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Derivative Instruments (Notes)
 9 Months Ended
Sep. 30, 2015
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.

Typically, 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.

From time to time, we may also enter into interest rate hedging agreements to limit floating interest rate exposure under the Second Amended and Restated Credit Agreement. Our initial 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. Accordingly, 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, but the interest rate hedge remains in place in accordance with its terms.
The tables below present the fair value of our derivative instruments, as of September 30, 2015 and December 31, 2014. During the three and nine months ended September 30, 2015 and September 30, 2014, 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.

(in thousands)
 
 
September 30, 2015
 
December 31, 2014
Derivative Type
Balance Sheet Location
 
Assets
 
Liabilities
 
Assets
 
Liabilities
Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
 
Interest rate derivatives
Other long term assets
 
$
—

 
$
—

 
$
24

 
$
—

Commodity derivatives (1)
Other current liabilities
 
6

 
(9
)
 
456

 
(61
)
Total gross value of derivatives
 
6

 
(9
)
 
480

 
(61
)
Less: Counterparty netting and cash collateral (2)
 
6

 
72

 
61

 
(61
)
Total net fair value of derivatives
 
$
—

 
$
(81
)
 
$
419

 
$
—

            

(1) As of September 30, 2015 and December 31, 2014, we had open derivative contracts representing 3,000 barrels and 142,000 barrels, respectively, of refined petroleum products.

(2) As of September 30, 2015 we had negative cash collateral of $0.1 million netted with the derivatives of one of our counterparties. As of December 31, 2014, no 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 nine months ended September 30, 2015 and 2014 were as follows (in thousands):
 
 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
Derivative Type
Income Statement Location
 
2015
 
2014
 
2015
 
2014
Interest rate derivatives
Interest expense
 
$
(1
)
 
$
4

 
$
(24
)
 
$
(71
)
Commodity derivatives
Cost of goods sold
 
(116
)
 
1,804

 
66

 
1,500

 
Total
 
$
(117
)
 
$
1,808

 
$
42

 
$
1,429