------- --------- --------- --------- --------- --------- RATIO OF EARNINGS TO FIXED CHARGES ..................... 1.14 1.28 1.83 3.31 2.89 2.26 ========= ========= ========= ======== ======== ========= Pro Forma as Adjusted Tesoro for the Historical Transactions ------------------------- Six Months Ended June 30, 2002 ------------------------- EARNINGS: Earnings (Loss) from continuing operations before income taxes and extraordinary loss ........ $(122,600) $(200,600) Interest expense, net of capitalized interest (a) ... 70,930 89,380 Amortization of debt discount ....................... 140 140 Amortization of debt issuance costs ................. 830 1,080 Estimated interest portion of rents (b) ............. 10,255 10,255 --------- --------- Total Earnings ................................ $ (40,445) $ (99,745) --------- --------- FIXED CHARGES: Interest expense whether expensed or capitalized (a).. $ 72,215 $ 90,665 Amortization of debt discount ........................ 140 140 Amortization of debt issuance costs .................. 830 1,080 Estimated interest portion of rents (b) .............. 10,255 10,255 --------- --------- Total Fixed Charges ............................ $ 83,440 $ 102,140 --------- --------- RATIO OF EARNINGS TO FIXED CHARGES ..................... * * ========= ========== </Table> - ------------------------------ * For the six months ended June 30, 2002 fixed charges exceeded earnings by $123.9 million and $201.9 million on a historical basis and on a pro forma basis, respectively. (a) Includes interest expense and financing costs. (b) For a majority of the marine charter leases the interest portion of rents was estimated by using the Company's incremental borrowing rate in effect at the inception of the leases. For the remaining leases, interest expense was estimated by using one third of the rental payments. Total rental expense including marine charters was approximately $45 million, $54 million, $64 million, $60 million and $66 million for the years ended 1997, 1998, 1999, 2000 and 2001, respectively, and $44 million for the six months ended June 30, 2002.