requirement in the secondary market or obtain a waiver from the EPA. We recognized $111 million and $64 million of expense related to the RINs requirement in 2014 and 2013, respectively, including accruals for our unsettled 2013 and 2014 RINs obligation as of December 31, 2014. We are in possession of the RINs needed to satisfy our 2013 obligation.  

The refinery recorded a profit of $ 96 million in 2014 , compared to losses of $ 116 million and $ 63 million recorded in 2013 and 2012, respectively. We believe that the increase in jet fuel supply due to the refinery's operation has reduced the overall market price of jet fuel, and thus lowered our cost of jet fuel.  

 

Financial Condition and Liquidity  

 

We expect to meet our cash needs for the next 12 months from cash flows from operations, cash and cash equivalents, short-term investments and financing arrangements. As of December 31, 2014 , we had $5.2 billion in unrestricted liquidity, consisting of $3.3 billion in cash and cash equivalents and short-term investments and $1.9 billion in undrawn revolving credit facilities. During 2014 , we generated $4.9 billion in cash from operating activities, which we used, along with existing cash, to reduce the principal on our debt and capital lease obligations by $1.9 billion, fund capital expenditures of $2.2 billion and return $1.4 billion to shareholders, while maintaining a solid liquidity position.  

 

Sources of Liquidity  

 

Operating Activities  

 

Cash flows from operating activities continue to provide our primary source of liquidity. We generated positive cash flows from operations of $4.9 billion in 2014 , $4.5 billion in 2013 and $2.5 billion in 2012 . We also expect to generate positive cash flows from operations in 2015 .  

 

Our operating cash flows can be impacted by the following factors:  

 

Seasonality of Advance Ticket Sales . We sell tickets for air travel in advance of the customer's travel date. When we receive a cash payment at the time of sale, we record the cash received on advance sales as deferred revenue in air traffic liability. The air traffic liability increases during the winter and spring as we have increased sales in advance of the summer peak travel season and decreases during the summer and fall months.  

 

Fuel and Fuel Hedge Margins . The cost of jet fuel is our most significant expense, representing approximately 35% of our total operating expenses for 2014 . The market price for jet fuel is highly volatile, which can impact the comparability of our cash flows from operations from period to period.  

 

We have jet fuel inventories used in our airline operations at various airport locations and in pipelines. We also have refined oil product inventories that are used in our refinery operations. Jet fuel and refined oil product inventories are recorded as fuel inventory.  

 

As part of our fuel hedging program, we may be required to post margin to counterparties when our portfolio is in a loss position. Conversely, if our portfolio with counterparties is in a gain position, we may receive margin. Our future cash flows are impacted by the nature of our derivative contracts and the market