Derivative Commodity Instruments

12 Months Ended

Dec. 31, 2013

Derivative Instruments and Hedges, Assets [Abstract]

Derivative Commodity Instruments

Derivative Commodity Instruments

The Company uses derivative instruments to reduce price volatility risk on commodities, primarily natural gas and ethane, from time to time. The Company does not use derivative instruments to engage in speculative activities.

For derivative instruments that are designated and qualify as fair value hedges, the gains or losses on the derivative instruments, as well as the offsetting losses or gains on the hedged items attributable to the hedged risk, were included in cost of sales in the consolidated statements of operations in 2013, 2012 and 2011. As of December 31, 2013, the Company had no feedstock forward contracts designated as fair value hedges. The Company had 46,620,000 gallons of feedstock forward contracts designated as fair value hedges at December 31, 2012.

Gains and losses from changes in the fair value of derivative instruments that are not designated as hedging instruments were included in cost of sales in the consolidated statements of operations in 2013, 2012 and 2011.

The exposure on commodity derivatives used for price risk management includes the risk that the counterparty will not pay if the market declines below the established fixed price. In such case, the Company would lose the benefit of the derivative differential on the volume of the commodities covered. In any event, the Company would continue to receive the market price on the actual volume hedged. The Company also bears the risk that it could lose the benefit of market improvements over the fixed derivative price for the term and volume of the derivative instruments (as such improvements would accrue to the benefit of the counterparty).

Disclosures related to the Company's derivative assets and derivative liabilities subject to enforceable master netting arrangements have not been presented as they were not material to the Company's consolidated balance sheets at December 31, 2013 and 2012.

The fair values of derivative instruments in the Company's consolidated balance sheets were as follows:

	Asset Derivatives
	Balance Sheet Location	Fair Value as of December 31,
		2013		2012
Designated as hedging instruments
Commodity forward contracts	Accounts receivable, net	$	—	$	13,032
Not designated as hedging instruments
Commodity forward contracts	Accounts receivable, net	296		1,395
Total asset derivatives		$	296	$	14,427
	Liability Derivatives
	Balance Sheet Location	Fair Value as of December 31,
		2013		2012
Designated as hedging instruments
Commodity forward contracts	Accrued liabilities	$	—	$	399
Not designated as hedging instruments
Commodity forward contracts	Accrued liabilities	176		13,295
Total liability derivatives		$	176	$	13,694

The following tables reflect the impact of derivative instruments designated as fair value hedges and the related hedged item on the Company's consolidated statements of operations. There was no material ineffectiveness with regard to the Company's qualifying hedges in 2013, 2012 and 2011.

Derivatives in Fair Value    Hedging Relationships	Location of Gain (Loss) Recognized in Income on Derivative	Year Ended December 31,
		2013			2012		2011
Commodity forward contracts	Cost of sales	$	(303	)	$	17,163	$	(4,895	)

Hedged Items in Fair Value    Hedging Relationships	Location of Gain (Loss) Recognized in Income on  Hedged Items	Year Ended December 31,
		2013		2012			2011
Firm commitment designated as the    hedged item	Cost of sales	$	143	$	(18,394	)	$	5,092

The impact of derivative instruments that have not been designated as hedges on the Company's consolidated statements of operations were as follows:

Derivatives Not Designated as    Hedging Instruments	Location of Gain (Loss) Recognized in Income on Derivative	Year Ended December 31,
		2013		2012			2011
Commodity forward contracts	Gross profit	$	5,438	$	(11,626	)	$	2,043

See Note 13 for the fair value of the Company's derivative instruments.