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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables)
 9 Months Ended
Sep. 30, 2016
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Summary of commodity derivative instruments outstanding
The following table summarizes our commodity derivative instruments outstanding at September 30, 2016 (amounts in thousands of gallons):
 
 
Volume (1)
 
Accounting
Derivative Purpose 
 
Current
 
Long-Term
 
Treatment
Derivatives NOT designated as hedging instruments:
 
 

 
 

 
 
Physical fixed price derivative contracts
 
8,504

 
1,073

 
Mark-to-market
Physical index derivative contracts
 
31,274

 
—

 
Mark-to-market
Futures contracts for refined petroleum products
 
24,819

 
16,926

 
Mark-to-market
 
 
 
 
 
 
 
Derivatives designated as hedging instruments:
 
 

 
 

 
 
Physical fixed price derivative contracts
 
1,176

 
—

 
Fair Value Hedge
Futures contracts for refined petroleum products
 
163,800

 
—

 
Fair Value Hedge
                                                     
(1)
Volume represents absolute value of net notional volume position.
Fair value of each classification of derivative instrument and their location in the unaudited consolidated balance sheet
The following table sets forth the fair value of each classification of derivative instruments and the locations of the derivative instruments on our unaudited condensed consolidated balance sheets at the dates indicated (in thousands):
 
September 30, 2016
 
Derivatives NOT Designated as Hedging Instruments
 
Derivatives Designated as Hedging Instruments
 
Derivative Carrying Value
 
Netting Balance Sheet Adjustment (1)
 
Net Total
Physical fixed price derivative contracts
$
4,046

 
$
67

 
$
4,113

 
$
(505
)
 
$
3,608

Physical index derivative contracts
67

 
—

 
67

 
(1
)
 
66

Futures contracts for refined products
20,655

 
1,005

 
21,660

 
(21,660
)
 
—

Total current derivative assets
24,768

 
1,072

 
25,840

 
(22,166
)
 
3,674

Physical fixed price derivative contracts
293

 
—

 
293

 
(8
)
 
285

Futures contracts for refined products
84

 
—

 
84

 
(84
)
 
—

Interest rates derivatives
—

 
1,052

 
1,052

 
—

 
1,052

Total non-current derivative assets
377

 
1,052

 
1,429

 
(92
)
 
1,337

Physical fixed price derivative contracts
(2,673
)
 
—

 
(2,673
)
 
505

 
(2,168
)
Physical index derivative contracts
(41
)
 
—

 
(41
)
 
1

 
(40
)
Futures contracts for refined products
(29,231
)
 
(12,257
)
 
(41,488
)
 
21,660

 
(19,828
)
Total current derivative liabilities
(31,945
)
 
(12,257
)
 
(44,202
)
 
22,166

 
(22,036
)
Physical fixed price derivative contracts
(27
)
 
—

 
(27
)
 
8

 
(19
)
Futures contracts for refined products
(4,042
)
 
—

 
(4,042
)
 
84

 
(3,958
)
Total non-current derivative liabilities
(4,069
)
 
—

 
(4,069
)
 
92

 
(3,977
)
Net derivative liabilities
$
(10,869
)
 
$
(10,133
)
 
$
(21,002
)
 
$
—

 
$
(21,002
)
                                                      
(1)
Amounts represent the netting of physical fixed and index contracts’ assets and liabilities when a legal right of offset exists.  Futures contracts are subject to settlement through margin requirements and are additionally presented on a net basis. 
 
December 31, 2015
 
Derivatives NOT Designated as Hedging Instruments
 
Derivatives Designated as Hedging Instruments
 
Derivative Carrying Value
 
Netting Balance Sheet Adjustment (1)
 
Net Total
Physical fixed price derivative contracts
$
26,698

 
$
—

 
$
26,698

 
$
(79
)
 
$
26,619

Physical index derivative contracts
87

 
—

 
87

 
(62
)
 
25

Futures contracts for refined products
136,131

 
36,834

 
172,965

 
(121,324
)
 
51,641

Total current derivative assets
162,916

 
36,834

 
199,750

 
(121,465
)
 
78,285

Physical fixed price derivative contracts
1,057

 
—

 
1,057

 
—

 
1,057

Total non-current derivative assets
1,057

 
—

 
1,057

 
—

 
1,057

Physical fixed price derivative contracts
(535
)
 
—

 
(535
)
 
79

 
(456
)
Physical index derivative contracts
(116
)
 
—

 
(116
)
 
62

 
(54
)
Futures contracts for refined products
(119,506
)
 
(1,818
)
 
(121,324
)
 
121,324

 
—

Total current derivative liabilities
(120,157
)
 
(1,818
)
 
(121,975
)
 
121,465

 
(510
)
Futures contracts for refined products
(703
)
 
—

 
(703
)
 
—

 
(703
)
Total non-current derivative liabilities
(703
)
 
—

 
(703
)
 
—

 
(703
)
Net derivative assets
$
43,113

 
$
35,016

 
$
78,129

 
$
—

 
$
78,129

                                                      
(1)
Amounts represent the netting of physical fixed and index contracts’ assets and liabilities when a legal right of offset exists.  Futures contracts are subject to settlement through margin requirements and are additionally presented on a net basis.
Gains and losses on derivative instruments recognized in income
 
The gains and losses on our derivative instruments recognized in income were as follows for the periods indicated (in thousands):
 
 
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
Location
 
2016
 
2015
 
2016
 
2015
Derivatives NOT designated as hedging instruments:
 
 
 

 
 

 
 

 
 

Physical fixed price derivative contracts
Product sales
 
$
301

 
$
15,731

 
$
(7,263
)
 
$
19,660

Physical index derivative contracts
Product sales
 
142

 
(299
)
 
130

 
(309
)
Physical fixed price derivative contracts
Cost of product sales
 
479

 
3,600

 
7,965

 
10,191

Physical index derivative contracts
Cost of product sales
 
30

 
(288
)
 
193

 
(224
)
Futures contracts for refined products
Cost of product sales
 
(307
)
 
(10,992
)
 
4,326

 
2,591

 
 
 
 
 
 
 
 
 
 
Derivatives designated as fair value hedging instruments:
 
 
 

 
 

 
 

 
 

Futures contracts for refined products
Cost of product sales
 
$
(635
)
 
$
54,514

 
$
(27,590
)
 
$
21,959

Physical inventory - hedged items
Cost of product sales
 
3,620

 
(55,424
)
 
43,627

 
(34,848
)
 
 
 
 
 
 
 
 
 
 
Ineffectiveness excluding the time value component on fair value hedging instruments:
 
 
 

 
 

 
 

 
 

Fair value hedge ineffectiveness (excluding time value)
Cost of product sales
 
$
(4,262
)
 
$
2,626

 
$
(4,275
)
 
$
2,476

Time value excluded from hedge assessment
Cost of product sales
 
7,247

 
(3,536
)
 
20,312

 
(15,365
)
Net gain (loss) in income
 
 
$
2,985

 
$
(910
)
 
$
16,037

 
$
(12,889
)
Losses reclassified from AOCI to income (effective portion)
The change in value recognized in other comprehensive income (“OCI”) and the losses reclassified from AOCI to income attributable to our derivative instruments designated as cash flow hedges were as follows for the periods indicated (in thousands):

 
Gain Recognized in OCI on Derivatives for the
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2016
 
2015
 
2016
 
2015
Derivatives designated as cash flow hedging instruments:
 

 
 

 
 

 
 

Interest rate contracts
$
1,052

 
$
—

 
$
1,052

 
$
—

Commodity derivatives
—

 
11,168

 
—

 
7,311

Total
$
1,052

 
$
11,168

 
$
1,052

 
$
7,311


 
 
 
(Loss) Gain Reclassified from AOCI to Income (Effective Portion) for the
 
 
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
Location
 
2016
 
2015
 
2016
 
2015
Derivatives designated as cash flow hedging instruments:
 
 
 

 
 

 
 

 
 

Interest rate contracts
Interest and debt expense
 
$
(3,037
)
 
$
(3,037
)
 
$
(9,112
)
 
$
(9,113
)
Commodity derivatives
Product Sales
 
—

 
—

 
1,266

 
—

Total
 
 
$
(3,037
)
 
$
(3,037
)
 
$
(7,846
)
 
$
(9,113
)