Futures prices

However, there are many other factors to be considered in the choice of reaction path. Some are commercial, such as uncertainties regarding future prices of raw materials and b3q)roducts. Others are technical, such as safety and energy consumption. 

The future price of ionic liquids will also reflect intellectual property considerations. While the currently most frequently requested ionic liquids, the tetrafluoroborate and hexafluorophosphate ionic liquids, are all patent-free, many recently developed, new ionic liquid systems are protected by state of matter patents. Table 2.2-2 gives an overview of some examples published after 1999. 

Another characteristic of the economic-efficiency concept IS that it does not require arbitrai y decisions by the analyst about, fur example, how coal should be evaluated compared with natural gas. The question of whether I Btu of coal is equal to 1, or perhaps 1/2, Btu of natural gas is answered directly by the market. The weightings of the marketplace, revealed in relative prices, vary with scarcity, cost of production, technology, and human preferences. Decisionmakers do not need to think about the underlying reasons, however. They need to know only current prices (and make their best guesses about future prices). 

In addition to providing some control of price risk, futures and options markets are also very useful mechanisms for price discovery and for gauging market sentiment. There is a world-wide need for accurate, real-time information about the prices established through futures and options trading, that is, a need for price transparency. Exchange prices are simultaneously transmitted around the world via a network of information vendors terminal seiwices directly to clients, thereby allowing users to follow the market in real time wherever they may be. Energy futures prices are also widely reported in the financial press. These markets thus enable an open, equitable and competitive environment. 

Futures Prices Natural gas futures contracts began trading on April 3, 1990, on the New York Mercantile Exchange (NYMEX). Sabine Pipe Line Company s Heniy Hub near Erath,... 

For nonrenewable energy sources such as fossil fuels, expectations about the future price and interest rates influence the current quantity supplied. Expectations of higher future prices should cause less production today and more production tomorrow. 

With the current energy demands increasing, the unit costs of all utilities are increasing. Any prices quoted need to be reviewed periodically to determine their effect on plant operations. A company utility supervisor is a good source of future price trends. Unfortunately, there are no shortcuts for estimating and projecting utility prices. Utilities are the third largest expense item in the manufacture of a product, behind raw materials and labor. 

A single energy refinery would require about 20,000 tons/day of high-sulfur Eastern coal, producing about 600 long tons/day of elemental sulfur by-product. For the purposes of this paper, the future price of sulfur has been projected to be about 100/LT, with a floor provided by the energy cost to produce discretionary sulfur. At this sale price, the sulfur by-product credit is about 0.25/million Btu of energy produced. This credit, for 2 million... 

Although these early findings showed that significant beneficial effects could be derived from mixes prepared with SEA binders, very little attention was maintained in this area until the mid-1970 s, or more directly, the advent of the Oil Embargo from the Middle East. In anticipation of reduced crude supplies on the future price and availability of asphalt, coupled with the lower cost and projected surpluses of sulfur, the paving industry revived its interest in SEA binder technology. 

There are many arguments for the rational-expectations hypothesis. In the simple cobweb cycle, and even with adaptive expectations, we must assume that each agent believes himself to be the only one to adjust rationally to the circumstances and that others act in a more or less mechanical way But this is an irrational belief, which we should not impute to people without evidence. It is surely more plausible to assume that people believe others to be as rational as themselves. Also, in a rapidly changing world people would be silly to pay much attention to the past. When oil prices quadrupled in 1973, the prices of oil before 1973 lost all relevance as guides to future prices. And if ordinary people understood much less of the economy than economists do, we would expect the latter to make much more money than they in fact do. The reason economists don t make a killing by outguessing the market is that the market has access to whatever information they have and can use it just as efficiently. ... 

Market research is an important and effective link in the chain of events that starts with an idea and leads to an investment in research and development. Market research is required to ferret out market needs and to help describe the characteristics of the product that could fill this need. Many new plastics are expected to replace nonplastic materials in specific applications, and part of the input must include the developing of a suitable new fabricating process. Anyone involved in these activities knows that it is an oversimplification to expect market research people to go out into the market place and ask potential users what their future needs are going to be. A large majority just do not know, particularly when yours program requires an estimate of the profitability of a project before it is initiated. This requires not only an understanding of a need but also an appreciation of future pricing, volume, and costs. 

If widely predicted future price increases for the natural gas liquid feeds materialize, naphtha and gas on feedstocks will become more competitive in the United States even at current prices for the heavier feeds. 

Increased imports from low-cost countries and price erosion Increased imports from low-cost countries are typically correlated with future price erosions indicating a strong increase of competitive pressure. 

In addition to uncertainty about future prices, this would inject into the phase II market uncertainties about the terms of borrowing from future periods that do not yet exist, against allocations that are not yet defined, with no legal clarity around penalties for non-compliance in future periods, and with much scope for lobbying future allocations based upon the size of the debt accumulated. 

Sensitivity analysis. Uncertainties in the costs of equipment, labor, operation, and raw materials—as well as in future prices received for products—can have a major effect on the evaluation of investments. It is important in appraising the risks involved to know how the outcome... 

What will be the future price and availability of both natural gas and petroleum ... 

Many factors interact and ultimately determine the market prices of commodity chemicals - and hence returns to the various players. Some of these factors are reasonably hard , for example, cost stmctures and historic demand. Others are quite soff, for example, beliefs about future demand, beliefs about what and when new capacity may be added, and expectations about future price movements. 

Because of these situations, the production of the major portion of feed grade fats and some oil-bearing feedstuffs is likely to continue regardless of their market prices. However, future prices will reflect (1) domestic competition between feed, oleochemicals, and detergent industries needs (2) opportunities to ship into global markets and (3) abilities to import lower cost fats like palm oil and stearin. 

B. The uncertainty in the forecasts of future prices is usually so large that it dominates most differences between design alternatives. 

Chemical Market Associates Inc. (CMAI) Maintains a large archive of historic data and future price forecasts for 70 commodity chemicals, including multiple grades, U.S., N.W Europe, Middle East, N.E., and S.E. Asia. Spot and contract prices are given for some compounds, and in some cases margins are also estimated by formula. 

Recent events have again emphasized the precarious nature of imported petroleum. Canada currently imports about 80,000 m3/day (500,000 Bbl/day) into Eastern provinces and exports 9,000 m3/day (56,600 Bbl/day) to the U.S.A. from western Canada. These exports will probably be phased out in the 1980 s. At the present time natural gas exports to the U.S.A. result in an overall dollar trade balance for oil and gas in Canada. The continued development of the oil sands, the promising oil discoveries in the Beaufort Sea, and natural gas discoveries in the Arctic Islands and eastern Canada are key factors in Canada s energy future. However, it is evident that Canada for sometime will rely on oil imports for which the degree of future price escalation is unknown. 

For producers, information on actual market prices and qualities, as well as information on expected trends in consumer preferences and future price levels, may be most relevant. 

Suppose now that air pollution increases. All else equal this is equivalent to a reduction in current period maintenance activities. Its consequence is a reduction in future capital stocks. Production costs and users costs jncreaje. These higher costs result in a leftward shift from S to S of the supply function in Figure 2. If demand is unchanged, higher future prices and lower future outputs result. The discounted value of the stream of changes in quasi-rents represent the economic consequences of the air pollution increase for the firm. 

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