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Special Sunday energy trading

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  • soyamaven@aol.com
    The following is for everyone EXCEPT Perry E. Metzger (perry@piermont.com), who is instructed NOT to read the following: Because of the special situation of
    Message 1 of 7 , Sep 25, 2005
      The following is for everyone EXCEPT Perry E. Metzger (perry@...),
      who is instructed NOT to read the following:


      Because of the special situation of Hurricane Rita, the New York Mercantile
      Exchange (NYMEX) is having a special Sunday trading session:

      A little bit earlier this morning, the November price:

      <> wholesale gasoline $1.9300, off 6.49 cents/gallon

      <> wholesale heating oil $194.90, off 3.37 cents/gallon

      <> crude oil $63.15, off $1.04/barrel

      Thus, the crack spread (gross operating refinery margin) slipped
      $1.16/barrel, but is still at an historically wide $18.23/barrel.


      Here's the work sheet for calculating the crack spread:

      ................................................................product
      ..............................................................equivalent
      ...........................per gallon....per barrel ....per barrel
      Gasoline...............$1.9300.......$81.06.......$48.64
      Heating Oil............$1.9490.......$81.86.......$32.74
      Product value............................................$81.38
      Less Crude Oil..........................................$63.15
      ......Crack spread....................................+$18.23

      Note 1: There are approximately 42 gallons in a barrel, depending on
      temperature.

      Note 2: A 42 gallon barrel of crude oil will yield approximately 25.2 gallons
      of gasoline (60%) and 16.8 gallons of distillates (40%). Distillates
      includes heating oil, jet fuel, etc., etc.

      Note 3: The price of heating oil is being used to represent all distillates.


      In recent years the crack spread (the gross operating refining margin: the
      difference between the price received from selling petroleum products and the
      price paid to buy crude petroleum) was averaging only about +$3.50 to
      +$4.50/barrel. This was not wide enough to encourage expansion in refining capacity
      because the shortfall of refining capacity in the U.S. was offset by imports of
      products, mostly gasoline, from refineries outside the U.S. (Most people,
      including the MSM, were aware that the U.S. imports crude oil, but were oblivious
      to the imports of gasoline.)

      Then, almost without warning, earlier this year, China and India, benefiting
      from sales to Wal-Mart. etc., etc., started to compete for these non-U.S.
      gasoline supplies, and, as a result, the crack spread, started to widen into the
      +$10.00 to +$12.50/barrel area as the price of petroleum products started to
      rise faster than crude oil, signaling to the market that more refining capacity
      was needed.

      Then came Hurricane Katrina, and now Hurricane Rita, and with refinery
      shutdowns, actual and expected, the crack spread has widened further, and has been
      trading from $15.00 to $22.00/barrel.


      A widening in the gross operating margin should generate extra profits, if
      the politicians can keep their hands off, so that the industry can finance new
      construction using internal funds rather than borrowed financing, and attract
      new investment capital as well, if those damned politicians can keep their
      hands off and do not interfere with things like "windfall profits taxes" and/or
      enacting "price gouging legislation".



      I hope this information is useful or, at least, interesting.


      L'Shannah Tovah* & Happy 5766,

      Walter Greenspan
      Great Falls, MT

      * L'Shannah Tovah (li-SHAH-nuh TOH-vuh; li-shah-NAH toh-VAH)
      Hebrew. Lit. for a good year. The common greeting during Rosh ha Shannah and
      the Days of Awe. This is a shortening of "L'Shannah tovah tikatev v'taihatem"
      (or, to women, "L'Shannah tovah tikatevi v'taihatemi"), which means, "May you
      be inscribed and sealed for a good year." This year, Rosh ha Shannah begins
      at sunset on Monday, October 3 on the civil calendar.
    • Bob Armstrong
      Energy is interesting . Do you have any insight as to the petroleum prices which make soy and corn derived fuels economic ? What really sucks is when
      Message 2 of 7 , Sep 25, 2005
        Energy is interesting .

        Do you have any insight as to the petroleum prices which
        make soy and corn derived fuels economic ?


        What really sucks is when politicians impose "windfall"
        taxes AND implement subsidies .

        soyamaven@... wrote:
        > The following is for everyone EXCEPT Perry E. Metzger (perry@...),
        > who is instructed NOT to read the following:
        >
        >
        > Because of the special situation of Hurricane Rita, the New York Mercantile
        > Exchange (NYMEX) is having a special Sunday trading session:
        >
        > A little bit earlier this morning, the November price:
        >
        > <> wholesale gasoline $1.9300, off 6.49 cents/gallon
        >
        > <> wholesale heating oil $194.90, off 3.37 cents/gallon
        >
        > <> crude oil $63.15, off $1.04/barrel
        >
        > Thus, the crack spread (gross operating refinery margin) slipped
        > $1.16/barrel, but is still at an historically wide $18.23/barrel.
        >
        >
        > Here's the work sheet for calculating the crack spread:
        >
        > ................................................................product
        > ..............................................................equivalent
        > .................................per gallon....per barrel ....per barrel
        > Gasoline............................$1.9300.......$81.06.......$48.64
        > Heating Oil.........................$1.9490.......$81.86.......$32.74
        > Product value..................................................$81.38
        > Less Crude Oil.................................................$63.15
        > ......Crack spread............................................+$18.23
        >
        > Note 1: There are approximately 42 gallons in a barrel, depending on
        > temperature.
        >
        > Note 2: A 42 gallon barrel of crude oil will yield approximately 25.2 gallons
        > of gasoline (60%) and 16.8 gallons of distillates (40%). Distillates
        > includes heating oil, jet fuel, etc., etc.
        >
        > Note 3: The price of heating oil is being used to represent all distillates.
        >
        >
        > In recent years the crack spread (the gross operating refining margin: the
        > difference between the price received from selling petroleum products and the
        > price paid to buy crude petroleum) was averaging only about +$3.50 to
        > +$4.50/barrel. This was not wide enough to encourage expansion in refining capacity
        > because the shortfall of refining capacity in the U.S. was offset by imports of
        > products, mostly gasoline, from refineries outside the U.S. (Most people,
        > including the MSM, were aware that the U.S. imports crude oil, but were oblivious
        > to the imports of gasoline.)
        >
        > Then, almost without warning, earlier this year, China and India, benefiting
        > from sales to Wal-Mart. etc., etc., started to compete for these non-U.S.
        > gasoline supplies, and, as a result, the crack spread, started to widen into the
        > +$10.00 to +$12.50/barrel area as the price of petroleum products started to
        > rise faster than crude oil, signaling to the market that more refining capacity
        > was needed.
        >
        > Then came Hurricane Katrina, and now Hurricane Rita, and with refinery
        > shutdowns, actual and expected, the crack spread has widened further, and has been
        > trading from $15.00 to $22.00/barrel.
        >
        >
        > A widening in the gross operating margin should generate extra profits, if
        > the politicians can keep their hands off, so that the industry can finance new
        > construction using internal funds rather than borrowed financing, and attract
        > new investment capital as well, if those damned politicians can keep their
        > hands off and do not interfere with things like "windfall profits taxes" and/or
        > enacting "price gouging legislation".
        >
        >
        > I hope this information is useful or, at least, interesting.
        >
        >
        > L'Shannah Tovah* & Happy 5766,
        >
        > Walter Greenspan
        > Great Falls, MT
        >
        > * L'Shannah Tovah (li-SHAH-nuh TOH-vuh; li-shah-NAH toh-VAH)
        > Hebrew. Lit. for a good year. The common greeting during Rosh ha Shannah and
        > the Days of Awe. This is a shortening of "L'Shannah tovah tikatev v'taihatem"
        > (or, to women, "L'Shannah tovah tikatevi v'taihatemi"), which means, "May you
        > be inscribed and sealed for a good year." This year, Rosh ha Shannah begins
        > at sunset on Monday, October 3 on the civil calendar.

        --
        Bob Armstrong -- http://CoSy.com -- 719-337-2733
        NoteComputing Environment : http://CoSy.com/CoSy/
        WTC vision : http://CoSy.com/CoSy/ConicAllConnect/
        Liberty : http://cosy.com/Liberty/
      • soyamaven@aol.com
        On 9/25/05 (11:14:24 AM MDT), as part of a reply to my earlier posting, Bob Armstrong (bob@cosy.com) asked, Do you have any insight as to the petroleum prices
        Message 3 of 7 , Sep 25, 2005
          On 9/25/05 (11:14:24 AM MDT), as part of a reply to my earlier posting, Bob
          Armstrong (bob@...) asked,

          "Do you have any insight as to the petroleum prices which make soy and corn
          derived fuels economic?"


          For an overview, you might want to read the Department of Energy's FAQ on
          BIOMASS:

          http://www.eere.energy.gov/biomass/biomass_basics_faqs.html


          There are a number of inconsistencies that might need to be "corrected" so
          that the biomass industry allocates economic resources in a rational fashion.
          For example, corn farmers receive subsidies if the corn price gets too low and
          corn refiners receive subsidies because the corn price is not permitted to get
          too low.

          The U.S. currently has import quotas on raw sugar that raise the domestic
          sugar price higher than it would otherwise be. This makes the production of high
          fructose corn sweetener economic, a situation that would not exist int he
          absence of these import quotas on raw sugar. The same corn sludge that makes
          HFCS is also the feedstock for making power alcohol (ethanol). (Yes, after a
          corn refiner removes the corn oil, the remaining 'sludge' can make either a
          sweetener or a fuel.)

          In Brazil, where sugar prices are lower (currently less than half the price
          of sugar in the U.S.) because they have a large sugar crop, they will be
          requiring all their new cars to be able to use ethanol made from sugar.


          Walter Greenspan
          Great Falls, MT
        • Perry E. Metzger
          ... No such price is economic, because ethanol from corn requires enormous amounts of energy as input -- more energy, in fact, than is output. The only reason
          Message 4 of 7 , Sep 25, 2005
            Bob Armstrong <bob@...> writes:
            > Do you have any insight as to the petroleum prices which
            > make soy and corn derived fuels economic ?

            No such price is economic, because ethanol from corn requires enormous
            amounts of energy as input -- more energy, in fact, than is
            output. The only reason we have ethanol being used as a fuel is that
            it is (effectively) heavily subsidized by the current regime.

            On the other hand, the price of photovoltaics, as measured in cost per
            kilowatt hour, is dropping fast. I suspect within ten years it
            becomes quite economical.

            Nuclear is already enormously economical -- it is a bit cheaper than
            coal in fact -- but we have lots of people who foolishly believe it is
            more dangerous than fossil fuels, so I suspect photovoltaics become
            the next big source of energy.

            Perry
          • Perry E. Metzger
            ... Why? You ve finally posted something interesting. ... Interesting. So we can likely expect good business for refineries. Are there any publicly traded
            Message 5 of 7 , Sep 25, 2005
              soyamaven@... writes:
              > The following is for everyone EXCEPT Perry E. Metzger (perry@...),
              > who is instructed NOT to read the following:

              Why? You've finally posted something interesting.

              > Thus, the crack spread (gross operating refinery margin) slipped
              > $1.16/barrel, but is still at an historically wide $18.23/barrel.

              Interesting. So we can likely expect good business for refineries. Are
              there any publicly traded refining companies? A chart of their equity
              prices might be amusing to look at compared to the crack spread.

              Perry
            • Bob Armstrong
              Nuclear by terawatts . Followed by Biomass and among the minnows , wind . ... -- Bob Armstrong -- http://CoSy.com -- 719-337-2733 NoteComputing Environment :
              Message 6 of 7 , Sep 25, 2005
                Nuclear by terawatts .
                Followed by Biomass and among the minnows , wind .

                Perry E. Metzger wrote:
                > I suspect photovoltaics become
                > the next big source of energy.

                --
                Bob Armstrong -- http://CoSy.com -- 719-337-2733
                NoteComputing Environment : http://CoSy.com/CoSy/
                WTC vision : http://CoSy.com/CoSy/ConicAllConnect/
                Liberty : http://cosy.com/Liberty/
              • Bob Armstrong
                Meant gigawatts . ... -- Bob Armstrong -- http://CoSy.com -- 719-337-2733 NoteComputing Environment : http://CoSy.com/CoSy/ WTC vision :
                Message 7 of 7 , Sep 25, 2005
                  Meant gigawatts .

                  Bob Armstrong wrote:
                  > Nuclear by terawatts .
                  > Followed by Biomass and among the minnows , wind .
                  >
                  > Perry E. Metzger wrote:
                  >
                  >>I suspect photovoltaics become
                  >>the next big source of energy.
                  >
                  >

                  --
                  Bob Armstrong -- http://CoSy.com -- 719-337-2733
                  NoteComputing Environment : http://CoSy.com/CoSy/
                  WTC vision : http://CoSy.com/CoSy/ConicAllConnect/
                  Liberty : http://cosy.com/Liberty/
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