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 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.

The following table presents the fair value of our derivative instruments as of March 31, 2018 and December 31, 2017. The fair value amounts below are presented on a gross basis and do not reflect the netting of asset and liability positions permitted under our master netting arrangements, including any cash deficit or collateral on deposit with our counterparties. We have elected to offset the recognized fair value amounts for multiple derivative instruments executed with the same counterparty in our financial statements. As a result, the asset and liability amounts below differ from the amounts presented in our accompanying condensed consolidated balance sheets. During the three months ended March 31, 2018 and 2017, we did not elect hedge accounting 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 and comprehensive income. See Note 13 for further information regarding the fair value of derivative instruments.



(in thousands)		March 31, 2018						December 31, 2017
Derivative Type	Balance Sheet Location	Assets			Liabilities			Assets		Liabilities
Derivatives:
Commodity derivatives ⁽¹⁾	Accrued expenses and other current liabilities	$	13		$	(167	)	$	—	$	(1,087	)
Total gross fair value of derivatives		13			(167		)	—		(1,087		)
Less: Counterparty netting and cash collateral (deficit) ⁽²⁾		(13		)	(209		)	—		290
Total net fair value of derivatives		$	—		$	(376	)	$	—	$	(797	)

⁽¹⁾As of March 31, 2018 and December 31, 2017, we had open derivative contracts representing 189,000 barrels and 370,000 barrels, respectively, of refined petroleum products.

⁽²⁾ As of March 31, 2018 and December 31, 2017, we had a cash deficit of $0.2 million and cash collateral of $0.3 million, respectively, netted with the net derivative position of our counterparty.

Recognized gains (losses) associated with our derivatives for the three months ended March 31, 2018 and 2017 were as follows (in thousands):



		Three Months Ended March 31,
Derivative Type	Income Statement Location	2018		2017
Commodity derivatives	Cost of goods sold	$	1,583	$	510