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Derivatives | 12 Months Ended
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Dec. 31, 2012
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivatives | 17. Derivatives Commodity Derivatives We have exposure to commodity price changes related to our inventory and purchase commitments. We utilize derivative instruments (primarily futures and options contracts traded on the NYMEX) to hedge our exposure to commodity prices, primarily of crude oil, fuel oil and petroleum products. Our decision as to whether to designate derivative instruments as fair value hedges for accounting purposes relates to our expectations of the length of time we expect to have the commodity price exposure and our expectations as to whether the derivative contract will qualify as highly effective under accounting guidance in limiting our exposure to commodity price risk. Most of the petroleum products, including fuel oil that we supply cannot be hedged with a high degree of effectiveness with derivative contracts available on the NYMEX; therefore, we do not designate derivative contracts utilized to limit our price risk related to these products as hedges for accounting purposes. Typically we utilize crude oil and other petroleum products futures and option contracts to limit our exposure to the effect of fluctuations in petroleum products prices on the future sale of our inventory or commitments to purchase petroleum products, and we recognize any changes in fair value of the derivative contracts as increases or decreases in our cost of sales. The recognition of changes in fair value of the derivative contracts not designated as hedges for accounting purposes can occur in reporting periods that do not coincide with the recognition of gain or loss on the actual transaction being hedged. Therefore we will, on occasion, report gains or losses in one period that will be partially offset by gains or losses in a future period when the hedged transaction is completed. In accordance with NYMEX requirements, we fund the margin associated with our loss positions on commodity derivative contracts traded on the NYMEX. The amount of the margin is adjusted daily based on the fair value of the commodity contracts. The margin requirements are intended to mitigate a party’s exposure to market volatility and the associated contracting party risk. We offset fair value amounts recorded for our NYMEX derivative contracts against margin funding as required by the NYMEX in Current Assets - Other in our Consolidated Balance Sheets. At December 31, 2012, we had the following outstanding derivative commodity futures and options contracts that were entered into to economically hedge inventory or fixed price purchase commitments. We had no outstanding derivative contracts that were designated as hedges under accounting rules.
| Sell (Short) Contracts |  | Buy (Long) Contracts
Not qualifying or not designated as hedges under accounting rules: |  |  |
Crude oil futures: |  |  |
Contract volumes (1,000 bbls) | 316 |  |  | 199 |
Weighted average contract price per bbl | $ | 88.35 |  |  | $ | 89.66 |
Crude oil LLS/WTI swap: |  |  |
Contract volumes (1,000 bbls) | 100 |  |  | — |
Weighted average contract price per bbl | $ | 17.25 |  |  | $ | — |
Heating oil futures: |  |  |
Contract volumes (1,000 bbls) | 62 |  |  | — |
Weighted average contract price per gal | $ | 3.02 |  |  | $ | — |
# 6 Fuel oil futures: |  |  |
Contract volumes (1,000 bbls) | 765 |  |  | 160 |
Weighted average contract price per bbl | $ | 92.37 |  |  | $ | 93.06 |
Crude oil options: |  |  |
Contract volumes (1,000 bbls) | 325 |  |  | 85 |
Weighted average premium received | $ | 1.61 |  |  | $ | 0.55 |
Interest Rate Derivatives During 2010, our DG Marine subsidiary utilized swap contracts with financial institutions to hedge interest payments for its outstanding debt. DG Marine expected these interest rate swap contracts to be highly effective in limiting its exposure to fluctuations in market interest rates; therefore, we designated these swap contracts as cash flow hedges under accounting guidance. The effective portion of the derivative represented the change in fair value of the hedge that offset the change in cash flows of the hedged item. The effective portion of the gain or loss in the fair value of these swap contracts was reported as a component of Accumulated Other Comprehensive Loss (AOCL) and was reclassified into future earnings contemporaneously, as interest expense associated with the underlying debt was recorded. In the third quarter of 2010, we settled the DG Marine interest rate swaps in connection with our acquisition of the 51% interest of DG Marine that we did not own (see Note 3). Financial Statement Impacts The following table summarizes the accounting treatment and classification of our derivative instruments on our Consolidated Financial Statements.
Derivative Instrument |  | Hedged Risk |  | Impact of Unrealized Gains and Losses
|  | Consolidated Balance Sheets |  | Consolidated Statements of Operations
Designated as hedges under accounting guidance:
Crude oil futures contracts (fair value hedge) |  | Volatility in crude oil prices - effect on market value of inventory |  | Derivative is recorded in Other current assets (offset against margin deposits) and offsetting change in fair value of inventory is recorded in Inventories |  | Excess, if any, over effective portion of hedge is recorded in Supply and logistics costs - product costs Effective portion is offset in cost of sales against change in value of inventory being hedged
Interest rate swaps (cash flow hedge) (through July 2010) |  | Changes in interest rates |  | Not applicable |  | Expect hedge to fully offset hedged risk; no ineffectiveness recorded. Effective portion is recorded to AOCL and ultimately reclassified to Interest expense
Not qualifying or not designated as hedges under accounting guidance:
Commodity hedges consisting of crude oil, heating oil and natural gas futures and forward contracts and call options |  | Volatility in crude oil and petroleum products prices - effect on market value of inventory or purchase commitments |  | Derivative is recorded in Other current assets (offset against margin deposits) or Accrued liabilities |  | Entire amount of change in fair value of derivative is recorded in Supply and logistics costs - product costs
Unrealized gains are subtracted from net income and unrealized losses are added to net income in determining cash flows from operating activities. To the extent that we have fair value hedges outstanding, the offsetting change recorded in the fair value of inventory is also eliminated from net income in determining cash flows from operating activities. Changes in margin deposits necessary to fund unrealized losses also affect cash flows from operating activities. The following tables reflect the estimated fair value gain (loss) position of our derivatives at December 31, 2012 and 2011: Fair Value of Derivative Assets and Liabilities
|  |  | Fair Value |
| Consolidated Balance Sheets Location |  | December 31, 2012 |  |  |  | December 31, 2011 |
Asset Derivatives: |  |  |  |  |  |  |  |
Commodity derivatives—futures and call options: |  |  |  |  |  |  |  |
Undesignated hedges | Current Assets - Other |  | 758 |  |  |  |  | 306 |  |
Total asset derivatives |  |  | $ | 758 |  |  |  |  | $ | 306 |  |
Liability Derivatives: |  |  |  |  |  |  |  |
Commodity derivatives—futures and call options: |  |  |  |  |  |  |  |
Undesignated hedges | Current Assets - Other |  | (3,357 | ) |  | (1) |  | (2,820 | ) | (1)
Total liability derivatives |  |  | $ | (3,357 | ) |  |  |  | $ | (2,820 | ) |
(1) | These derivative liabilities have been funded with margin deposits recorded in our Consolidated Balance Sheets under Current Assets - Other.
Effect on Operating Results
| Amount of Loss Recognized in Income
| Supply & Logistics Product Costs |  | Interest Expense Reclassified from AOCL |  | Other Comprehensive Loss Effective Portion
| Year Ended December 31, |  | Year Ended December 31, |  | Year Ended December 31,
| 2012 |  | 2011 |  | 2010 |  | 2012 |  | 2011 |  | 2010 |  | 2012 |  | 2011 |  | 2010
Commodity derivatives—futures and call options: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Contracts designated as hedges under accounting guidance | $ | — |  |  | $ | (173 | ) | (1) | $ | 307 |  | (1) | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Contracts not considered hedges under accounting guidance | (2,388 | ) |  | (17,419 | ) |  | (4 | ) |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total commodity derivatives | (2,388 | ) |  | (17,592 | ) |  | 303 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Interest rate swaps designated as cash flow hedges under accounting guidance | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (2,112 | ) |  | — |  |  | — |  |  | (424 | )
Total derivatives | $ | (2,388 | ) |  | $ | (17,592 | ) |  | $ | 303 |  |  | $ | — |  |  | $ | — |  |  | $ | (2,112 | ) |  | $ | — |  |  | $ | — |  |  | $ | (424 | )
(1) | Represents the amount of loss recognized in income for derivatives related to the fair value hedge of inventory. The amount excludes the gain on the hedged inventory under the fair value hedge of $0.8 million and $1 million for the years ended 2011 and 2010, respectively.
We have no derivative contracts with credit contingent features.

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- Definition The entire disclosure for the entity's entire derivative instruments and hedging activities. Describes an entity's risk management strategies, derivatives in hedging activities and non-hedging derivative instruments, the assets, obligations, liabilities, revenues and expenses arising therefrom, and the amounts of and methodologies and assumptions used in determining the amounts of such items. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=7668309&loc=d3e80784-113994 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4C -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5624171-113959 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4E -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5624181-113959 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4K -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5708775-113959 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1A -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5579245-113959 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(n)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=7476318&loc=d3e41641-113959 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5579240-113959 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 45 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6441202&loc=d3e80720-113993 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=7476318&loc=d3e41638-113959 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=7476318&loc=d3e41635-113959 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 133 -Paragraph 44 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. 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