Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2012

Fair value of financial assets and liabilities measured on recurring basis

The tables below present information (in millions) about our financial instruments recognized at their fair values in our balance sheets categorized according to the fair value hierarchy of the inputs utilized by us to determine the fair values as of September 30, 2012 and December 31, 2011.

Cash collateral deposits of $213 million and $136 million with brokers under master netting arrangements are included in the fair value of the commodity derivatives reflected in Level 1 as of September 30, 2012 and December 31, 2011, respectively. Certain of our commodity derivative contracts under master netting arrangements include both asset and liability positions. We have elected to offset the fair value amounts recognized for multiple similar derivative instruments executed with the same counterparty, including any related cash collateral asset or obligation under the column “Netting Adjustments” below; however, fair value amounts by hierarchy level are presented on a gross basis in the tables below.



	Fair Value Measurements Using
	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Netting Adjustments			Total Fair Value as of September 30, 2012
Assets:
Commodity derivative contracts	$	3,351	$	105	$	—	$	(3,292	)	$	164
Physical purchase contracts	—		3		—		—			3
Investments of certain benefit plans	88		—		11		—			99
Foreign currency contracts	3		—		—		—			3
Other investments	—		—		—		—			—
Liabilities:
Commodity derivative contracts	3,191		117		—		(3,292		)	16
Biofuels blending obligation	6		—		—		—			6
Foreign currency contracts	1		—		—		—			1



	Fair Value Measurements Using
	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		Netting Adjustments			Total Fair Value as of December 31, 2011
Assets:
Commodity derivative contracts	$	2,038	$	78		$	—	$	(1,940	)	$	176
Physical purchase contracts	—		(2		)	—		—			(2		)
Investments of certain benefit plans	84		—			11		—			95
Other investments	—		—			—		—			—
Liabilities:
Commodity derivative contracts	1,864		101			—		(1,940		)	25
Foreign currency contracts	3		—			—		—			3

Reconciliation of the beginning and ending balances for fair value measurements developed using significant unobservable inputs

The following is a reconciliation of the beginning and ending balances (in millions) for fair value measurements developed using significant unobservable inputs (Level 3) for the three and nine months ended September 30, 2012 and 2011.



	2012				2011
	Investments of Certain Benefit Plans		Other Investments		Investments of Certain Benefit Plans		Other Investments
Three months ended September 30:
Balance as of beginning of period	$	11	$	—	$	11	$	—
Purchases	—		—		—		5
Total gains (losses):
Included in refining operating expenses	—		—		—		(5		)
Transfers in and/or out of Level 3	—		—		—		—
Balance as of end of period	$	11	$	—	$	11	$	—
The amount of total gains (losses) included in income attributable to the change in unrealized gains (losses) relating to assets still held at end of period	$	—	$	—	$	—	$	(5	)

Nine months ended September 30:
Balance as of beginning of period	$	11	$	—	$	10	$	—
Purchases	—		—		—		21
Total gains (losses):
Included in refining operating expenses	—		—		1		(21		)
Transfers in and/or out of Level 3	—		—		—		—
Balance as of end of period	$	11	$	—	$	11	$	—
The amount of total gains (losses) included in income attributable to the change in unrealized gains (losses) relating to assets still held at end of period	$	—	$	—	$	1	$	(21	)

Fair value of assets measured on a nonrecurring basis

The table below presents the fair value (in millions) of our nonfinancial assets measured on a nonrecurring basis during the nine months ended September 30, 2012 and categorized according to the fair value hierarchy of the inputs utilized by us to determine the fair values as of September 30, 2012.



	Fair Value Measurements Using								Total Loss Recognized During the Nine Months Ended September 30, 2012
	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value as of September 30, 2012
Assets:
Long-lived assets of the Aruba Refinery	$	—	$	—	$	—	$	—	$	903
Materials and supplies inventories of the Aruba Refinery	—		—		—		—		25
Cancelled capital project	—		—		2		2		16
Property, plant and equipment of convenience stores	—		—		5		5		12

Carrying amounts and estimated fair value of financial instruments

Financial instruments that we recognize in our balance sheets at their carrying amounts are shown in the table below (in millions):



	September 30, 2012				December 31, 2011
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Cash and temporary cash investments	$	2,549	$	2,549	$	1,024	$	1,024
Financial liabilities:
Debt (excluding capital leases)	6,997		8,576		7,690		9,298

- Definition

Tabular disclosure of assets and liabilities by class, including financial instruments measured at fair value that are classified in shareholders' equity, if any, that are measured at fair value on a nonrecurring basis in periods after initial recognition (for example, impaired assets). Disclosures may include, but are not limited to: (a) the fair value measurements recorded and the reasons for the measurements and (b) the level within the fair value hierarchy in which the fair value measurements are categorized in their entirety (levels 1, 2, 3).

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- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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- Definition

Tabular disclosure of the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments, assets, and liabilities. Such certain disclosures about the financial instruments, assets, and liabilities include: (1) the fair value of the required items together with their carrying amounts (as appropriate) and (2) the methodology and assumptions used in developing such estimates of fair value.

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Reference 1: http://www.xbrl.org/2003/role/presentationRef

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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef

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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 10: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

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