Before we begin our work in the days ahead, we’ll outline our key objectives, including an understanding of fuel buying basics, how they affect your business, and an outline of most frequently used industry terminology.
Refining is very complex and sophisticated. We’ll give you an easy-to-understand tutorial on how gasoline and diesel fuel are produced and how it gets from the refinery to the rack and ultimately to the station or end-user tank.
Before you can learn to buy fuel smarter, you must understand two key components of how racks are priced: the New York Mercantile Exchange (NYMEX) and U.S. spot markets. In this session, we’ll zero in on everything you need to know about the NYMEX.
Now that we understand the NYMEX, it is time to explain how spot markets work, and why they are so important to a fuel buyer. We’ll explain in detail the intricacies of the seven major U.S. spot markets and who the big players are in each of those markets.
Rack price discovery began back in 1980, and although it has changed much in the intervening years, the bottom line is that nearly all wholesale gasoline and diesel fuel transactions are based on rack prices. We’ll define what rack means, who posts prices, branded vs. unbranded, spot replacement costs, how taxes work, and the impact of the changing fuel slate.
Retail is perhaps the most complex link in the fuel chain. We’ll explain the five major classes of retail trade, how retail prices are determined and the huge challenge retailers face from hypermarketers.
© 2008 OPIS