Note 4.Inventories

The Partnership hedges substantially all of its petroleum and ethanol inventory using a variety of instruments, primarily exchange-traded futures contracts. These futures contracts are entered into when inventory is purchased and are either designated as fair value hedges against the inventory on a specific barrel basis for inventories qualifying for fair value hedge accounting or not designated and maintained as economic hedges against certain inventory of the Partnership on a specific barrel basis. Changes in fair value of these futures contracts, as well as the offsetting change in fair value on the hedged inventory, is recognized in earnings as an increase or decrease in cost of sales. All hedged inventory designated in a fair value hedge relationship is valued using the lower of cost, as determined by specific identification, or market, as determined at the product level. All petroleum and ethanol inventory not designated in a fair value hedging relationship is carried at the lower of historical cost, on a first-in, first-out basis, or market.

Convenience store inventory and Renewable Identification Numbers (“RINs”) inventory are carried at the lower of historical cost, on a first-in, first-out basis, or market.

Inventories consisted of the following (in thousands):

	March 31,		December 31,
	2015		2014
Distillates: home heating oil, diesel and kerosene	$	103,057	$	163,679
Gasoline	96,846		82,080
Gasoline blendstocks	47,651		33,760
Crude oil	86,385		20,769
Residual oil	13,172		20,602
Propane and other	2,037		5,123
Renewable identification numbers (RINs)	1,213		2,057
Convenience store inventory	21,266		8,743
Total	$	371,627	$	336,813

In addition to its own inventory, the Partnership has exchange agreements for petroleum products with unrelated third-party suppliers, whereby it may draw inventory from these other suppliers and suppliers may draw inventory from the Partnership. Positive exchange balances are accounted for as accounts receivable and amounted to $9.6 million and $3.9 million at March 31, 2015 and December 31, 2014, respectively. Negative exchange balances are accounted for as accounts payable and amounted to $12.1 million and $16.5 million at March 31, 2015 and December 31, 2014, respectively. Exchange transactions are valued using current carrying costs and have no income statement impact.