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Inventories
3 Months Ended
Mar. 31, 2023
Inventories  
Inventories

Note 4.    Inventories

The Partnership hedges substantially all of its petroleum and ethanol inventory using a variety of instruments, primarily exchange-traded futures contracts. These futures contracts are entered into when inventory is purchased and are either designated as fair value hedges against the inventory on a specific barrel basis for inventories qualifying for

fair value hedge accounting or not designated and maintained as economic hedges against certain inventory of the Partnership on a specific barrel basis. Changes in fair value of these futures contracts, as well as the offsetting change in fair value on the hedged inventory, are recognized in earnings as an increase or decrease in cost of sales. All hedged inventory designated in a fair value hedge relationship is valued using the lower of cost, as determined by specific identification, or net realizable value, as determined at the product level. All petroleum and ethanol inventory not designated in a fair value hedging relationship is carried at the lower of historical cost, on a first-in, first-out basis, or net realizable value. Renewable Identification Numbers (“RINs”) inventory is carried at the lower of historical cost, on a first-in, first-out basis, or net realizable value. Convenience store inventory is carried at the lower of historical cost, based on a weighted average cost method, or net realizable value.

Inventories consisted of the following (in thousands):

March 31,

December 31,

    

2023

    

2022

Distillates: home heating oil, diesel and kerosene

$

100,813

$

205,076

Gasoline

 

147,256

 

160,386

Gasoline blendstocks

 

42,266

 

51,900

Residual oil

 

61,916

 

112,457

Renewable identification numbers (RINs)

 

2,488

 

5,098

Crude oil

 

1,459

 

2,248

Convenience store inventory

 

29,105

 

29,566

Total

$

385,303

$

566,731

In addition to its own inventory, the Partnership has exchange agreements for petroleum products and ethanol with unrelated third-party suppliers, whereby it may draw inventory from these other suppliers and suppliers may draw inventory from the Partnership. Positive exchange balances are accounted for as accounts receivable and amounted to $9.2 million and $2.3 million at March 31, 2023 and December 31, 2022, respectively. Negative exchange balances are accounted for as accounts payable and amounted to $22.8 million and $24.3 million at March 31, 2023 and December 31, 2022, respectively. Exchange transactions are valued using current carrying costs.