Fuel offering and purchase management system

• US 8,121,930 B2
• Filed: 04/09/2007
• Issued: 02/21/2012
• 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:
  US11/733,178
• Publication Number:
  US 20080249916A1
• Time in Patent Office: 1,779 Days
• Field of Search: 705/37
• US Class Current: 705/37
• CPC Class Codes: G06Q 30/0206 Price or cost determination based on market factors
• 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
• CPC Class Codes: G06Q 50/06 Energy or water supply

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. The Fuel Offer Generator determines which metrics are relevant to pricing the fuel offering and then employs those determined metrics to establish the pricing of fuel offerings.

Claims

1. A processor-implemented method to generate fuel offerings for selection by customers, comprising:

setting a strike price for a fuel offering;

determining a premium price associated with the strike price for the fuel offering based on the strike price and pricing input factors;

monitoring customer purchases of the fuel offering that specifies at least a quantity of fuel and a tenor and customer exercises of the purchases during the specified tenor;

storing information regarding the monitored customer fuel offering purchases and exercises as monitored information;

adjusting at least one of the strike price and the premium price based on the monitored information;

providing the fuel offering at an offer price comprised of the adjusted at least one of the strike price and the premium price for selection by customers.

2. The method of claim 1, wherein the customers are in a retail market.

3. The method of claim 1, further, comprising:

determining a service markup price associated with the premium price for the fuel offering.

4. The method of claim 1, wherein the strike price is arbitrarily set.

5. The method of claim 1, wherein the strike price is derived from a metric calculated at a national or multi-national level.

6. The method of claim 1, further, comprising:

determining if the strike and premium price are satisfactory by querying a market information database for information to be used as a factor in determining whether said strike and premium price are satisfactory.

7. The method of claim 1, further, comprising:

determining if the strike and premium price are satisfactory by querying a customer marketing database for information to be used as a factor in determining whether said strike and premium price are satisfactory.

8. The method of claim 1, further, comprising:

determining if the strike and premium price are satisfactory by querying a historical usage database for information to be used as a factor in determining whether said strike and premium price are satisfactory.

9. The method of claim 1, wherein the pricing input factors comprise:

fuel market information, historical analysis, offering parameters, observable parameters and non-observable parameters.

10. The method of claim 9, wherein the fuel market information may include any of:

a wholesale gasoline over-the-counter options market, wholesale gasoline over-the-counter forward market and futures market, retail gasoline spot prices.

11. The method of claim 9, wherein the historical analysis may include any of:

wholesale gasoline over-the-counter options market, wholesale gasoline over-the-counter forward market, wholesale gasoline over-the-counter futures market, historical retail gasoline spot prices, historical wholesale gasoline spot prices, correlation between wholesale and retail gasoline prices.

12. The method of claim 9, wherein the offering parameters may include any of:

strike price, tenor, constraints, incentives, restrictions, fuel type, geographic location.

13. The method of claim 9, wherein the observable parameters may include any of:

wholesale gasoline implied volatilities, wholesale gasoline forward curve, spread of retail spot price over wholesale spot price.

14. The method of claim 9, wherein the non-observable parameters may include any of:

retail gasoline implied volatilities, wholesale gasoline mean reversion parameters, retail gasoline mean reversion parameters, retail gasoline forward curve.

15. The method of claim 1, wherein determination of the premium price based on the pricing input factors, further includes:

obtaining the pricing input factors;

employing the pricing input factors in a commodity volatility model to generate a volatility solution; and

partially determining the premium price based on the pricing input factors using the volatility solution as an input into a pricing simulation.

16. The method of claim 15, wherein the commodity volatility model is based on a stochastic differential equation.

17. The method of claim 15, wherein the pricing simulation is based on grid pricing.

18. The method of claim 15, wherein the pricing simulation is based on a Monte Carlo simulation.

19. The method of claim 1, further, comprising:

obtaining a customer order responsive to said fuel offering, the customer order including specified parameters including at least a quantity of fuel and a tenor.

20. The method of claim 19, wherein the specified parameters further include a type of fuel.

21. The method of claim 19, wherein the specified parameters further include a periodic usage limit.

22. The method of claim 1, further, comprising:

reimbursing a customer that exercises a customer fuel offering order.

23. The method of claim 22, further, comprising:

storing exercise information regarding the customer'"'"'s fuel offering order exercise in a historical usage database.

24. The method of claim 23, wherein the exercise information includes a location where fuel was purchased.

25. The method of claim 23, wherein the exercise information includes a quantity of fuel that was purchased.

26. The method of claim 1, further, comprising:

reimbursing the customer for fuel purchased having a price greater than the strike price.

27. The method of claim 26, wherein the customer reimbursement is limited to the quantity specified in the customer fuel offering order.

28. The method of claim 19, further, comprising:

aggregating customer fuel offering orders.

29. The method of claim 28, further, comprising:

executing a hedge for the aggregated customer fuel offering orders.

30. The method of claim 28, wherein the hedge employs a forward contract.

31. The method of claim 19, further, comprising:

providing the customer with incentives to modify the customer'"'"'s behavior.

32. The method of claim 31, wherein if a customer'"'"'s fuel purchasing behavior is determined to be undesirable, pricing disincentives negatively affect the fuel offering provided to the customer.

33. The method of claim 32, wherein the pricing disincentives will be put into effect when the customer has been determined to be undesirable for a specified period of time.

34. The method of claim 32, wherein the customer'"'"'s fuel purchasing behavior is undesirable when the customer tends to purchase fuel at higher prices.

35. The method of claim 32, the negative disincentives increases the cost of the fuel offering.

36. The method of claim 31, wherein if a customer'"'"'s fuel purchasing behavior is determined to be desirable, incentives are offered to the customer.

37. The method of claim 36, wherein the incentives decrease the cost of the fuel offering.

38. The method of claim 36, wherein the incentives award points to the customer.

39. The method of claim 36, wherein the incentives are offered to the customer when the customer has been determined to be desirable for a specified period of time.

40. The method of claim 19, further, comprising:

providing a fuel vendor with incentives to modify behavior.

41. The method of claim 40 wherein if a customer'"'"'s fuel purchasing behavior is determined to be undesirable, pricing disincentives negatively affect the fuel offering provided to the customer.

42. The method of claim 41, wherein the pricing disincentives will be put into effect when the customer has been determined to be undesirable for a specified period of time.

43. The method of claim 41, wherein the customer'"'"'s fuel purchasing behavior is undesirable when the customer tends to purchase fuel at higher prices.

44. The method of claim 42, the negative disincentives increases the cost of the fuel offering.

45. The method of claim 42, wherein if a customer'"'"'s fuel purchasing behavior is determined to be desirable, incentives are offered to the customer.

46. The method of claim 45, wherein the incentives decrease the cost of the fuel offering.

47. The method of claim 45, wherein the incentives award points to the customer.

48. The method of claim 45, wherein the incentives are offered to the customer when the customer has been determined to be desirable for a specified period of time.

49. The method of claim 1, further, comprising:

determining a sensitivity to the offer price.

50. The method of claim 49, wherein the price is the strike price.

51. The method of claim 49, wherein the price is the premium price.

52. The method of claim 49, wherein the price is a service markup price.

53. The method of claim 1, further, comprising:

aggregating customer fuel offering orders;

determining a sensitivity to said offered strike and premium price;

executing a hedge for the customer fuel offering order based on the determined sensitivity to said fuel offering strike and premium pricing.

54. 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 a strike price for a fuel offering;

determine a premium price associated with the strike price for the fuel offering based on the strike price and pricing input factors;

monitor customer purchases of the fuel offering that specifies at least a quantity of fuel and a tenor and customer exercises of the purchases during the specified tenor;

store information regarding the monitored customer fuel offering purchases and exercises as monitored information;

adjust at least one of the strike price and the premium price based on the monitored information;

provide the fuel offering at an offer price comprised of the adjusted at least one of the strike price and the premium price for selection by customers.

55. A medium readable by a processor storing processor-issuable instructions to generate fuel offering for selection by customers wherein the instruction are issuable by the processor to:

set a strike price for a fuel offering;

determine a premium price associated with the strike price for the fuel offering based on the strike price and pricing input factors;

monitor customer purchases of the fuel offering that specifies at least a quantity of fuel and a tenor and customer exercises of the purchases during the specified tenor;

store information regarding the monitored customer fuel offering purchases and exercises as monitored information;

adjust at least one of the strike price and the premium price based on the monitored information;

provide the fuel offering at an offer price comprised of the adjusted at least one of the strike price and the premium price for selection by customers.

56. 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 a strike price for a fuel offering;

determine a premium price associated with the strike price for the fuel offering based on the strike price and pricing input factors;

monitor customer purchases of the fuel offering that specifies at least a quantity of fuel and a tenor and customer exercises of the purchases during the specified tenor;

store information regarding the monitored customer fuel offering purchases and exercises as monitored information;

adjust at least one of the strike price and the premium price based on the monitored information;

provide the fuel offering at an offer price comprised of the adjusted at least one of the strike price and the premium price for selection by customers.