A Survey on Oil Pump Prices – Philippine Oil Pump Price Bulletin 4 – 01 May 1, 2009

April 30th, 2009 No Comments   Posted in oil and gas, oil pump prices

A Survey on Oil Pump Prices – Philippine Oil Pump Price Bulletin 4 – 01 May 1, 2009

This time, I am still holding my breath because of the fast pace of changes in the international crude oil and product posted prices and its immediate impact on domestic prices of oil products. One week, its gone up, only to be followed by a price reduction the next week as the prices of crude oil and products move in unison with changes in the Philippine peso with the US dollar.

NEDA Secretary Says Domestic Pump Price is Over-priced by P8/Liter (??) More »

The Ultimate Commuter Vehicle Concept – electric regenerative renewable

April 30th, 2009 7 Comments   Posted in electric cars, oil crisis

The Ultimate Commuter Vehicle Concept – electric regenerative renewable

In the recent automotive show in New York, visitors commented that “why only now are the big three motors of USA offering energy efficient compact vehicles after receiving massive government budget support?” Some commented that “have they not seen the writing on the wall several years back when the Japanese and other European car makers have started to include advanced technologies that provide greater fuel economy?” Finally some said “had the US car manufacturers and American consumers invested in fuel-efficient vehicles, the world oil price would have not soared to such $147 per barrel heights, the world would have avoided a global recession, and this global meltdown woud not have happened at all”

I guess these are all speculative, but it is never too late to do the right thing –> build fuel-efficient cars, save money on fuels, conserve oil so as not to drive its price upward, clean the environment and avoid global warming, and so on.

My concept of the ultimate vehicle consists of the following:

1) A small engine, perhaps of lawn-mower size, be it a spark-ignition, compression ignition or fuel cell, to drive an energy efficient electric generator (both prime mover engine and generator should be of best design and highest efficiency).

2) The electric generator charging an array of batteries of the best storage technology. The prime mover engine turns on only when the voltage of the battery pack goes lower than its set point.

3) The batteries drive the energy efficient electric motors or drive shafts on each wheel (either 2 wheel or 4 wheel drive).

4) The 4 wheels of the vehicle should be of such design that it has minimum rolling resistance, the vehicle itself is lightweight and made of composite materials that make it both strong but lightweight.

5) During day time, the batteries are primarily charged using solar PV cells, or in the absence of adequate sunlight and the voltage drops, the small engines cut in to drive the generator to charge the batteries.

6) When the vehicle is parked and there is no sunlight, it is charged using small wind vanes that could be deployed and retracked from the car’s ceiling.

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How to Calculate the Levelized Cost of Energy – a simplified approach

How to Calculate the Levelized Cost of Energy – a simplified approach

Calculating the levelized cost of energy is a fundamental principle in the energy and power industry. It basically allows the comparison of various technologies of unequal life times and capacities without resorting to developing a full-blown project finance model.

This simplified approach is particularly appropriate when doing a rough estimate on the cost of electricity given the various technologies in a country. By applying the formula on each power plant, as if it is continuously replaced to provide incremental power to meet new incremental demand, it provides a good estimate on the cost of electricity had a new plant been constructed to replace the old plant that became obsolete.

The weighted average levelized cost for the country is then estimated by using the electricity generation of each technology as weighing factor. For instance, the effect of injecting a nuclear power plant into the generation mix will be estimated quickly so that the country’s average levelized cost of energy could be compared with its neighboring competitor countries having nuclear power. Applying the same set of formulas and cost factors for each technology will yield a good index on our country’s competitiveness with respect to power costs.

Various Power Generation Technologies

I am sharing with you my own list and classification of the various power generation technologies, both existing and future technologies, that taken as a whole, would supply the ever growing needs of the peoples of our mother earth.

Levelized Cost of Each Power Generation Technology

The only way power generation technologies could be compared with respect to cost is to calculate the levelized cost of energy over its economic life. This involves obtaining data on rated capacity kW, overnigh costs $/kW, fixed Operating & Maintenance cost $/kW/year, variable O&M cost $/kWh, efficiency % or plant heat rate kJ/kWh, economic life years, availability %, load factor % or capacity factor %, fuel cost $/GJ or $/kg or $/L, fuel Gross Heating Value kJ/kg or kJ/L, fuel density kg/L, and construction lead time years.

The levelized cost allows comparison of different power generation technologies of unequal economic life, capital cost, risk and returns, capacity factor, efficiencies or plant heat rate, fuel costs and construction lead times.

The basic formula used is based on the US NREL formula for the levelized cost of energy (net):

Net COE = ICC * CRF / AEPnet + (LLC + O&M + LRC + MOE) – PTC, in US $/kWh

where ICC = Initial Capital Cost (total debt), $

CRF = capital recovery factor, 1/yr = int / (1 – (1 + int)^-Life)

AEPnet = Net Annual Energy Production, kWh/yr (net of plant own use)

= (kW capacity) * (capacity factor) * (hours/year)

LLC = Land Lease Cost, $/kWh

O&M = Levelized Operating & Maintenance Expense, $/kWh

LRC = Levelized Replacement/Overhaul Cost, $/kWh

MOE = Miscellaneous Operating Expense, $/kWh

PTC = US Production Tax Credit, $/kWh

In the case of the Philippines where the effect of income tax and depreciation needs to be considered, the RP MTO formula developed by Engr. Marcial T. Ocampo is shown:

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Philippine Oil Pump Price Bulletin 3: 22 April 2009

April 22nd, 2009 No Comments   Posted in oil and gas, oil pump prices

Philippine Oil Pump Price Bulletin 3 : 22 April 2009

This is the 3rd issue of this weekly oil pump price bulletin. It is being issued to provide pricing forecast for low sulfur diesel LSD (0.05% Sulfur) and unleaded gasoline 93 RON. Please refer to the previous Bulletin 1 dated 15 April 2009 for 93 RON and Bulletin 2 dated 17 April 2009 for the pump price of LSD.

This bulletin predicted a similar upward price adjustment in unleaded 93 RON gasoline of 0.6710 PhP/liter which is similar to the 0.50 PhP/liter upward adjustment announced by Shell and Petron this day of 22 April 2009. For low sulfur diesel (0.05% sulfur), a very small downward adjustment of 0.0894 PhP/liter was predicted by this bulletin. This approximates the announcement that no adjustments will be made on diesel.

Basic Information (from Philippine Star, 22 April 2009)

Exchange Rate = 48.46 PhP/$ (April 22) vs 47.66 PhP/$ (April 15)

1 US gallon = 3.7854 liters

1 barrel of oil = 42 US gallons = 42 * 3.7854 = 158.9868 liters

Dubai Crude = 49.27 $/bbl (April 14, 2009 – Philippine Star)

Singapore Posted Price, $ per barrel:

Diesel = $62.08 (April 10-21 ave) vs $62.32 (April 6-9 ave)

Mogas = $63.74 (April 10-21 ave) vs $62.09 (April 6-9 ave)

Example for Unleaded 93 RON Gasoline:

To reflect production cost, a factor of 1.134 to 1.176 is applied on crude cost. However, the reader is advised to use actual posted price.

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How to Get Out of this Global Economic Meltdown – a suggested approach

How to Get Out of this Global Financial Meltdown – a suggested approach

Oil Crisis, US Recession and Global Financial Meltdown

As early as 2007, signs of economic recession have been observed throughout the world. By end December 2007, the international price of crude oil went past $100 per barrel. Continued speculation in the world markets as well as increased demand pushed the price to its maximum of $147 per barrel by July 2008.

From then on, it was a roller coaster ride and the price of crude oil dropped to $40-50 per barrel as off April 2009. US Banks and financial institutions began to request for US government bailout, some were allowed to fail, and the big US insurers and banks that were considered too big to fail were recipients of bailout funds from the outgoing Bush administration.

With the onset of the new Obama administration, the US legislature together with the US executive passed fiscal stimulus package to address and hopefully arrest the continued global financial meltdown that also ravaged Europe and major industrial economies in Asia.

Some Countries Were Spared. Why?
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Philippine Oil Pump Price Bulletin 2 : 17 April 2009

April 16th, 2009 2 Comments   Posted in oil and gas, oil pump prices

Philippine Oil Pump Price Bulletin 2 : 17 April 2009

This is the 2nd issue of this weekly oil pump price bulletin. It is being issued to provide pricing forecast for unleaded 93 RON gasoline. Please refer to the previous Bulletin 1 dated 15 April 2009 for the pump price of LSD (low sulfur diesel).

Basic Information

Exchange Rate = 47.66 PhP/$ (April 15, 2009 – Philippine Star)

1 US gallon = 3.7854 liters

1 barrel of oil = 42 US gallons = 42 * 3.7854 = 158.9868 liters

Dubai Crude = 49.27 $/bbl (April 14, 2009 – Philippine Star)

Example for Unleaded 93 RON Gasoline:

To reflect production cost, a factor of 1.134 to 1.176 is applied on crude cost. However, the reader is advised to use actual posted price (e.g. MOPS).

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Philippine Oil Pump Price Bulletin 1 : 15 April 2009

April 14th, 2009 1 Comment   Posted in oil and gas, oil pump prices

Philippine Oil Pump Price Bulletin 1 : April 15, 2009

Introduction

The worldwide phenomenon of frequent rise and fall of the international price of crude oil and its roller-coaster effect on the domestic price of petroleum products have brought about the need for a transparent and predictable price adjustment mechanism in order to protect the overall interest of the consuming public, petroleum dealers, oil refiners, importers and marketers of oil-based products.

During period of supply and price stability, the international price of crude oil and finished products is fully reflected in domestic pump prices with all the participants in the supply chain (importers, insurers, refiners, marketers, shippers, haulers and dealers) receiving their fair share of logistics costs and margins, and the government likewise receiving mandated customs duties, specific taxes, wharfage fee, BOE fee, value added tax (VAT) on imported oil and added services.

However during extra-ordinary events such as supply restraints by OPEC, conflicts and tensions in the Middle East and major oil suppliers, speculations in oil futures and commodity exchanges, steep currency depreciation, and stringent environmental requirements, the international price of crude oil and petroleum products suddenly rise and consequently the oil majors and minor industry players naturally raise prices to reflect the cost of new deliveries to replenish working capital, albeit moderated somewhat by stocks bought at previously lower prices and market competition.

Problem of Price Adjustments

Consequently, the problem arise when the international price of crude oil and petroleum products drop significantly following an oil price “spike”. End consumers and lobby groups naturally demand for significant one-time oil price adjustment to fully reflect the drop in the international price of crude oil and petroleum products.

The oil company and minor players are accused of dilly dallying price reductions in contrast with their speedy upward price adjustments. This observation is indeed unfortunate but very popular but a careful analysis reveals that in the same manner that prices were adjusted upwards gradually below international prices, the converse is likewise true that prices are adjusted downwards gradually but higher than international prices in order that upfront under-recoveries are liquidated via delayed over-recoveries.

Hence, the main determinant of equality is for the average international price to be reflected in the average domestic pump price for a defined period, after fully reflecting all the cost factors to bring the product to our country’s shores and after reasonable margin for the upkeep of the oil companies. In this way, there is neither under-recovery nor over-recovery on the part of the oil companies.

Objective of the Philippine Oil Pump Price Bulletin weekly service

The primary objective of this Philippine Oil Pump Price Bulletin is to provide weekly pump price updates given the prevailing past week average or start of the week Peso per US$ exchange rate, Dubai Crude marker $ per barrel, prevailing average petroleum product prices in Singapore, currently in force customs duties, specific taxes, value added tax on oil import, and other supply chain costs such as insurance, freight, oil company margin, dealer’s margin, transshipment & hauling and local value added tax.

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How to develop your own project finance model

How to develop your own project finance model

In simplest terms, a project finance model is a business plan written in some sort of a spreadsheet implemented in software (e.g. MS Excel).

It is prepared primarily to assist a potential investor like you to assess numerous business alternatives that you might want to venture into — and decide which alternative would meet your investment objectives – capital requirement, payback, profitability or internal rate of return, cash flows and risks profile.

By preparing in advance a financial model and doing simple to complicated sensitivity tests, the potential investor is forewarned of any potential problems in advance so that mitigation measures are put in place to address such potential risks and problems.

It consists of the following worksheets (or tabs):

1) Assumption or Input worksheet

2) Capital Cost Estimation Worksheet

3) Project Schedule or Drawdown Worksheet

4) Total Project Cost Summary Worksheet (equipment, taxes, installation, land, working capital, capitalized expenses, capitalized interest during construction)

5) Loan Amortization Worksheet (interest, principal repayment)

6) Depreciation Worksheet (beginning balance, depreciation, ending balance)

7) Working Capital Worksheet (receivables, payables, stocks, training, mobilization)

8) Income & Expense Statement Worksheet

9) Balance Sheet Worksheet

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Energy Technology Expert is also Project Finance and Financial Modeling Expert

Energy Technology Expert is also a Project Finance Modeling Expert.

He will help you provide data to set up your own business model for power plants, manufacturing plants and direct lending or lending investor business.

Here is my resume. More »

How to Start Your Direct Lending Business (Lending Investor)

How to Start Your Direct Lending Business (Lending Investor)

Aside from being an Energy Technology Expert, Marcial T. Ocampo is also a leading consultant in setting up your own start-up business, especially in direct lending — also called lending investor.

The following is a sample business plan for starting your own direct lending business. With today’s global economic crisis, it is important that credit is made available to small businesses with the least inconvenience and costs which normal banks would not otherwise lend for being too small an amount or for being not credit worthy.

On the other hand, traditional investment outlets provide very low returns that individuals with surplus capital placing their hard-earned savings either earn very low interests or risks in stocks and other high-yield instruments.

This article below will hopefully guide you start your own direct lending business.

Please contact the author below for further help in setting up your own direct lending business, including the needed administrative, loan processing and accounting systems.

For a minimal fee, you will be provided with a Sample Business Plan and a Sample Financial Model for a Lending Investor Business.

For a regular fee, you will be provided further with a spreadsheet for a five-year business plan (income statement and balance sheet) that shows the growth of your business to break-even and to profitability.

This model will provide you the minimum new loan releases and minimum capitalization that will provide sustainable operation to overcome the fixed costs of the direct lending business.

Contact Details

Mobile: (63-915)-606-7949

email: energydataexpert@gmail.com

BUSINESS PLAN FOR DIRECT LENDING BUSINESS

Introduction

In the Philippines, there is a great number of individuals and families that could not secure affordable credit because they are either retired already (over 55-60 years old), temporarily disabled (receiving disability pension for about 12 months), or under employed (receiving less than P15,000 gross income per month).

These individuals are therefore exposed to usury and are forced to borrow money at exorbitant interest rates of over 4% per month from pawnshops and individuals wherein they pawn as security jewelry, cellfones, laptops or desktops, motorcycles or vehicles and house & lot titles as collateral. Sometimes, they borrow at 5%-10% a month from individuals lending money for 1-3 months.

It is in this light that this corporation engaged in lending business aims to help them get affordable credit at 2%-3% per month plus fixed charges (3% service fee, 2% collection fee, 1% credit investigation fee, 1% legal/audit fee, 2.5% marketing/referral fee, documentary stamps [PhP 0.30 per PhP 200 PN amount if more than PhP 100,000], notarial fee [PhP 180 per loan] and creditor’s life insurance [PhP 1.55 per PhP 1,000 outstanding balance], all totaling around 8-9% as one-time fixed charges).

This is still much cheaper than their traditional sources of credit. The retired pensioners usually borrow around PhP 2,000-4,000 per month for a term of around 6 to 12 months. For a 12-month term at 2% per month, this translates to a 2.58% per month average interest. On the other hand, salaried individuals borrow from PhP 4,000-8,000 per month for a term of around 3 to 6 months. For a 6-month term at 2.5% per month, this translates to a 3.85% per month average interest.

Target Market

Experience has shown that once a private employee (SSS member) or a government employee (GSIS member) retires at the optional age of 60 years old or mandatory retirement of 65 years old, the retiree suddenly loses access to affordable credit. This means that prior to retirement, the employee should ideally have saved money and/or invested his savings in some form such as time deposits, treasury bills, stocks, small business enterprises, apartment rental units, etc. in order to have regular replacement income after retirement.

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