Archive for April 2024
All Eyes on Renewable Diesel Margins – Part 2, The High Cost of Renewable Diesel
GET THE ATTRACTOR SPREADSHEET As the renewable diesel (RD) business has grown, its profit margins have come under scrutiny. In analyzing RD margins, our starting point is the cost of RD production. For a representative renewable diesel plant feeding soybean oil and selling its RD in California in April 2021, the cost of RD production…
Read MoreAll Eyes on Renewable Diesel Margins – Part 1
Consider a business that makes hydrogenated renewable diesel fuel from soybean oil and sells if for $1.90/gallon. To make the gallon requires purchasing $4.30 worth of soybean oil as feedstock. This business has upside-down economics. It loses $2.40/gallon before even factoring in production costs or capital charges. This was the situation 3 years ago in…
Read MoreD4T – The world’s first licensed theoretical value of an environmental credit
Hoekstra Trading has studied Renewable Identification Number (RIN) pricing and economics since 2020 and reported on this topic in our Annual Research Reports and other publications. The RIN is a complex financial instrument. It is: It is a financial derivative whose value derives from and depends on the prices of other commodities. Like many other…
Read MoreThe Bloomberg Farm, Food, and Fuel Summit – My Top 3 Takeaways
This Summit was held in Kansas City Tuesday and Wednesday this week. I learned a lot about food, farms, and fuels, but my top 3 takeaways were about Bloomberg – here is the countdown: 3) Bloomberg does a wealth of applied research that is valuable to their client companies. 2) Bloomberg client companies should encourage…
Read MoreThe MPC-PSX Stock Price Spread – Update Number Six
Since 2021, I have tracked and reported on the relative performance of Marathon Petroleum (MPC, green) and Phillips 66 (PSX, red) stock on this blog. This is the sixth post in the series. The others are Aug 23 2021, Dec 9 2021, Jan 19 2022, Mar 17 2022, Feb 1 2023. This latest update shows…
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