Oil Prices: Key To Biodiesel Profitability
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Oil Prices: Key To Biodiesel Profitability “It ain’t right, but it’s true!” James L. Williams WTRG Economics. Canola Council of Canada March 21, 2007 Westin Bear Mountain Victoria. Market Linkage Biodiesel Diesel Heating Oil Crude Oil. Food or Fuel Historical Precedence

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Canola Council of Canada March 21, 2007 Westin Bear Mountain Victoria

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Canola council of canada march 21 2007 westin bear mountain victoria

Oil Prices: Key To Biodiesel Profitability“It ain’t right, but it’s true!” James L. WilliamsWTRG Economics

Canola Council of CanadaMarch 21, 2007

Westin Bear Mountain Victoria


Canola council of canada march 21 2007 westin bear mountain victoria

  • Market Linkage

    • Biodiesel

    • Diesel

    • Heating Oil

    • Crude Oil


Canola council of canada march 21 2007 westin bear mountain victoria

  • Food or Fuel

    • Historical Precedence

      • Cowboys Fed Their Horses

    • Current issue

      • Mike’s decision


Canola council of canada march 21 2007 westin bear mountain victoria

Beer: Now Cheaper Than Gas


Canola council of canada march 21 2007 westin bear mountain victoria

  • Factors in Oil Prices

    • Production (Economy & Policy)

    • Consumption (Economy & Policy)

    • Stocks

    • Production Capacity


Politics geopolitics nature

Politics, Geopolitics & Nature

  • Supply Interruptions

    • Wars

    • Natural disasters

  • Consumer Policies

    • Taxes

    • CAFE

    • Import duties / restrictions

    • Price controls

  • Producer / OPEC Policies

    • Quotas

    • Embargos

    • Taxes


Prices have little impact on short term consumption government policy and the economy dominate

Prices have little impact on short term consumption.Government policy and the economy dominate.


Canola council of canada march 21 2007 westin bear mountain victoria

Distillate = Diesel & Heating Oil


Canola council of canada march 21 2007 westin bear mountain victoria

Residual Fuel: Bunker Fuel, Power Generation & Heating


Do high prices cause recessions or do recessions cause low prices

Do high prices cause recessions or do recessions cause low prices?


Canola council of canada march 21 2007 westin bear mountain victoria

World Production: Doesn’t Make Sense


Canola council of canada march 21 2007 westin bear mountain victoria

Non-OPEC Production: Slow Response to Price Changes


Canola council of canada march 21 2007 westin bear mountain victoria

Iraq / Iran War

Revolution


Canola council of canada march 21 2007 westin bear mountain victoria

CoalitionInvades

Kuwait InvadedGulf War

Iraq / Iran War


Canola council of canada march 21 2007 westin bear mountain victoria

Kuwait InvadedGulf War


Canola council of canada march 21 2007 westin bear mountain victoria

SwingProducer

Iraq / Iran War


Canola council of canada march 21 2007 westin bear mountain victoria

Historically Oil Price Inversely Related to Stocks

Inventory Price Relationship went off track in the last 3-4 years


Lower capacity higher production

Lower Capacity Higher Production


Low spare capacity increases risk

Low Spare Capacity Increases Risk


Opec capacity production spare capacity

OPECCapacity, Production & Spare Capacity


Canola council of canada march 21 2007 westin bear mountain victoria

  • Future

    • Excess Production Capacity

    • Saudi Arabia

    • Russia

    • China

    • Venezuela

    • Recession

    • Alternate fuels

    • Conservation


Canola council of canada march 21 2007 westin bear mountain victoria

  • Product Markets

    • Gasoline

      • MTBE to Ethanol

    • Distillates

      • Heating Oil

      • Diesel

        • Ultra Low Sulfur


Canola council of canada march 21 2007 westin bear mountain victoria

  • Risk

    • Capacity

    • Russia

    • Mexico

    • Iran

    • Nigeria

    • Iraq

    • Venezuela

    • Hurricanes

    • Economy


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