Fair Value Measurements (Policies)

6 Months Ended

Jun. 30, 2014

Fair value of financial instruments policy

We classify financial assets and financial liabilities into the following fair value hierarchy:


•	level 1 - valued based on quoted prices in active markets for identical assets and liabilities;


•	level 2 - valued based on quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability; and


•	level 3 - valued based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

We measure fair value using level 1 inputs, when available, because they provide the most reliable evidence of fair value. Our financial assets and financial liabilities measured at fair value on a recurring basis include derivative instruments along with obligations for Renewable Identification Numbers (“RINs”) and cap and trade emission credits for the state of California (together with RINs, our “Environmental Credit Obligations”). We did not have any financial assets or liabilities classified as level 3 at June 30, 2014 or December 31, 2013. See Note I for further information on the Company’s derivative instruments.