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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables)
 9 Months Ended
Sep. 30, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Summary of commodity derivative instruments outstanding
The following table summarizes the notional volumes of the net long (short) positions of our commodity derivative instruments outstanding at September 30, 2019 (amounts in thousands of gallons):
 
 
Volume
 
 
Derivative Purpose 
 
Current
 
Long-Term
 
 
Derivatives NOT designated as hedging instruments:
 
 

 
 

 
 
Physical fixed-price derivative contracts
 
(14,544
)
 
(879
)
 
 
Physical index derivative contracts
 
(677
)
 
—

 
 
Futures contracts for refined petroleum products
 
(26,622
)
 
1,638

 
 
 
 
 
 
 
 
Hedge Type
Derivatives designated as hedging instruments:
 
 

 
 

 
 
Cash flow hedge futures contracts
 
29,652

 
—

 
Cash Flow Hedge
Physical fixed price derivative contracts
 
(2,946
)
 
—

 
Cash Flow Hedge
Futures contracts for refined petroleum products
 
(50,568
)
 
—

 
Fair Value Hedge
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 derivative instruments’ location on our unaudited condensed consolidated balance sheets at the dates indicated (in thousands):
    
September 30, 2019
 
Derivative
Carrying Value
 
Netting Balance Sheet Adjustment (1)
 
Net Total
Physical fixed-price derivative contracts
$
5,778

 
$
(230
)
 
$
5,548

Physical index derivative contracts
139

 
(36
)
 
103

Total current derivative assets
5,917

 
(266
)
 
5,651

Physical fixed-price derivative contracts
138

 
—

 
138

Total non-current derivative assets
138

 
—

 
138

Physical fixed-price derivative contracts
(1,166
)
 
230

 
(936
)
Physical index derivative contracts
(145
)
 
36

 
(109
)
Total current derivative liabilities
(1,311
)
 
266

 
(1,045
)
Net derivative assets
$
4,744

 
$
—

 
$
4,744

 
                                                      
(1) Amounts represent the netting of physical fixed price and index contracts’ assets and liabilities when a legal right of offset exists.
 
December 31, 2018
 
Derivative
Carrying Value (1)
 
Netting Balance Sheet Adjustment (2)
 
Net Total
Physical fixed-price derivative contracts
$
17,934

 
$
(84
)
 
$
17,850

Physical index derivative contracts
286

 
(117
)
 
169

Total current derivative assets
18,220

 
(201
)
 
18,019

Physical fixed-price derivative contracts
1,003

 
—

 
1,003

Total non-current derivative assets
1,003

 
—

 
1,003

Physical fixed-price derivative contracts
(1,386
)
 
84

 
(1,302
)
Physical index derivative contracts
(135
)
 
117

 
(18
)
Total current derivative liabilities
(1,521
)
 
201

 
(1,320
)
Physical fixed-price derivative contracts
(3
)
 
—

 
(3
)
Total non-current derivative liabilities
(3
)
 
—

 
(3
)
Net derivative assets
$
17,699

 
$
—

 
$
17,699

                                                      
(1)
Other than our exchange-settled derivative contracts, as of December 31, 2018, none of our derivative instruments were designated as hedging instruments.
(2)
Amounts represent the netting of physical fixed price and index contracts’ assets and liabilities when a legal right of offset exists. 
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
 
2019
 
2018
 
2019
 
2018
Derivatives NOT designated as hedging instruments:
 
 
 

 
 

 
 

 
 

Physical fixed price derivative contracts
Product sales
 
$
2,927

 
$
(3,887
)
 
$
(4,948
)
 
$
(4,192
)
Physical index derivative contracts
Product sales
 
63

 
123

 
171

 
283

Physical fixed price derivative contracts
Cost of product sales
 
(4,253
)
 
697

 
(5,884
)
 
644

Physical index derivative contracts
Cost of product sales
 
(127
)
 
53

 
(343
)
 
479

Futures contracts for refined products
Cost of product sales
 
2,403

 
2,493

 
4,251

 
(2,070
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
Location
 
2019
 
2018
 
2019
 
2018
Derivatives designated as fair value hedging instruments:
 
 
 
 
 

 
 

 
 

Futures contracts for refined products
Cost of product sales
 
$
1,886

 
$
(8,049
)
 
$
(25,738
)
 
$
(12,355
)
Physical inventory - hedged items
Cost of product sales
 
(1,041
)
 
7,214

 
27,524

 
10,754

 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
Location
 
2019
 
2018
 
2019
 
2018
Ineffectiveness excluding the time value component on fair value hedging instruments:
 
 
 
 
 

 
 

 
 

Fair value hedge ineffectiveness (excluding time value)
Cost of product sales
 
$
2,464

 
$
1,196

 
$
(245
)
 
$
1,000

Time value excluded from hedge assessment
Cost of product sales
 
(1,619
)
 
(2,031
)
 
2,031

 
(2,601
)
Net (loss) gain for ineffectiveness in income
 
 
$
845

 
$
(835
)
 
$
1,786

 
$
(1,601
)
(Loss) gain recognized in OCI and gains (losses) reclassified from AOCI to income
The change in value recognized in OCI and the losses reclassified from accumulated other comprehensive income (“AOCI”) to income, attributable to our derivative instruments designated as cash flow hedges, were as follows for the periods indicated (in thousands):
 
Gain (Loss) Recognized in OCI on Derivatives for the
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
Derivatives designated as cash flow hedging instruments:
 

 
 

 
 

 
 

Interest rate contracts
$
—

 
$
7,322

 
$
—

 
$
27,739

Commodity derivatives
2,033

 
(193
)
 
1,311

 
2,464

Total
$
2,033

 
$
7,129

 
$
1,311

 
$
30,203


 
 
 
Loss Reclassified from AOCI to Income (Effective Portion) for the
 
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
Location
 
2019
 
2018
 
2019
 
2018
Derivatives designated as cash flow hedging instruments:
 
 
 

 
 

 
 

 
 

Interest rate derivative contracts
Interest and debt expense
 
$
(2,296
)
 
$
(2,296
)
 
$
(6,888
)
 
$
(6,928
)
Total
 
 
$
(2,296
)
 
$
(2,296
)
 
$
(6,888
)
 
$
(6,928
)