We like to think that when we deposit a dollar at the bank, it goes into a big vault and we can pull out that same dollar at any time. But that¿s not how the U.S. banking system works. Banks take that money and invest it to make money themselves, so cash gets spread around. This, naturally, leads to a big risk: What happens if those investments go sour? Well, you¿d be out of luck. You can¿t get your dollar back.

The Federal Reserve doesn¿t like that scenario, so it prohibits banks from putting all the cash it has on deposit on the line. In fact, the Fed forces banks to keep a portion of their assets at the Federal Reserve itself, to make sure that some of your assets won¿t get squandered if the bank¿s bets go south. These are called ¿reserves,¿ (hence, Federal Reserve. Got it? Good), and usually amount to 10% of the total cash kept in checking accounts.

These reserves are never exactly 10%, and banks like to keep a little extra in reserve ¿ not, as you might think, to make you more comfortable that they¿re in good financial shape, but rather so they can take that excess and lend it to other banks and make money off it. (They¿re banks, they can¿t help themselves.) The rate at which they make these loans is called the Federal Funds rate, which is set by the Federal Reserve¿s Federal Open Market Committee.

When you hear people chattering about how the Fed cut or hiked interest rates, this is what they¿re talking about: the interest rate banks can charge for lending money from their reserves. This begs the question: If these are essentially loans between banks, why is the Fed Funds rate so important for the rest of the economy?

Well, simply put, because loans make the financial world go round. Bank A lends Bank B $10,000 at a Fed Funds rate of 5%. Bank B then lends out $10,000 to a small business at 7%. The small business then takes that money and expands the business and hires new workers. Now someone is employed, Bank B has made interest off the loan, and Bank A is the richer for making it all happen. It¿s perhaps overly simplistic, but you get the idea. When you want the economy to thrive, you make lending cheaper.

Of course, sometimes you don¿t want the economy to thrive. In fact, you might want it to cool down, mostly to avoid money flooding the system and causing inflation. In that case, the Fed raises interest rates, making it difficult to lend or borrow.

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Friday, July 25, 2008

NuStar GP Holdings, LLC Reports Better-Than-Expected Second Quarter 2008 Earnings and Announces Quarterly Distribution

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SAN ANTONIO, Jul 25, 2008 (BUSINESS WIRE) ----NuStar GP Holdings, LLC (NYSE:NSH) today announced earnings of $5.8 million, or $0.14 per unit, for the second quarter of 2008, which is better than the $0.10 per unit earnings management guided to previously on May 28. These results compare to $11.2 million, or $0.26 per unit, generated in the second quarter of 2007. Distributable cash flow available to unitholders for the second quarter of 2008 was $16.2 million, or $0.38 per unit, compared to $14.4 million, or $0.34 per unit, for the second quarter of 2007.

With respect to the quarterly distribution to unitholders for the second quarter of 2008, NuStar GP Holdings, LLC also announced that its board of directors has declared a distribution of $0.36 per unit, which would equate to $1.44 per unit on an annualized basis. This quarterly distribution represents an increase of $0.02 per unit, or 5.9 percent, over the $0.34 distribution for the second quarter of 2007 and will be paid on August 15, 2008, to holders of record as of August 6, 2008.

"NuStar Energy L.P.'s strong outlook for the third quarter of 2008 and continued focus on future growth should allow for healthy distribution increases at NuStar GP Holdings, LLC in 2008 as a result of the benefit of the incentive distribution rights," said Curt Anastasio, Chief Executive Officer and President of NuStar Energy L.P. and NuStar GP Holdings, LLC.

A conference call with management is scheduled for 11:00 a.m. ET (10:00 a.m. CT) today, July 25, 2008, to discuss the financial results for the second quarter of 2008. Investors interested in listening to the presentation may call 800-622-7620, passcode 54135570. International callers may access the presentation by dialing 706-645-0327, passcode 54135570. The company intends to have a playback available following the presentation, which may be accessed by calling 800-642-1687, passcode 54135570. A live broadcast of the conference call will also be available on the company's Web site at www.nustargp.com.

NuStar GP Holdings, LLC is a publicly traded limited liability company that owns the two percent general partner interest, an 18.4 percent limited partner interest and the incentive distribution rights in NuStar Energy L.P., one of the largest asphalt refiners and marketers in the U.S. and the second largest independent liquids terminal operator in the nation with operations in the United States, the Netherlands Antilles, Canada, Mexico, the Netherlands and the United Kingdom. For more information, visit NuStar GP Holdings, LLC's Web site at www.nustargp.com.

Cautionary Statement Regarding Forward-Looking Statements

This press release includes forward-looking statements regarding future events. All forward-looking statements are based on the company's beliefs as well as assumptions made by and information currently available to the company. These statements reflect the company's current views with respect to future events and are subject to various risks, uncertainties and assumptions. These risks, uncertainties and assumptions are discussed in NuStar GP Holdings, LLC's 2007 annual report on Form 10-K and subsequent filings with the Securities and Exchange Commission.

 NuStar GP Holdings, LLC Consolidated Financial Information
   (Unaudited, Thousands of Dollars, Except Unit Data and Per Unit Data) Three Months Ended Six Months Ended June 30, June 30,
   ----------------------- ----------------------- 2008 2007 2008 2007 ----------- ----------- ----------- ----------- Statement
   of Income Data: Equity in earnings of NuStar Energy L.P. $ 6,704 $ 11,951 $ 22,458 $ 21,508 General and administrative expenses
   (824) (747) (1,566) (1,543) Other (expense) income, net (82) 24 (82) (2) Interest (expense) income, net (67) 18 (96) 14 -----------
   ----------- ----------- ----------- Income before income tax benefit 5,731 11,246 20,714 19,977 Income tax benefit 49 2 69
   42 ----------- ----------- ----------- ----------- Net income $ 5,780 $ 11,248 $ 20,783 $ 20,019 =========== =========== ===========
   =========== Basic and diluted net income per unit $ 0.14 $ 0.26 $ 0.49 $ 0.47 =========== =========== =========== ===========
   Equity in Earnings of NuStar Energy L.P.: General partner interest (2%) $ 167 $ 705 $ 1,181 $ 1,249 General partner incentive
   distribution 5,718 4,413 10,906 8,323 ----------- ----------- ----------- ----------- General partner's interest in earnings
   of NuStar Energy L.P. 5,885 5,118 12,087 9,572 Limited partner interest in earnings of NuStar Energy L.P. 1,540 7,554 11,813
   13,378 Amortization of step- up in basis related to NuStar Energy L.P.'s assets and liabilities (721) (721) (1,442) (1,442)
   ----------- ----------- ----------- ----------- Equity in earnings of NuStar Energy L.P. $ 6,704 $ 11,951 $ 22,458 $ 21,508
   =========== =========== =========== =========== Distributable Cash (Note 1): Cash distributions from NuStar Energy L.P. associated
   with: General partner interest (2%) $ 1,211 $ 997 $ 2,422 $ 1,951 Incentive distribution rights (Note 2): 5,718 4,413 11,436
   8,323 Limited partner interest-common units 10,064 9,714 20,131 19,073 ----------- ----------- ----------- ----------- Total
   cash distributions from NuStar Energy L.P. 16,993 15,124 33,989 29,347 Deduct expenses of NuStar GP Holdings, LLC: General
   and administrative expenses (824) (747) (1,566) (1,543) Income tax benefit 49 2 69 42 Interest (expense) income, net (67)
   18 (96) 14 ----------- ----------- ----------- ----------- Distributable cash flow $ 16,151 $ 14,397 $ 32,396 $ 27,860 ===========
   =========== =========== =========== Units outstanding 42,500,990 42,500,000 42,500,990 42,500,000 Distributable cash flow
   per unit $ 0.38 $ 0.34 $ 0.76 $ 0.66 =========== =========== =========== =========== Cash distributions to be paid to the
   unitholders of NuStar GP Holdings, LLC: Distribution per unit $ 0.36 $ 0.34 $ 0.72 $ 0.66 =========== =========== ===========
   =========== Total distribution $ 15,300 $ 14,450 $ 30,600 $ 28,050 =========== =========== =========== ===========

   NuStar GP Holdings, LLC Consolidated Financial Information (Unaudited, Thousands of Dollars) Notes: 1. NuStar GP Holdings,
   LLC utilizes distributable cash flow as a financial measure which is not defined in United States generally accepted accounting
   principles. Management uses this financial measure because it is a widely accepted financial indicator used by investors to
   compare general partner performance. In addition, management believes that this measure provides investors an enhanced perspective
   of the ability to make a minimum quarterly distribution. Distributable cash flow is not intended to represent cash flows for
   the period, nor is it presented as an alternative to net income. It should not be considered in isolation or as a substitute
   for a measure of performance prepared in accordance with United States generally accepted accounting principles. The following
   is a reconciliation of net income to distributable cash to net cash provided by operating activities: Three Months Ended Six
   Months Ended June 30, June 30, ------------------- ------------------- 2008 2007 2008 2007 --------- --------- --------- ---------
   Net Income $ 5,780 $ 11,248 $ 20,783 $ 20,019 Adjustments to Derive Distributable Cash Flow: Equity in earnings of NuStar
   Energy L.P. (6,704) (11,951) (22,458) (21,508) Quarterly distribution from NuStar Energy L.P. 16,993 15,124 33,989 29,347
   Other expense (income), net 82 (24) 82 2 --------- --------- --------- --------- Distributable cash flow 16,151 14,397 32,396
   27,860 Adjustments to Distributable Cash Flow to Derive Net Cash Provided by Operating Activities: Quarterly distribution
   from NuStar Energy L.P. (16,993) (15,124) (33,989) (29,347) Cash distribution of equity earnings received from NuStar Energy
   L.P. 6,704 11,951 22,458 21,508 Net effect of changes in operating accounts 339 1,345 (510) 2,560 --------- --------- ---------
   --------- Net cash provided by operating activities $ 6,201 $ 12,569 $ 20,355 $ 22,581 ========= ========= ========= =========
   2. NuStar Energy L.P.'s net income allocation for the first quarter 2008 to general and limited partners reflected total cash
   distributions based upon the partnership interests outstanding as of March 31, 2008. NuStar Energy L.P. issued approximately
   5.1 million common units in April 2008. Actual distribution payments are made within 45 days after the end of each quarter
   as of a record date that is set after the end of each quarter. As such, the general partner's portion of the actual cash payment
   made with respect to the first quarter 2008, including the incentive distribution rights, was greater than the net income
   allocated to the general partner.

SOURCE: NuStar GP Holdings, LLC

NuStar GP Holdings, LLC, San Antonio Investors,
   Mark Meador, Director, Investor Relations: 210-918-2895 or Media, Mary Rose Brown, Senior Vice President, Corporate Communications:
   210-918-2314

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