Fuel offering and purchase management system

• US 8,121,932 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:
  US11/733,198
• Publication Number:
  US 20080249920A1
• Time in Patent Office: 1,779 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. The Fuel Offer Generator employs a geographical fuel pump location metric as well as consumer redemption to establish the pricing of fuel offerings.

Claims

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

setting by a processor at least one commodity offering term for a commodity offering wherein setting the at least one commodity offering term is based on a customer specification;

setting by the processor at least one geographic zone exercise restriction based on the customer specification for the commodity offering;

determining by the processor at least one commodity offering pricing value based on the at least one geographic zone exercise restriction and at least one commodity offering pricing model for the commodity offering;

providing the commodity offering when the determined commodity offering pricing value is 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 geographic zone exercise restriction when the strike price of the exercised commodity offering is less than a local retail 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 2, wherein the local retail commodity price is a fuel pump price.

6. The method of claim 5, wherein the fuel pump price is paid according to the customer specification.

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

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 at least one commodity offering term is 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 at least one commodity offering term is 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, 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 customer specification includes a strike price.

27. The method of claim 1, wherein the customer specification includes a premium.

28. The method of claim 1, wherein the customer specification includes a tenor.

29. The method of claim 1, wherein the customer specification includes a commodity type.

30. The method of claim 1, wherein the customer specification includes at least two geographic zones.

31. The method of claim 30, wherein the customer specification includes at least one primary geographic zone.

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

33. The method of claim 1, wherein the customer specification comprises customer payment based on a premium and a strike price for a specified commodity quantity.

34. The method of claim 33, wherein payment for some portion of a commodity purchase for an exercised commodity offering comprises a payment amount for a commodity retailer for the commodity purchase on which the commodity offering has been exercised.

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

36. The method of claim 35, wherein payment for some portion of a commodity purchase for an exercised commodity offering comprises a payment amount defined by the customer specification wherein the payment amount is based on a commodity purchase size and a difference between the strike price and the local retail commodity price.

37. 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.

38. 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.

39. The method of claim 38, 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.

40. The method of claim 39, wherein aggregating entries is based on commodity offering terms.

41. The method of claim 39, wherein aggregating entries is based on commodity offering pricing.

42. The method of claim 39, wherein aggregating entries is based on customer characteristics.

43. The method of claim 39, wherein aggregating entries is based on risk considerations.

44. The method of claim 38, wherein the hedge includes the purchase of at least one forward contract.

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

46. The method of claim 45, further comprising:

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

47. The method of claim 1, wherein the at least one commodity offering exercise restrictions comprise:

a periodic usage restriction having a specified period.

48. The method of claim 47, wherein the specified period is a month.

49. The method of claim 47, wherein the specified period is a year.

50. The method of claim 47, wherein the specified period is a fiscal quarter.

51. The method of claim 47, wherein the periodic usage restriction having a specified period is configured to allow a different usage restriction for each period.

52. The method of claim 47, wherein the periodic usage restriction monotonically decreases with the passage of each successive period.

53. The method of claim 47, wherein the periodic usage restriction monotonically increases with the passage of each successive period.

54. The method of claim 47, wherein the periodic usage restriction comprises commodity offering term specifying a maximum allowed usage per period.

55. The method of claim 47, wherein the periodic usage restriction comprises commodity offering term specifying a fixed allowed usage per period.

56. The method of claim 1, wherein the commodity offering comprises a maximum redemption restriction.

57. The method of claim 56, wherein the maximum redemption restriction comprises a commodity offering term specifying a limiting commodity price, wherein exercising the commodity offering on a quantity of commodity with a retail price that is higher than the limiting commodity price yields a redemption based on the limiting commodity price and not the retail price.

58. The method of claim 56, wherein the maximum redemption restriction comprises a commodity offering term specifying a limiting payout, wherein exercising the commodity offering on a quantity of commodity with a retail price higher than the sum of the strike price and the limiting payout yields a redemption based on the limiting payout and not the difference of the retail price and strike price.

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

a memory;

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

set at least one commodity offering term for a commodity offering based on a customer specification;

set at least one geographic zone exercise restriction based on the customer specification for the commodity offering;

determine at least one commodity offering pricing value based on the at least one geographic zone exercise restriction and at least one commodity offering pricing model for the commodity offering;

provide the commodity offering when the determined commodity offering pricing value is between a strike price and a premium; and

provide payment for some portion of a commodity purchase for an exercised commodity offering subject to the at least one geographic zone exercise restriction when the strike price of the exercised commodity offering is less than a local retail commodity price.

60. A processor readable medium having processor-executable program instructions residing thereon, wherein the processor-executable program instructions are issuable by the processor to:

set at least one commodity offering term for a commodity offering based on a customer specification;

set at least one geographic zone exercise restriction based on the customer specification;

determine at least one commodity offering pricing value based on the at least one geographic zone exercise restriction and at least one commodity offering pricing model for the commodity offering;

provide the commodity offering when the commodity offering pricing value is between a strike price and a premium; and

provide payment for some portion of a commodity purchase for an exercised commodity offering subject to the at least one geographic zone exercise restriction when the strike price of the exercised commodity offering is less than a local retail commodity price.

61. 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 based on a customer specification;

set at least one geographic zone exercise restriction based on the customer specification for the commodity offering;

determine at least one commodity offering pricing value based on the at least one geographic zone exercise restriction and at least one commodity offering pricing model for the commodity offering;

provide the commodity offering when the determined commodity offering pricing value is 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 geographic zone exercise restriction when the strike price of the exercised commodity offering is less than a local retail commodity price.