15. Derivatives

For further information regarding the fair value measurement of derivative instruments, see Note 14. We do not designate any of our commodity derivative instruments as hedges for accounting purposes. Our interest rate derivative instruments were designated as fair value hedges.

The following table presents the gross fair values of derivative instruments, excluding cash collateral, and where they appear on the consolidated balance sheets as of September 30, 2012 and December 31, 2011:


	September 30, 2012
(In millions)	Asset		Liability		Balance Sheet Location
Commodity derivatives	$	99	$	75	Other current assets

	December 31, 2011
(In millions)	Asset		Liability		Balance Sheet Location
Commodity derivatives	$	26	$	45	Other current assets
Interest rate derivatives		19		—	Other noncurrent assets
Commodity derivatives		1		1	Other current liabilities

Derivatives Designated as Fair Value Hedges

During the first quarter of 2012, we terminated interest rate swap agreements with a notional amount of $500 million that had been entered into as fair value hedges on our 3.50 percent senior notes due in March 2016. There was a $20 million gain on the termination of the transactions, which has been accounted for as an adjustment to our long-term debt balance. The gain is being amortized over the remaining life of the 3.50 percent senior notes, which reduces our interest expense. The interest rate swaps had no hedge ineffectiveness.

Derivatives not Designated as Hedges

Derivatives that are not designated as hedges may include commodity derivatives used to manage price risk on (1) inventories, (2) fixed price sales of refined products, (3) the acquisition of foreign-sourced crude oil and (4) the acquisition of ethanol for blending with refined products.

The table below summarizes open commodity derivative contracts as of September 30, 2012:


	Position		Total Barrels (In thousands)
Crude oil^(a)
Exchange-traded		Long		18,300
Exchange-traded		Short		(34,870	)
Refined Products^(b)
Exchange-traded		Long		3,219
Exchange-traded		Short		(4,872	)

^(a)	100 percent of these contracts expire in the fourth quarter of 2012.

^(b)	100 percent of these contracts expire in the fourth quarter of 2012.

The following table summarizes the effect of all commodity derivative instruments in our consolidated statements of income:


(In millions)	Gain (Loss) Three Months Ended September 30,						Gain (Loss) Nine Months Ended September 30,
Income Statement Location	2012			2011			2012		2011
Sales and other operating revenues	$	(32	)	$	(11	)	$	6	$	(30	)
Cost of revenues		(251	)		269			58		464
Other income		—			—			—		1

Total	$	(283	)	$	258		$	64	$	435