Fuel offering and purchase management system

• US 8,108,287 B2
• Filed: 04/09/2007
• Issued: 01/31/2012
• Est. Priority Date: 04/09/2007
• Status: Active Grant

• Current Assignee: Goldman Sachs & Co. LLC (Goldman Sachs Group Incorporated)
• Original Assignee: Goldman Sachs & Company (Goldman Sachs Group Incorporated)
• Inventors: Kirch, Michael, Sharfman, Daniel, Sanghvi, Saurabh H.
• Primary Examiner(s): Maguire, Lindsay M
• Assistant Examiner(s): Lemieux, Jessica
• Application Number:
  US11/733,200
• Publication Number:
  US 20080249922A1
• Time in Patent Office: 1,758 Days
• Field of Search: 705/37
• US Class Current: 705/37
• CPC Class Codes: G06Q 30/0283 Price estimation or determination
• CPC Class Codes: G06Q 30/06 Buying, selling or leasing transactions
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange

Abstract

The present disclosure is directed towards apparatuses, systems and methods to facilitate the pricing, sales and delivery of a commodity fuel to a Customer. In one embodiment, the disclosure teaches a Fuel Offer Generator that facilitates the purchase and management of fuel offerings. The Fuel Offer Generator allows Customers interested in securing fuel to obtain an offer for fuel at lock-in prices for various tenors. Fuel Customers can buy these fuel offers such that they may later exercise the fuel offers so their fuel costs are locked-in at desired levels (e.g., they may be set to strike prices). The Fuel Offer Generator also can establish a Premium Price that will be part of the fuel offer. The Fuel Offer Generator may generate hedges to counteract fuel related risks stemming from fuel offer purchases. Ultimately, a customer that purchases a fuel offering can exercise their fuel offering order at a specified price and redeem any difference between the market price for their purchased fuel and the price specified in their fuel offering order. While the Fuel Offer Generator may place various constraints on redemption, it will employ various consumer behavior metrics to establish the pricing of fuel offerings.

Claims

1. A processor-implemented method to provide commodity offerings, comprising:

setting at least one commodity offering term for a commodity offering;

setting at least one customer behavior direction motive for discouraging customers from exercising commodity offerings on a large commodity quantity near end of a commodity offering tenor;

setting at least one commodity offering exercise restriction for a commodity offering based on the at least one customer behavior direction motive;

determining via a processor at least one commodity offering pricing value based on the at least one commodity offering term and at least one commodity offering pricing model for the commodity offering;

providing the commodity offering, including at least one association based on the commodity offering pricing values between a strike price and a premium, for selection by a customer; and

providing payment for some portion of a commodity purchase for an exercised commodity offering subject to the at least one commodity offering exercise restriction, wherein the strike price of the commodity offering is less than a reference commodity price.

2. The method of claim 1, wherein the commodity is a fuel.

3. The method of claim 2, wherein the fuel is a vehicle fuel.

4. The method of claim 2, wherein the fuel is a heating fuel.

5. The method of claim 1, wherein the reference commodity price is a commodity price charged by a retail commodity dealer at which the commodity offering is exercised.

6. The method of claim 1, wherein the reference commodity price is a regional average commodity price.

7. The method of claim 1, wherein the reference commodity price is a national average commodity price.

8. The method of claim 1, wherein the strike price is pre-selected and the premium is determined based at least in part on the strike price.

9. The method of claim 1, wherein the premium is pre-selected and the strike price is determined based at least in part on the premium.

10. The method of claim 1, wherein the commodity offering pricing model includes at least one commodity market variable.

11. The method of claim 10, wherein the at least one commodity market variable comprises at least one local retail commodity price.

12. The method of claim 10, wherein the at least one commodity market variable includes any of:

wholesale gasoline over-the-counter options market data, wholesale gasoline over-the-counter forward market and futures market data, retail gasoline spot prices, wholesale gasoline implied volatilities, wholesale gasoline forward curve, spread of retail spot price over wholesale spot price.

13. The method of claim 1, further comprising:

determining whether the at least one association based on the commodity offering pricing values between a strike price and a premium is satisfactory.

14. The method of claim 13, wherein the determining whether the at least one association based on the commodity offering pricing values between a strike price and a premium is satisfactory, further, comprises querying a market information database for information to be used as a factor in determining whether said association is satisfactory.

15. The method of claim 13, wherein the determining whether the at least one association based on the commodity offering pricing values between a strike price and a premium is satisfactory, further, comprises querying a customer marketing database for information to be used as a factor in determining whether said association is satisfactory.

16. The method of claim 15, wherein the commodity offering terms are adjusted based on the determination of whether the association is satisfactory.

17. The method of claim 15, wherein the commodity pricing model is adjusted based on the determination of whether the association is satisfactory.

18. The method of claim 13, wherein the determining whether the at least one association based on the commodity offering pricing values between a strike price and a premium is satisfactory, further, comprises querying a historical usage database for information to be used as a factor in determining whether said association is satisfactory.

19. The method of claim 18, wherein the commodity offering terms are adjusted based on the determination of whether the association is satisfactory.

20. The method of claim 18, wherein the commodity pricing model is adjusted based on the determination of whether the association is satisfactory.

21. The method of claim 1, wherein the commodity offering term parameters may include any of:

strike price, premium, tenor, constraints, incentives, restrictions, commodity type.

22. The method of claim 1, wherein the commodity offering pricing model comprises a commodity volatility model described by a stochastic differential equation.

23. The method of claim 22, wherein the commodity volatility model described by a stochastic differential equation is manifested in a Monte Carlo simulation.

24. The method of claim 22, wherein the commodity volatility model described by a stochastic differential equation is manifested in a grid-pricing scheme.

25. The method of claim 22, wherein the commodity volatility model described by a stochastic differential equation is manifested in at least one analytic formula.

26. The method of claim 1, wherein the setting at least one commodity offering terms is based on a customer specification.

27. The method of claim 26, wherein the customer specification includes a strike price.

28. The method of claim 26, wherein the customer specification includes a premium.

29. The method of claim 26, wherein the customer specification includes a tenor.

30. The method of claim 26, wherein the customer specification includes a commodity type.

31. The method of claim 26, wherein the customer specification includes at least one geographic zone.

32. The method of claim 31, wherein the customer specification includes at least one primary geographic zone.

33. The method of claim 32, wherein the customer specification includes at least one peripheral geographic zone.

34. The method of claim 1, wherein the selection by a customer comprises customer payment of a premium and a strike price for a specified commodity quantity.

35. The method of claim 34, wherein payment for some portion of a commodity purchase for an exercised commodity offering comprises a payment to a commodity retailer for the commodity purchase on which the commodity offering has been exercised.

36. The method of claim 1, wherein the selection by a customer comprises customer payment of a premium but not a strike price for a specified commodity quantity.

37. The method of claim 36, wherein payment for some portion of a commodity purchase for an exercised commodity offering comprises a payment to a customer based on a commodity purchase size and a difference between the strike price and the local retail commodity price.

38. The method of claim 1, further comprising:

storing commodity offering exercise information in a historical usage database.

39. The method of claim 38, wherein the commodity offering exercise information includes a location where the commodity offering was exercised.

40. The method of claim 38, wherein the commodity offering exercise information includes a commodity quantity on which the commodity offering was exercised.

41. The method of claim 1, wherein the payment for some portion of a commodity purchase for an exercised commodity offering is limited to a total commodity quantity specified by the commodity offering terms.

42. The method of claim 1, further comprising:

recording customer selection of commodity offerings in a customer selection database; and

executing a hedge based on entries in the customer selection database.

43. The method of claim 42, further comprising:

aggregating entries in the customer selection database into at least one similarity class prior to executing a hedge; and

executing a hedge based on similarity classes.

44. The method of claim 43, wherein aggregating entries is based on commodity offering terms.

45. The method of claim 43, wherein aggregating entries is based on commodity offering pricing.

46. The method of claim 43, wherein aggregating entries is based on customer characteristics.

47. The method of claim 43, wherein aggregating entries is based on risk considerations.

48. The method of claim 42, wherein the hedge includes the purchase of at least one forward contract.

49. The method of claim 1, wherein the commodity pricing model is configured to output at least one price sensitivity value.

50. The method of claim 49, further comprising:

executing a hedge based at least in part on the at least one price sensitivity value.

51. The method of claim 1, wherein:

the at least one commodity offering exercise restriction comprises a periodic minimum quantity usage restriction, whereby if a customer exercises a commodity offering in one period on a period quantity less than a minimum amount specified by the periodic minimum quantity usage restriction, the customer forfeits rights to exercise on a commodity quantity equal to the difference between the minimum amount and the period quantity.

52. A processor-implemented system to provide commodity offerings, comprising:

a memory;

a processor disposed in communication with said memory, and configured to issue a plurality of processing instructions stored in the memory, wherein the processor issues instructions to;

set at least one commodity offering term for a commodity offering;

set at least one customer behavior direction motive for discouraging customers from exercising commodity offerings on a large commodity quantity near end of a commodity offering tenor;

set at least one commodity offering exercise restriction for a commodity offering based on the at least one customer behavior direction motive;

determine at least one commodity offering pricing value based on the at least one commodity offering term and at least one commodity offering pricing model for the commodity offering;

provide the commodity offering, including at least one association based on the commodity offering pricing values between a strike price and a premium, for selection by a customer; and

provide payment for some portion of a commodity purchase for an exercised commodity offering subject to the at least one commodity offering exercise restriction, wherein the strike price of the commodity offering is less than a reference commodity price.

53. A medium readable by a processor storing processor-issuable instructions to provide commodity offerings, wherein the instructions are issuable by the processor to:

set at least one commodity offering term for a commodity offering;

set at least one customer behavior direction motive for discouraging customers from exercising commodity offerings on a large commodity quantity near end of a commodity offering tenor;

set at least one commodity offering exercise restriction for a commodity offering based on the at least one customer behavior direction motive;

determine at least one commodity offering pricing value based on the at least one commodity offering term and at least one commodity offering pricing model for the commodity offering;

provide the commodity offering, including at least one association based on the commodity offering pricing values between a strike price and a premium, for selection by a customer; and

provide payment for some portion of a commodity purchase for an exercised commodity offering subject to the at least one commodity offering exercise restriction, wherein the strike price of the commodity offering is less than a reference commodity price.

54. An apparatus to provide commodity offerings, comprising:

a memory;

a processor disposed in communication with said memory, and configured to issue a plurality of processing instructions stored in the memory, wherein the processor issues instructions to;

set at least one commodity offering term for a commodity offering;

set at least one customer behavior direction motive for discouraging customers from exercising commodity offerings on a large commodity quantity near end of a commodity offering tenor;

set at least one commodity offering exercise restriction for a commodity offering based on the at least one customer behavior direction motive;

determine at least one commodity offering pricing value based on the at least one commodity offering terms and at least one commodity offering pricing model for the commodity offering;

provide the commodity offering, including at least one association based on the commodity offering pricing values between a strike price and a premium, for selection by a customer; and

provide payment for some portion of a commodity purchase for an exercised commodity offering subject to the at least one commodity offering exercise restriction, wherein the strike price of the commodity offering is less than a reference commodity price.