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INVENTORIES

12 Months Ended

Dec. 31, 2011

5. INVENTORIES

Our inventory amounts were as follows at the dates indicated (in thousands):


	December 31,
	2011		2010
Refined petroleum products (1)	$	285,509	$	340,659
Materials and supplies		12,795		10,946

Total inventories	$	298,304	$	351,605

(1)	Ending inventory was 99.6 million and 134.9 million gallons of refined petroleum products at December 31, 2011 and 2010, respectively.

At December 31, 2011 and 2010, approximately 96% and 94%, respectively, of our refined petroleum products inventory volumes were hedged. Because we generally designate inventory as a hedged item upon purchase, hedged inventory is valued at current market prices with the change in value of the inventory reflected in our consolidated statements of operations. Inventory not accounted for as a fair value hedge is accounted for at the lower of cost or market using the weighted average cost method.

- Definition

The entire disclosure for inventory. This may include, but is not limited to, the basis of stating inventory, the method of determining inventory cost, the major classes of inventory, and the nature of the cost elements included in inventory. If inventory is stated above cost, accrued net losses on firm purchase commitments for inventory and losses resulting from valuing inventory at the lower-of-cost-or-market may also be included. For LIFO inventory, may disclose the amount and basis for determining the excess of replacement or current cost over stated LIFO value and the effects of a LIFO quantities liquidation that impacts net income.

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