Back at it

Well it has been a while since my last post.  A lot has been going on in the market and I have been taking my time trying to learn all the issues/opportunities as they arise.  The biggest thing I'm noticing is the Platts vs. rack benefits.  Chicago Platts numbers are incredible compared to what is being offered at the rack level in the Chicago market (at least on diesel).  If you are a large distillate user and you have the ability to lock in some contract volumes at a reasonable Platts number, I would jump on it....we're seeing savings close to .01 - .025 below low rack.  We have also noticed a huge benefit with biodiesel as well.  As you all know I'm a huge proponent of the product and have pushed it as a viable competitive solution for the last couple years and it is back in full force again right now.  Not only do you get a tax incentive for an 11% blend (no sales tax) in Chicago, but the savings on the physical product is also substantial.  Right now we are seeing a .16/gallon savings on a B20 blend NOT including an additional, probably, .11/gallon savings on not paying sales tax.  I don't know about you, but for .27/gallon I'm all over using some FAME.

There have also been some weather related issues as I'm sure you've all heard.  With the heavy rainstorm a couple weeks ago, we had the Forest View Terminal under 4 feet of water and it is STILL closed at this point.  They expect it to be back up and running next week, but considering the conditions, I'm cautiously optimistic.  Another issue which has come up is the possibility of the Enterprise pipeline discontinuing shipments of diesel starting July 1st.  There have been people argue this issue and put in to have it stopped, but it still looks as though it is going to be inevitable.  Though this does not have a direct effect on me, it will have an effect on many of the jobbers/retailers in the Southern Illinois/Southern Indiana markets.  If you are in these markets I would suggest you contact your jobber/supplier and ask what options they are going to be offering for you to stay competitive in the market.  For companies with proprietary terminals (like HWRT & Marathon) this non-shipment can increase their margins on distillate substantially as they are now going to be the only games in town offering the product.  I'm not saying they would do that, but hey....supply and demand right?