Inventory

9 Months Ended

Sep. 30, 2020

Crude oil, work in process, refined products, blendstocks and asphalt inventory for all of our operations, excluding the Tyler refinery and merchandise inventory in our retail segment, are stated at the lower of cost determined using FIFO basis or net realizable value. Cost of all inventory at the Tyler refinery is determined using the LIFO inventory valuation method and inventory is stated at the lower of cost or market. Retail merchandise inventory consists of cigarettes, beer, convenience merchandise and food service merchandise and is stated at estimated cost as determined by the retail inventory method.

Carrying value of inventories consisted of the following (in millions):


	September 30, 2020		December 31, 2019
Refinery raw materials and supplies	$	261.4	$	400.4
Refinery work in process	82.9		109.1
Refinery finished goods	299.1		397.5
Retail fuel	5.9		7.3
Retail merchandise	21.0		19.8
Logistics refined products	1.7		12.6
Total inventories	$	672.0	$	946.7

At September 30, 2020, we recorded a pre-tax inventory valuation reserve of $67.5 million, $65.0 million of which related to LIFO inventory, due to a market price decline below our cost of certain inventory products. At December 31, 2019, we recorded a pre-tax inventory valuation reserve of $1.7 million, $1.2 million of which related to LIFO inventory, which reversed in the first quarter of 2020 due to the sale of inventory quantities that gave rise to the December 31, 2019 reserve. We recognized a net reduction (increase) in cost of materials and other in the accompanying condensed consolidated statements of income related to the change in pre-tax inventory valuation of $9.5 million and $(65.6) million for the three and nine months ended September 30, 2020, respectively, and $(20.0) million and $31.5 million for the three and nine months ended September 30, 2019, respectively.