Annual report pursuant to Section 13 and 15(d)

INVENTORIES

v3.8.0.1
INVENTORIES
12 Months Ended
Dec. 31, 2017
INVENTORIES [Abstract]  
INVENTORIES
NOTE 8 – INVENTORIES

Inventories include the following at December 31:

   
2017
   
2016
 
   
(thousands of dollars)
 
             
Raw material
 
$
3,703
   
$
3,627
 
Work in process
   
27
     
12
 
Finished products
   
14,720
     
14,232
 
                 
Total inventory
 
$
18,450
   
$
17,871
 

Inventory serves as collateral for our amended and restated loan agreement with a domestic bank (see Note 13).

Effective January 1, 2017, we changed the inventory basis of SHR to FIFO.  We believe that the use of FIFO more accurately reflects current inventory valuation.  The drop in crude oil prices over the last several years has caused LIFO value of inventory to be above the FIFO value for each period presented.  There was no LIFO reserve in any of the periods in this filing; therefore, no change is reflected in our current statements for the retrospective application.

Prior to this change, the difference between the calculated value of inventory under the FIFO and LIFO bases generated either a recorded LIFO reserve (i.e., where FIFO value exceeds the LIFO value) or an unrecorded negative LIFO reserve (i.e., where LIFO value exceeds the FIFO value).  In the latter case, in order to ensure that inventory was reported at the lower of cost or market and in accordance with ASC 330-10, we did not increase the stated value of our inventory to the LIFO value.  At December 31, 2016, LIFO value of petrochemical inventory exceeded FIFO; therefore, in accordance with the above policy, no LIFO reserve was recorded.
 
Inventory included products in transit valued at approximately $3.7 million and $2.1 million at December 31, 2017, and 2016, respectively.