Inventories

Inventory consists of the following components:



	June 30, 2017			December 31, 2016
	(In thousands)
Crude oil	$	543,139		$	549,886
Other raw materials and unfinished products⁽¹⁾	342,991			287,561
Finished products⁽²⁾	606,371			465,432
Lower of cost or market reserve	(428,323		)	(332,518		)
Process chemicals⁽³⁾	21,704			2,767
Repair and maintenance supplies and other ⁽⁴⁾	106,091			162,548
Total inventory	$	1,191,973		$	1,135,676


(1)	Other raw materials and unfinished products include feedstocks and blendstocks, other than crude.


(2)	Finished products include gasolines, jet fuels, diesels, lubricants, asphalts, LPG’s and residual fuels.


(3)	Process chemicals include additives and other chemicals.


(4)	Includes RINs.

We acquired $213.0 million of other raw materials, unfinished and finished products and repair and maintenance supplies in connection with our February 1, 2017 acquisition of PCLI. We value these inventories at the lower of FIFO cost or net realizable value.

Inventories, which are valued at the lower of LIFO cost or market, reflect a valuation reserve of $428.3 million and $332.5 million at June 30, 2017 and December 31, 2016, respectively. The December 31, 2016 market reserve of $332.5 million was reversed due to the sale of inventory quantities that gave rise to the 2016 reserve. A new market reserve of $428.3 million was established as of June 30, 2017 based on market conditions and prices at that time. The effect of the change in lower of cost or market reserve was an increase to cost of goods sold totaling $84.0 million for the three months ended June 30, 2017 and a decrease of $138.5 million for the three months ended June 30, 2016, respectively, and an increase to cost of goods sold totaling $95.8 million for the six months ended June 30, 2017 and a decrease of $194.6 million for the six months ended June 30, 2016.

At June 30, 2017, the LIFO value of inventory, net of the lower of cost or market reserve, was equal to current costs.

In May 2017, the Environmental Protection Agency (“EPA”) granted the Cheyenne Refinery a one-year small refinery exemption from the Renewable Fuel Standard (“RFS”) program requirements for the 2016 calendar year. As a result, the Cheyenne Refinery’s gasoline and diesel production are not subject to the percentage of production that must satisfy a Renewable Volume Obligation (“RVO”) for 2016. We are currently working with the EPA to reinstate the RINs previously submitted to meet our Cheyenne Refinery’s 2016 RVO and expect the EPA to reinstate these RINs. The cost of the RINs used earlier to satisfy the Cheyenne Refinery’s 2016 RVO of $30.5 million was charged to cost of products sold in 2016. In the second quarter of 2017, we increased our inventory of RINs and reduced our cost of products sold by this amount, representing the cost of the RINs to be reinstated as a result of the RFS exemption received by the Cheyenne Refinery.