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Market Research and Analysis — Using MarketBuilder to Inform Key Decisions

Modeling future prices, flowing quantities, capacity additions, and retirements in the markets you face — how are these factors affected by policy?

MarketResearchICON

Market research is a common function within most energy and resource companies, but with widely varying effectiveness. Various methods have been employed traditionally:

  • Gathering traded forwards (Brent, Dubai, NYMEX, National Balancing Point)
  • Plotting historical prices and extrapolating them into the future, as a statistician would. The markets are frequently changing with many factors, such as potential regulatory issues and new production, and with the global interrelated nature of the current energy markets, historical reference data does not capture known and expected changes in fundamentals.
  • Relying on reports by "advisory" consultants, who put out frequent projections, often with little or no transparency
  • Subjective judgment by internal staff

One of the key goals in market research and analysis is accurate price anticipation. The methods mentioned previously have not proven to be consistently reliable in pursuing this goal.

What is needed is a rigorous, time-tested, market-based, fundamental analytic approach that enables you to take account of supply, transportation, and demand for each commodity your corporation needs to analyze in order to make informed decisions. Additionally, it is important that the methodology help you to analyze these factors together and also to apply combinations of potential market changes (price, quantity, and capacity additions) to enable what-if analysis and compare the various outcomes.

MarketBuilder enables this type of research and analysis. It has integrated market models for most energy commodities (natural gas, electricity and emissions, oil and refined products, and coal) and a choice of either global or regional scope, such as shown in the figure above. Based in fundamentals, MarketBuilder is a market research and analysis solution that models the supply chains in detail for each commodity, from source to distribution. Because each component of the supply chains act as independent, profit-seeking, competitive agents, as they do in the real market, MarketBuilder helps customers analyze realistic market behavior and project prices.

Our time-tested models and data enable MarketBuilder to be used as an off-the-shelf solution. Additionally, MarketBuilder was designed for ease of use with features that facilitate customers' use of their proprietary data and knowledge, such as:

  • Click and drag of model component objects, which facilitates easy customization of the supply chains; it also enables adding proposed market additions, such as new pipelines or generation plants, which helps users analyze how these market changes affect future market behavior and price.
  • Microsoft Explorer display and drill-down for model transparency, which enables users to easily display data used for any model components and easily alter key data for changing scenarios and what-if analysis.

MarketBuilder utilizes sound, industry-accepted economic principles. Combined with its thoroughness, integration, and ease-of-use, it helps users analyze many aspects of current and future market behavior under numerous scenarios, enabling users to make more informed decisions. With the transparency it provides, MarketBuilder enables users to easily support and document their analyses and conclusions.