Product Sales Revenue

The amounts reported as product sales revenue on our consolidated statements of income include revenue from the physical sale of petroleum products and from mark-to-market adjustments from NYMEX contracts. We use NYMEX contracts to hedge against changes in the price of refined products we expect to sell from our business activities where we acquire or produce petroleum products. Some of these NYMEX contracts qualify for hedge accounting treatment and we designate and account for these as either cash flow or fair value hedges. The effective portion of the fair value changes in contracts designated as cash flow hedges are recognized as adjustments to product sales when the hedged product is physically sold. Ineffectiveness in the contracts designated as cash flow hedges is recognized as an adjustment to product sales in the period the ineffectiveness occurs. We account for NYMEX contracts that do not qualify for hedge accounting treatment as economic hedges, with the period changes in fair value recognized as product sales, except for those agreements that economically hedge the inventories associated with our pipeline system overages (the period changes in the fair value of these agreements are charged to operating expense). See Note 13 - Derivative Financial Instruments for further disclosures regarding our NYMEX contracts.

For the years ended December 31, 2011, 2012 and 2013, product sales revenue included the following (in thousands):



	Year Ended December 31,
	2011			2012			2013
Physical sale of refined products	$	870,007		$	833,581		$	755,266
NYMEX contract adjustments:
Change in value of NYMEX contracts that did not qualify for hedge accounting treatment and the effective portion of gains and losses of matured NYMEX contracts that qualified for hedge accounting treatment associated with our butane blending and fractionation activities⁽¹⁾	(4,330		)	(30,270		)	(10,586		)
Change in value of NYMEX contracts that did not qualify for hedge accounting treatment associated with the Houston-to-El Paso pipeline section linefill working inventory⁽¹⁾	(11,149		)	(3,940		)	—
Other	—			11			(11		)
Total NYMEX contract adjustments	(15,479		)	(34,199		)	(10,597		)
Total product sales revenue	$	854,528		$	799,382		$	744,669

(1) The associated refined products for these activities are, to the extent still owned as of the statement date, or were, to the extent no longer owned as of the statement date, classified as inventory in current assets on our consolidated balance sheets.