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Derivative Instruments (Notes)
 6 Months Ended
Jun. 30, 2014
Derivative Instruments [Abstract]  
Derivative Instruments
Derivative Instruments
From time to time, we enter into forward fuel contracts to limit the exposure to price fluctuations for physical purchases of finished products in the normal course of business. We use derivatives to reduce normal operating and market risks with a primary objective in derivative instrument use being the reduction of the impact of market price volatility on our results of operations.
We enter into forward fuel contracts with major financial institutions in which we fix the purchase price of finished grade fuel for a predetermined number of units with fulfillment terms of less than 90 days. During the three and six months ended June 30, 2014 and June 30, 2013, we did not elect hedge treatment for these derivative positions. As a result, all changes in fair value are marked to market in the accompanying condensed consolidated statements of income.
From time to time, we may also enter into interest rate hedging agreements to limit floating interest rate exposure under the Amended and Restated Credit Agreement. The prior credit facility required us to maintain interest rate hedging arrangements on at least 50% of the amount funded on November 7, 2012 under the credit facility, which was required to be in place for at least a three-year period beginning no later than March 7, 2013. Effective February 25, 2013, we entered into interest rate hedges in the form of a LIBOR interest rate cap for a term of three years for a total notional amount of $45.0 million, thereby meeting the requirements in effect at that time. These requirements were eliminated in connection with the Amended and Restated Credit Agreement in July 2013.
The tables below present the fair value of our derivative instruments, as of June 30, 2014 and December 31, 2013 (in thousands).
 
 
 
June 30, 2014
 
December 31, 2013
Derivative Type
Balance Sheet Location
 
Assets
 
Liabilities
 
Assets
 
Liabilities
Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
 
Interest rate derivatives
Other long term assets
 
$
41

 
$
—

 
$
116

 
$
—

Commodity derivatives (1)
Other current assets
 
309

 
(21
)
 
—

 
—

Total gross value of derivatives
 
$
350

 
$
(21
)
 
$
116

 
$
—

Less: Counterparty netting and cash collateral (2)
 
(264
)
 
(21
)
 
—

 
—

Total net fair value of derivatives
 
$
614

 
$
—

 
$
116

 
$
—


            

(1) As of June 30, 2014, we had open derivative contracts representing 182,000 barrels of refined petroleum products.

(2) As of June 30, 2014, $0.3 million of cash collateral associated with our commodity derivatives has been netted with the derivative positions with each counterparty.
Recognized gains (losses) associated with derivatives not designated as hedging instruments for the three and six months ended June 30, 2014 and 2013 were as follows (in thousands):
 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
Derivative Type
Income Statement Location
 
2014
 
2013
 
2014
 
2013
Interest rate derivatives
Interest expense
 
$
(54
)
 
$
92

 
$
(75
)
 
$
25

Commodity derivatives
Cost of goods sold
 
(175
)
 
101

 
(304
)
 
(103
)
 
Total
 
$
(229
)
 
$
193

 
$
(379
)
 
$
(78
)