Inventories

3 Months Ended

Mar. 31, 2020

Inventory Disclosure [Abstract]

Inventories [Text Block]

5. Inventories

Inventories consisted of the following components:

Millions of dollars	March 31, 2020		December 31, 2019
Finished goods	$	2,691	$	3,083
Work-in-process	124		130
Raw materials and supplies	1,158		1,375
Total inventories	$	3,973	$	4,588

Our inventories are stated at the lower of cost or market (“LCM”). Cost is determined using the last-in, first-out ("LIFO") inventory valuation methodology, which means that the most recently incurred costs are charged to cost of sales and inventories are valued at the earliest acquisition costs. Market is determined based on an assessment of the current estimated replacement cost and selling price of the inventory. In periods where the market price of our inventory declines substantially, cost values of inventory may be higher than the market value, which reduces the value of inventory to market value. This adjustment is related to the recent decline in pricing for many of our raw material and finished goods inventories. Fluctuation in the prices of crude oil, natural gas and correlated products from period to period may result in the recognition of charges to adjust the value of inventory to the lower of cost or market in periods of falling prices and the reversal of those charges in subsequent interim periods as market prices recover.

During the first quarter of 2020, we recognized an LCM inventory charge of $419 million. This charge is related to the recent decline in pricing for many of our raw material and finished goods inventories

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