DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables)

12 Months Ended

Dec. 31, 2011

Commodity Derivative Instruments Outstanding

The following table summarizes our commodity derivative instruments outstanding at December 31, 2011 (amounts in thousands of gallons, except as noted):

	Volume (1)
Derivative Purpose	Current		Long-Term (2)		Accounting Treatment
Derivatives Not designated as hedging instruments:
Physical fixed price derivative contracts for refined products		27,744		—		Mark-to-market
Physical index derivative contracts		155,054		—		Mark-to-market
Futures contracts for refined products		30,324		—		Mark-to-market
Derivatives designated as hedging instruments:
Futures contracts for refined products		95,277		—		Fair Value Hedge

(1) Volume represents absolute value of net notional volume position.

(2) At December 31, 2011, we did not have any derivatives with a contract month exceeding December 31, 2012.

Fair Value of Each Classification of Derivative Instruments

The following table sets forth the fair value of each classification of derivative instruments at the dates indicated (in thousands):

	December 31, 2011
	Derivatives Not Designated as Hedging Instruments			Derivatives Designated as Hedging Instruments			Derivative Net Carrying Value			Netting Balance Sheet Adjustment			Total
Physical fixed price derivative contracts	$	5,351		$	—		$	5,351		$	(59	)	$	5,292
Physical index derivative contracts		853						853			(19	)		834
Futures contracts for refined products		3,594			2,664			6,258			(5,628	)		630
Total current derivative assets		9,798			2,664			12,462			(5,706	)		6,756
Physical derivative contracts		(1,304	)		—			(1,304	)		59			(1,245	)
Physical index derivative contracts		(633	)		—			(633	)		19			(614	)
Futures contracts for refined products		(3,154	)		(2,474	)		(5,628	)		5,628			—
Total current derivative liabilities		(5,091	)		(2,474	)		(7,565	)		5,706			(1,859	)
Interest rate derivatives		—			(101,911	)		(101,911	)		—			(101,911	)
Total non-current derivative liabilities		—			(101,911	)		(101,911	)		—			(101,911	)
Net derivative assets/(liabilities)	$	4,707		$	(101,721	)	$	(97,014	)	$	—		$	(97,014	)
	December 31, 2010
	Derivatives Not Designated as Hedging Instruments			Derivatives Designated as Hedging Instruments			Derivative Net Carrying Value			Netting Balance Sheet Adjustment			Total
Physical derivative contracts	$	1,552		$	—		$	1,552		$	(30	)	$	1,522
Futures contracts for refined products		36,916			—			36,916			(36,804	)		112
Total current derivative assets		38,468			—			38,468			(36,834	)		1,634
Interest rate contracts		—			5,351			5,351			(1,459	)		3,892
Total long-term derivative assets		—			5,351			5,351			(1,459	)		3,892
Physical derivative contracts		(3,930	)		—			(3,930	)		30			(3,900	)
Futures contracts for refined products		(21,368	)		(28,071	)		(49,439	)		36,804			(12,635	)
Futures contract for natural gas		—			(206	)		(206	)		—			(206	)
Interest rate contracts		—			(2,003	)		(2,003	)		1,459			(544	)
Total current derivative liabilities		(25,298	)		(30,280	)		(55,578	)		38,293			(17,285	)
Net assets/(liabilities)	$	13,170		$	(24,929	)	$	(11,759	)	$	—		$	(11,759	)

Location of Derivative Instruments on Condensed Consolidated Balance Sheets

The following table sets forth the location of derivative instruments on our consolidated balance sheets at the dates indicated (in thousands):

	December 31,
	2011			2010
Derivative assets	$	6,756		$	1,634
Other non-current assets		—			3,892
Derivative liabilities		(1,859	)		(17,285	)
Other non-current liabilities		(101,911	)		—
Total	$	(97,014	)	$	(11,759	)

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):

		Gain (Loss) Recognized in Income on Derivatives for the Year  Ended December 31,
	Location	2011			2010
Derivatives Not designated as hedging instruments:
Physical fixed price derivative contracts	Product sales	$	5,141		$	3,032
Physical index derivative contracts	Product sales		123			—
Physical fixed price derivative contracts	Cost of product sales and natural gas storage services		5,968			—
Physical index derivative contracts	Cost of product sales and natural gas storage services		98			—
Futures contracts for refined products	Cost of product sales and natural gas storage services		7,103			22,073
Derivatives designated as fair value hedging instruments:
Futures contracts for refined products	Cost of product sales and natural gas storage services	$	(47,681	)	$	(61,235	)
Physical Inventory—hedged items	Cost of product sales and natural gas storage services		37,986			55,405
Ineffectiveness excluding the time value component on fair value hedging instruments:
Fair Value hedge ineffectiveness (excluding time value)	Cost of product sales and natural gas storage services	$	(500	)	$	9,746
Time value excluded from hedge assessment	Cost of product sales and natural gas storage services		(9,195	)		(15,576	)
Net loss in income		$	(9,695	)	$	(5,830	)

Gains and Losses Reclassified from AOCI to Income and Change in Value Recognized in Other Comprehensive Income (OCI) on Derivatives

The gains and losses reclassified from AOCI to income and the change in value recognized in other comprehensive income (“OCI”) on our derivatives were as follows for the periods indicated (in thousands):

		Gain (Loss) Reclassified From AOCI to Income for the Year Ended December 31,
	Location	2011			2010
Derivatives designated as cash flow hedging instruments:
Futures contracts for natural gas	Cost of product sales and natural gas storage services	$	(250	)	$	(428	)
Interest rate derivatives	Interest and debt expense		(920	)		(964	)
		Change in Value Recognized in OCI on Derivatives for the Year Ended December 31,
		2011			2010
Derivatives designated as cash flow hedging instruments:
Futures contracts for natural gas		$	(46	)	$	(929	)
Interest rate derivatives			(104,763	)		(13,856	)