SAN ANTONIO & IRVING, Texas -- Valero Energy Corp. reported the best year ever for its retail division. During 2011, the petroleum company and convenience store operator earned a profit of $381 million overall, $213 million of which came from its United States retail operations. By comparison, Valero earned $200 million in U.S. retail operating income in its 2010 fiscal year.

Retail profits were strong during Valero's 2011 fourth quarter. Retail operating income during Q4 more than doubled in Valero's U.S. c-stores to $48 million, compared to $19 million during its 2010 Q4. The company cited Texas as especially strong for retail sales.

Also robust were Valero's 2011 Q4 ethanol sales. The company earned $181 million in Q4 ethanol profits. "It was our best year ever for ethanol sales," Michael Ciskowski, Valero's CFO and executive vice president, said during the company's earnings call this morning. "In three years, we recovered our entire $75-million investment in ethanol [infrastructure]. However, ethanol margins were lower in December and continue to be weaker in 2012."

A seasonal reduction in ethanol demand was cited as the primary reason for weaker margins, not the expiration of government blender credits. "Demand in ethanol will get better," said Valero Chairman and CEO William Klesse. "We also saw weakness in early 2011. We see good margins returning once we move toward the summer."

Valero also chimed in about TransCanada Corp.'s Keystone XL pipeline proposal -- which was recently rejected by the Obama Administration -- by stating that the company supports all "projects that bring additional crude to the Gulf [of Mexico]."

Looking at the company as a whole, Valero earned a net income of $45 million for its 2011 fourth quarter, compared to $180 million in the same quarter in 2010. Valero blamed weaker refining margins for the overall earnings decline.

For the entire 2011 year, Valero earned $2.1 billion, compared to $923 million in 2010. ExxonMobil Corp.'s fourth quarter 2011 earnings offered a much different story. The largest petroleum company in the world saw its downstream division earnings -- home to its convenience store portfolio -- decline significantly during the quarter. U.S. downstream earnings dropped to $425 million in ExxonMobil's Q4, compared to $1.15 billion in its 2010 Q4. ExxonMobil cited unfavorable refining margins as the reason for the $725-million quarterly downstream decrease.

However, for the entire 2011 year, ExxonMobil's downstream profits reached $2.268 billion, much higher than $770 million the company earned for 2010.

In total, ExxonMobil earned a net profit of $9.4 billion for its 2011 Q4, compared to $9.250 billion in the same period in 2010. For all of 2011, ExxonMobil's profit came in at $41.06 billion, compared to $30.46 billion in 2010.

"ExxonMobil recorded strong results while investing at record levels to develop new supplies of energy that are critical to meeting growing world demand, and supporting economic recovery and growth," said Rex W. Tillerson, ExxonMobil's chairman and CEO.

The world's second-largest company also put any possibility of a downstream division spinoff to rest when David S. Rosenthal, ExxonMobil's secretary and vice president of investor relations, said, "We have a unique integration and optimization of the upstream and downstream businesses."

Several of ExxonMobil's competitors have at least considered spinning off their downstream divisions. As CSNews Online was first to report, Murphy Oil is the latest to consider such a move, joining Marathon Petroleum Corp.'s completed spinoff from Marathon Oil Corp. and ConocoPhillips' planned spinoff of Phillips 66.