Financial Instruments and Off-Balance Sheet Risk
 12 Months Ended
Dec. 31, 2016
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Financial Instruments and Off-Balance Sheet Risk
17.
Financial Instruments and Off-Balance Sheet Risk
As of December 31, 2016 and 2015, the carrying amounts of cash, cash equivalents and accounts receivable approximated fair value because of the short maturity of these instruments. As of December 31, 2016 and 2015, the carrying value of the Partnership’s margin deposits with brokers approximates fair value and consists of initial margin with futures transaction brokers, along with variation margin, which is paid or received on a daily basis, and is included in other current assets. As of December 31, 2016 and 2015, the carrying value of the Partnership’s debt approximated fair value due to the variable interest nature of these instruments.

Derivative Instruments
The following table presents all financial assets and financial liabilities of the Partnership measured at fair value on a recurring basis:
 
As of December 31, 2016
 
Fair Value
Measurement
 
Quoted
Prices in
Active
Markets
Level 1
 
Significant
Other
Observable
Inputs
Level 2
 
Significant
Unobservable
Inputs
Level 3
Financial assets:
 
 
 
 
 
 
 
Commodity fixed forwards
$
65,618

 
$
—

 
$
65,618

 
$
—

Commodity swaps and options
—

 
—

 
—

 
—

Commodity derivatives
65,618

 
—

 
65,618

 
—

Interest rate swaps
1,240

 
—

 
1,240

 
—

Total
$
66,858

 
$
—

 
$
66,858

 
$
—

Financial liabilities:
 
 
 
 
 
 
 
Commodity fixed forwards
$
94,875

 
$
—

 
$
94,875

 
$
—

Commodity swaps and options
103

 
—

 
103

 
—

Commodity derivatives
94,978

 
—

 
94,978

 
—

Interest rate swaps
336

 
—

 
336

 
—

Other
25

 
—

 
25

 
—

Total
$
95,339

 
$
—

 
$
95,339

 
$
—

 
As of December 31, 2015
 
Fair Value
Measurement
 
Quoted
Prices in
Active
Markets
Level 1
 
Significant
Other
Observable
Inputs
Level 2
 
Significant
Unobservable
Inputs
Level 3
Financial assets:
 
 
 
 
 
 
 
Commodity fixed forwards
$
157,389

 
$
—

 
$
157,389

 
$
—

Commodity swaps and options
51

 
—

 
51

 
—

Commodity derivatives
157,440

 
—

 
157,440

 
—

Interest rate swaps
274

 
—

 
274

 
—

Total
$
157,714

 
$
—

 
$
157,714

 
$
—

Financial liabilities:
 
 
 
 
 
 
 
Commodity fixed forwards
$
31,801

 
$
—

 
$
31,801

 
$
—

Commodity swaps and options
4,250

 
—

 
4,250

 
—

Commodity derivatives
36,051

 
—

 
36,051

 
—

Interest rate swaps
1,115

 
—

 
1,115

 
—

Other
12

 
—

 
12

 
—

Total
$
37,178

 
$
—

 
$
37,178

 
$
—


The Partnership enters into derivative contracts with counterparties, some of which are subject to master netting arrangements, which allow net settlements under certain conditions. The maximum amount of loss due to credit risk that the Partnership would incur if its counterparties failed completely to perform according to the terms of the contracts, based on the net fair value of these financial instruments, was $64.7 million at December 31, 2016. Information related to these offsetting arrangements as of December 31, 2016 and 2015 is as follows:
 
 
As of December 31, 2016
 
 
 
 
 
 
 
Gross Amount Not Offset
in the Balance Sheet
 
Net
Amount
 
Gross
Amounts of
Recognized
Assets/
Liabilities
Gross
Amounts
Offset in the
Balance
Sheet
Amounts of
Assets/
Liabilities in
Balance Sheet
Financial
Instruments
 
Cash
Collateral
Posted
 
Commodity derivative assets
$
65,618

 
$
—

 
$
65,618

 
$
(2,154
)
 
$
(209
)
 
$
63,255

Interest rate swap derivative assets
1,240

 
—

 
1,240

 
—

 
—

 
1,240

Fair value of derivative assets
$
66,858

 
$
—

 
$
66,858

 
$
(2,154
)
 
$
(209
)
 
$
64,495

 
 
 
 
 
 
 
 
 
 
 
 
Commodity derivative liabilities
$
(94,978
)
 
$
—

 
$
(94,978
)
 
$
2,154

 
$
—

 
$
(92,824
)
Interest rate swap derivative liabilities
(336
)
 
—

 
(336
)
 
—

 
—

 
(336
)
Other
(25
)
 
—

 
(25
)
 
—

 
—

 
(25
)
Fair value of derivative liabilities
$
(95,339
)
 
$
—

 
$
(95,339
)
 
$
2,154

 
$
—

 
$
(93,185
)
 
 
As of December 31, 2015
 
 
 
 
 
 
 
Gross Amount Not Offset
in the Balance Sheet
 
Net
Amount
 
Gross
Amounts of
Recognized
Assets/
Liabilities
Gross
Amounts
Offset in the
Balance
Sheet
Amounts of
Assets/
Liabilities in
Balance Sheet
Financial
Instruments
 
Cash
Collateral
Posted
 
Commodity derivative assets
$
157,440

 
$
—

 
$
157,440

 
$
(1,811
)
 
$
(1,798
)
 
$
153,831

Interest rate swap derivative assets
274

 
—

 
274

 
—

 
—

 
274

Fair value of derivative assets
$
157,714

 
$
—

 
$
157,714

 
$
(1,811
)
 
$
(1,798
)
 
$
154,105

 
 
 
 
 
 
 
 
 
 
 
 
Commodity derivative liabilities
$
(36,051
)
 
$
—

 
$
(36,051
)
 
$
1,811

 
$
—

 
$
(34,240
)
Interest rate swap derivative liabilities
(1,115
)
 
—

 
(1,115
)
 
—

 
—

 
(1,115
)
Other
(12
)
 
—

 
(12
)
 
—

 
—

 
(12
)
Fair value of derivative liabilities
$
(37,178
)
 
$
—

 
$
(37,178
)
 
$
1,811

 
$
—

 
$
(35,367
)

The following table presents total realized and unrealized gains (losses) on derivative instruments utilized for commodity risk management purposes included in cost of products sold (exclusive of depreciation and amortization): 
 
Years Ended December 31,
 
2016
 
2015
 
2014
Refined products contracts
$
(25,316
)
 
$
149,741

 
$
159,751

Natural gas contracts
7,153

 
19,824

 
30,372

Total
$
(18,163
)
 
$
169,565

 
$
190,123


There were no discretionary trading activities included in realized and unrealized gains (losses) on derivatives instruments for the years ended December 31, 2016, 2015 and 2014.
The following table presents the gross volume of commodity derivative instruments outstanding for the periods indicated: 
 
As of December 31, 2016
 
As of December 31, 2015
 
Refined Products
(Barrels)
 
Natural Gas
(MMBTUs)
 
Refined Products
(Barrels)
 
Natural Gas
(MMBTUs)
Long contracts
9,882
 
131,240
 
12,067
 
123,711
Short contracts
(13,940)
 
(76,556)
 
(16,558)
 
(75,785)

Interest Rate Derivatives
The Partnership has entered into interest rate swaps to manage its exposure to changes in interest rates on its Credit Agreement. The Partnership’s interest rate swaps hedge actual and forecasted LIBOR borrowings and have been designated as cash flow hedges. Counterparties to the Partnership’s interest rate swaps are large multinational banks and the Partnership does not believe there is a material risk of counterparty non-performance.
The Partnership's interest rate swap agreements outstanding as of December 31, 2016 were as follows:
Interest Rate Swap Agreements
Beginning
 
Ending
 
Notional Amount
 January 2016
 
 January 2017
 
$
250,000

 September 2016
 
 April 2017
 
$
25,000

 January 2017
 
 January 2018
 
$
225,000

 January 2018
 
 January 2019
 
$
200,000


There was no material ineffectiveness determined for the cash flow hedges for the years ended December 31, 2016, 2015 and 2014.
The Partnership records unrealized gains and losses on its interest rate swaps as a component of accumulated other comprehensive loss, net of tax, which is reclassified to earnings as interest expense when the payments are made. As of December 31, 2016, the amount of unrealized losses, net of tax, expected to be reclassified to earnings during the following twelve-month period was $0.1 million.