Market Intelligence Is Key to Best Decisions
An interview with Stephen Gloyd of Energy Management Institute
Q: How do you think alternative fuels will play out in the future?
A: EMI is bullish on alternative fuels. There are many exciting directions being pursued right now with time and research yet to determine the future shape of the industry. While high energy prices have their detriment, today's market is certainly providing the motivation to pursue alternatives. The prospects associated with cellulosic ethanol and hydrogen are truly society-altering additions to the more established movements in fermentation ethanol and biodiesel. Most importantly we must keep an open mind when evaluating alternatives and not let special interest initiatives tied to the advancement of specific feedstocks lead us in the wrong direction. The industry will thrive and prosper if we keep the ultimate goals of hydrocarbon reduction, renewability, national security, and the environment in focus.
EMI is proud to have been the first company to provide an Alternative fuels industry benchmark. We publish the DTN-sponsored Alternative Fuels Index that provides a critical wholesale survey of Alternative Fuel products registered and approved by the Department of Energy to meet current AF U.S. standards, including: Biodiesel, Ethanol, Propane, Methanol, Electricity, Hydrogen, and Natural Gas.
For companies more focused on ethanol and biodiesel production, EMI publishes Biofuel Age offering weekly coverage of the most recent developments in ethanol and biodiesel production, marketing, regulation, pricing supply and market development. Biofuel Age features: Ethanol wholesale supply and pricing moves, Ethanol production and stock report, Ethanol margin data, Ethanol plant and project monitor, and Corn/Soy trends.
Q: What is driving the intense volatility in the fuel markets?
A: The evolving geopolitical events around the world are driving energy prices and volatility, but primarily because the supply and demand model has switched into a demand-driven mode. The market sentiment remains biased to the upside and anything that looks like it could impact the flow of oil from anywhere in the world continues to be met with a surge in buying, pushing the price to even loftier levels. Going forward, the various geopolitical hot spots will continue to be the major market driver in the energy complex and, if nothing else, will also help set the floor in prices.
Of course the speculative community thrives on volatility and seeks out markets with the highest level of volatility and liquidity. Energy volatility is benefiting the smart speculators. On the other side of the equation, the commercial sector is negatively impacted by volatility. Starting with the refiners who are experiencing wide ranges in their manufacturing margins—making it more difficult to set run levels, select crudes and determine the optimum slate of products. At the wholesale level, the marketers are working with significantly smaller margins that the level of intraday volatility. Finally, at the retail level the jobbers are in the same mode as the wholesalers.
Q: How can marketers improve margins?
A: EMI offers a range of services designed to help small to large marketers. Small jobbers love our FutureRack product which forecast next day rack prices within 98% accuracy. They use it to quickly assess whether to lift product today or wait for better buying opportunity. This product is offered via DTN over satellite, fax, and email. Mid-to-larger-sized operations follow our purchasing and hedging advice published each morning in the Daily Hedger. The Daily Hedger is designed to give players an early edge on the market. We don’t just tell you the news, we advise our readers on how to make money on it.
Aside from specialized training and our publications, EMI also provides one-to-one advisory services. This is an area in which we focus on maximizing and protecting margins. Hedging can be a confusing strategy if you don’t have in-house expertise or are understaffed, or if you’ve tried hedging with varying degrees of success; but waiting to protect your margins can have disastrous results.
If you’re currently facing this dilemma, you’re not alone. Before utilizing Energy Management Institute’s Risk Advisory program, many of EMI’s clients experienced the same challenge. Knowing they needed expert and unbiased guidance they could trust, these companies looked to EMI for the tools, techniques and expertise they needed to successfully manage their risk.
Just a few of our services include: Purchase price/benchmarking matrix, Hedge position management, Market opportunity and threat alert, Negotiation with vendors for physical purchase & financial risk instruments, and Daily marked-to-market reporting.
Q: Tell us about the focus of EMI’s educational seminars.
A: EMI provides comprehensive, fully accredited education programs that focus on downstream petroleum, alternative fuels, natural gas and power. We offer intensive purchasing, risk management and trading curriculum from basic to advanced levels. Training programs are performed worldwide at our venues and on-site at client locations. EMI is an education partner with The New York Mercantile Exchange (NYMEX), and The NYMEX EU, providing training to the domestic and international exchange community. Alumni include all major and independent oil companies, petroleum marketers, Fortune 500 end-users, regulated and unregulated power and gas companies, public transit, large energy marketers, financial institutions and U.S./International State and Federal Government agencies. What could be more important in today’s fiercely competitive energy markets then a well-trained staff?
Stephen Gloyd, Energy Management Institute
Contact Steve:
Phone 410-442-5757
E-mail: sgloyd@emimail.org
http://www.energyinstitution.org/
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The views and opinions expressed in this feature article are designed for educational purposes. The views do not necessarily state or reflect those of DTN.
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