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Derivative Instruments
 12 Months Ended
Dec. 31, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments Derivative Instruments
We use the majority of our derivatives to reduce normal operating and market risks with the primary objective of reducing the impact of market price volatility on our results of operations. As such, our use of derivative contracts is aimed at:
•limiting our exposure to commodity price fluctuations on inventory above or below target levels (where appropriate) within each of our segments;
•managing our exposure to commodity price risk associated with the purchase or sale of crude oil, feedstocks/intermediates and finished grade fuel within each of our segments;
•managing our exposure to market crack spread fluctuations;
•managing the cost of our RINs Obligation using future commitments to purchase or sell RINs at fixed prices and quantities; and
•limiting the exposure to interest rate fluctuations on our floating rate borrowings.
We primarily utilize commodity swaps, futures, forward contracts and options contracts, generally with maturity dates of three years or less, and from time to time interest rate swaps or caps to achieve these objectives. Futures contracts are standardized agreements, traded on a futures exchange, to buy or sell the commodity at a predetermined price and location at a specified future date. Options provide the right, but not the obligation to buy or sell a commodity at a specified price in the future. Commodity swaps and futures contracts require cash settlement for the commodity based on the difference between a fixed or floating price and the market price on the settlement date, and options require payment/receipt of an upfront premium. Because these derivatives are entered into to achieve objectives specifically related to our inventory and production risks, such gains and losses (to the extent not designated as accounting hedges and recognized on an unrealized basis in other comprehensive income) are recognized in cost of materials and other.
Forward contracts are agreements to buy or sell a commodity at a predetermined price at a specified future date, and for our transactions, generally require physical delivery. Forward contracts where the underlying commodity will be used or sold in the normal course of business qualify as NPNS pursuant to ASC 815. If we elect the NPNS exception, such forward contracts are not accounted for as derivative instruments but rather are accounted for under other applicable GAAP. Commodity forward contracts accounted for as derivative instruments are recorded at fair value with changes in fair value recognized in earnings in the period of change. Our Canadian crude trading operations are accounted for as derivative instruments, and the related unrealized and realized gains and losses are recognized in other operating income, net on the consolidated statements of income. Additionally, as of and for the year ended December 31, 2023, other forward contracts accounted for as derivatives that are specific to managing crude costs rather than for trading purposes are recognized in cost of materials and other on the consolidated statements of income in our refining segment, and are included in our disclosures of commodity derivatives in the tables below.
Futures, swaps or other commodity related derivative instruments that are utilized to specifically provide economic hedges on our Canadian forward contract or investment positions are recognized in other operating income, net because that is where the related underlying transactions are reflected.
From time to time, we also enter into future commitments to purchase or sell RINs at fixed prices and quantities, which are used to manage the costs associated with our RINs Obligation. These future RINs commitment contracts meet the definition of derivative instruments under ASC 815, and are recorded at estimated fair value in accordance with the provisions of ASC 815. Changes in the fair value of these future RINs commitment contracts are recorded in cost of materials and other on the consolidated statements of income. As of December 31, 2023, we do not believe there is any material credit risk with respect to the counterparties to any of our derivative contracts.
The following table presents the fair value of our derivative instruments as of December 31, 2023 and December 31, 2022. The fair value amounts below are presented on a gross basis and do not reflect the netting of asset and liability positions permitted under our master netting arrangements, including cash collateral on deposit with our counterparties. We have elected to offset the recognized fair value amounts for multiple derivative instruments executed with the same counterparty in our financial statements. As a result, the asset and liability amounts below differ from the amounts presented in our consolidated balance sheets. See Note 12 for further information regarding the fair value of derivative instruments (in millions).
December 31, 2023December 31, 2022
Derivative TypeBalance Sheet LocationAssetsLiabilitiesAssetsLiabilities
Derivatives not designated as hedging instruments:
Commodity derivatives (1)
Other current assets$6.6 $(7.1)$217.1 $(204.4)
Commodity derivatives (1)
Other current liabilities— (0.8)101.0 (129.5)
Commodity derivatives (1)
Other long-term assets— — 1.1 (0.8)
RINs commitment contracts (2)
Other current assets— — 9.7 — 
RINs commitment contracts (2)
Other current liabilities— (3.1)— (6.6)
Total gross fair value of derivatives6.6 (11.0)328.9 (341.3)
Less: Counterparty netting and cash collateral (3)
5.3 (7.1)306.2 (320.0)
Total net fair value of derivatives$1.3 $(3.9)$22.7 $(21.3)
(1)As of December 31, 2023 and December 31, 2022, we had open derivative positions representing 55,336,870 and 154,263,020 barrels, respectively, of crude oil and refined petroleum products. Additionally, as of December 31, 2022, we had open derivative positions representing 2,310,000 million British Thermal Units ("MMBTU"), respectively, of natural gas products. We had no open derivative positions of natural gas products as of December 31, 2023.
(2)As of December 31, 2023 and December 31, 2022, we had open RINs commitment contracts representing 41,636,461 and 259,022,967 RINs, respectively.
(3)As of December 31, 2023 and December 31, 2022, $1.8 million and $13.8 million, respectively, of cash collateral held by counterparties has been netted with the derivatives with each counterparty.
Total gains (losses) on our non-trading commodity derivatives and RINs commitment contracts recorded in the consolidated statements of income are as follows (in millions) (2):
Year Ended December 31,
202320222021
Gains (losses) on hedging derivatives not designated as hedging instruments recognized in cost of materials and other (1)
$(68.6)$(38.0)$37.7 
Gains (losses) on non-trading physical forward contract commodity derivatives in cost of materials and other(2.4)9.0 (6.6)
Losses on hedging derivatives not designated as hedging instruments recognized in operating expenses— (1.7)— 
Realized gains reclassified out of accumulated other comprehensive income and into cost of materials and other on commodity derivatives designated as cash flow hedging instruments— — 0.2 
Total gains (losses) $(71.0)$(30.7)$31.3 
(1) Gains (losses) on commodity derivatives that are economic hedges but not designated as hedging instruments include unrealized (losses) gains of $(15.3) million, $(15.4) million and $7.8 million for the years ended December 31, 2023, 2022 and 2021, respectively.
(2)    See separate table below for disclosures about "trading derivatives."
Total gains (losses) on our trading derivatives (none of which were designated as hedging instruments) recorded in other operating (income) expense, net on the consolidated statements of income are as follows (in millions):
Year Ended December 31,
202320222021
Trading Physical Forward Contract Commodity Derivatives
Realized gains$8.3 $16.1 $6.5 
Unrealized gains (losses)0.2 (0.4)— 
Total$8.5 $15.7 $6.5 
Trading Hedging Commodity Derivatives
Realized (losses) gains$(1.9)$13.5 $3.3 
Unrealized gains (losses)2.3 (18.5)16.2 
 Total$0.4 $(5.0)$19.5