Part II  iteM 7a quantitative and qualitative Disclosures about Market risk iteM 7a quantitative and qualitative Disclosures  about Market risk Commodity price risk Foreign Currency exchange rate risk interest rate risk Our earnings, cash flows, and financial position are exposed to market  risks relating to fluctuations in commodity prices, interest rates and  foreign currency exchange rates. Our policy is to minimize exposure  to our cash flow over time caused by changes in commodity, interest  and currency exchange rates. To accomplish this we have implemented  a controlled program of risk management consisting of appropriate  derivative contracts entered into with major financial institutions.  See Note 17 to our consolidated financial statements included in this  Form 10-K for additional discussion surrounding the accounting  treatment of our financial instruments. The analysis below presents the sensitivity of the market value of our  financial instruments to selected changes in market rates and prices.  The range of changes chosen reflects our view of changes that are  reasonably possible over a one-year period. Market-value estimates are  based on the present value of projected future cash flows considering  the market rates and prices chosen. At December 31, 2010, our net financial instrument position was a  net liability of $6.8 million compared to a net asset of $0.3 million at  December 31, 2009. The change in the net financial instrument position  was primarily due to higher unrealized losses in our commodity and  foreign exchange portfolios. Energy costs are approximately 9 percent of our costs of sales and services  and are diversified among coal, electricity and natural gas. We attempt to  mitigate our exposure to increasing energy costs by hedging the cost of  future deliveries of natural gas and by entering into fixed-price contracts  for the purchase of coal and fuel oil. To analyze the effect of changing  energy prices, we have performed a sensitivity analysis in which we  assume an instantaneous 10 percent change in energy market prices  from their levels at December 31, 2010 and December 31, 2009 with  all other variables (including interest rates) held constant. A 10 percent  increase in energy market prices would result in a decrease of the net  liability position of $3.4 million at December 31, 2010 compared to a  $5.1 million increase in the net asset position at December 31, 2009. A  10 percent decrease in energy market prices would result in an increase  of $3.4 million in the net liability position at December 31, 2010,  compared to a decrease of $7.0 million in the net asset position at  December 31, 2009. As a result, at December 31, 2009, the net asset  position would have become a net liability position. The primary currencies for which we have exchange rate exposure are  the U.S. dollar versus the euro, the U.S. dollar versus the Chinese yuan  and the U.S. dollar versus the Brazilian real. Foreign currency debt and  foreign exchange forward contracts are used in countries where we do  business, thereby reducing our net asset exposure. Foreign exchange  forward contracts are also used to hedge firm and highly anticipated  foreign currency cash flows. To analyze the effects of changing foreign currency rates, we have  performed a sensitivity analysis in which we assume an instantaneous 10  percent change in the foreign currency exchange rates from their levels  at December 31, 2010 and December 31, 2009, with all other variables  (including interest rates) held constant. A 10 percent strengthening  of hedged currencies versus our functional currencies would have  resulted in an increase of $33.3 million in the net liability position at  December 31, 2010 compared to an increase of $17.5 million in the  net liability position at December 31, 2009. A 10 percent weakening  of hedged currencies versus our functional currencies would have  resulted in a decrease of $31.1 million in the net liability position  at December 31, 2009, compared to a decrease of $17.8 million  in the net liability position at December 31, 2009. As a result, at  December 31, 2010 and 2009, the net liability position would have  become a net asset position. One of the strategies that we can use to manage interest rate exposure  is to enter into interest rate swap agreements. In these agreements, we  agree to exchange, at specified intervals, the difference between fixed  and variable interest amounts calculated on an agreed-upon notional  principal amount. As of December 31, 2010 and December 31, 2009,  we had no interest rate swap agreements. Our debt portfolio, at December 31, 2010, is composed of 93 percent  fixed-rate debt and 7 percent variable-rate debt. The variable-rate  component of our debt portfolio principally consists of borrowings  under our Domestic and European Credit Agreements, variable-rate  industrial and pollution control revenue bonds, and amounts outstanding  under foreign subsidiary credit lines. Changes in interest rates affect  different portions of our variable-rate debt portfolio in different ways. Based on the variable-rate debt in our debt portfolio at  December 31, 2010, a one percentage point increase in interest rates  then in effect would have increased gross interest expense for 2010  by $0.4 million and a one percentage point decrease in interest rates  then in effect would have decreased gross interest expense for 2010  by $0.3 million. 34 FMC Corporation    2010 Form 10K