In this DTN downstream dictionary blog entry, we offer definitions for words frequently used by those who “move the molecules” (a.k.a. fuel buyers and sellers) and share their significance.
When any stock, commodity, or currency may be purchased in one market at a given price and simultaneously sold in another market at a higher price, creating an opportunity for a risk-free profit for the trader.
As the name suggests, these terminals store much fuel — at least 50,000 barrels — and are often supplied by pipeline, barge, or tanker. Semi-trailer tanker trucks are assigned to “lift” or transfer finished, consumer-ready refined fuel products from the terminal, then deliver them to various retail locations. It is the last stop for most fuels before being consumed by drivers pumping gas at the station.
A refined fuel product not reformulated or oxygenated using various chemicals. Most times, it is a temporary state of gasoline, as almost all consumer-used fuel is blended with a proprietary formulation of chemicals (e.g., detergents) or oxygenators (e.g., ethanol) before being dispensed from the pump into the tank of a vehicle.
When a fuel truck takes delivery of gasoline from the rack, the gasoline’s now-previous owner issues a bill of lading (BOL). It is an acknowledgment the specified product was lifted in the specified quantity, and its new owner is billable for the purchase. Today, BOLs are typically transferred electronically, hence, an electronic bill of lading (eBOL). These important documents represent a financial obligation of one party to another. Any discrepancies result in delays, which can be costly for all parties.
This is the preference of other downstream partners to do business with suppliers. A highly-ratable wholesaler is one who, when they say they will buy a product at a specified amount, actually lifts the agreed-upon product in the amount specified. If the truck never shows up, that buyer’s ratability suffers.
Based on demand and government regulations, reformulated gasoline blendstock for oxygenate blending (RBOB) can yield several different consumer products. For instance, federally mandated summer blend gas must combust so that it produces fewer evaporative emissions than winter-blend gasoline. Oxygenator ingredients usually consist of corn-based ethanol, but there are others.
As briefly mentioned above, the federal government mandates a seasonal change in the amount of evaporative emissions combusted fuel is allowed to produce. This change is referred to as the Reid Vapor Pressure transition. While exact dates vary by location, refiners must start in spring (roughly April 1) and end in fall.
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