Posts by Hoekstra Trading LLC
Sulfur Credit Strategy Pays Off For Refiners
The price of the Tier 3 gasoline sulfur credits has increased 12-fold in the last two years, and the impacts have been showing up in refining companies’ earnings. Four years ago, Dave Lamp, CEO of CVR Energy Inc., spoke about CVR’s Tier 3 strategy in their 2nd quarter 2019 earnings conference call: Dave Lamp, answering…
Read MoreBaby the RIN Must Fall Part 2 – Will A RIN Price Crash Make a Mess In The Renewable Diesel Market?
U.S. production of hydrogenated renewable diesel (RD), made from soybean oil and animal fats like used cooking oil, is growing faster than expected. That may sound like good news for the renewable fuels industry, but it comes with the fear that the rapid growth might trigger a sudden crash of Renewable Identification Number (RIN) prices…
Read MoreBaby, The RIN Must Fall Part 1 – What’s Behind The Chatter About RIN Prices Crashing To Zero?
The Renewable Identification Number (RIN) is an environmental credit that functions as a subsidy to force renewable fuels like ethanol and soybean oil into gasoline and diesel fuel. Recently, chatter has bubbled up across the RINs ecosystem that RIN prices might crash to zero in the near future. That would be headline news that would…
Read More99% Of Fuel Exhaust Problem Is Solved
Most people under 30 don’t know that 99% of the problem with vehicle exhaust emissions was solved while they were growing up, as evidenced by this chart showing the reduction of sulfur in gasoline to 10 parts per million (ppm). This, along with reductions in nitrogen oxides (NOx), toxics, particulates, and volatile organic compounds (VOCs),…
Read MoreModeling RINs As An Option – Part 2
Also see Part 1 of this series In Figure 1, the silver points represent the price of D4 RINs that expire at the end of that trading year (2012), and the gold points represent RINs that expire at the end of the next trading year (2013). The lines are calculated by the Hoekstra Trading RIN…
Read MoreEconomics of Octane Loss In Gasoline Desulfurizers
With gasoline margins surprisingly strong, refiners are focusing on economic costs and opportunities in cracked gasoline desulfurization. These opportunities come in the categories: feed, catalyst, process, sulfur credits, laboratory tools, revamps, and new investment opportunities. Many of them can be captured quickly with no capital investment. This segment of the RefComm 2023 FCC program will…
Read MoreWhat Has Quintupled? Multiple Choice:
A. Octane value B. Gasoline sulfur credit price C. U.S. gasoline exports D. Octane-barrel destruction in U.S. gasoline desulfurizers E. Reformate price premium F. All the above The answer is F, all the above. The hidden cause that links them is the Tier 3 gasoline sulfur specification. Recommendation: Read this short book to quickly become…
Read MoreInvestment alternatives for clean gasoline production in a volatile fuels market
This economic analysis presents investment costs and returns for a hypothetical refinery with a 55,000 barrel/day fluid catalytic cracker (FCC) in a market that will adopt a new 30-ppm clean sulfur gasoline specification. The refinery’s current FCC naphtha, which has been suitable for use in gasoline, will then be too high in sulfur for that…
Read MoreNo let-up in rising U.S. octane values
The relentless rise in octane value is seen in the U.S. average retail premium-regular pump price differential, expressed here in units of $ per octane-gallon, up to date through today: To convert this number to actual pump price differential in $/gallon, multiply by 6 octane (=93-87). The building pressure on octane cost is also seen…
Read MoreModeling RINs as an option – Part 1
Also see Part 2 of this series This chart shows the price of D4 Renewable Identification Numbers (RINs) traded in 2012 and 2013. The data is from the EPA’s Moderated Transaction System. RINs expire at the end of the year following the calendar year of their creation. In Figure 2, the silver data points represent…
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