If this is the global marginal refiner, what is the crude price differential between these two crudes?

If this is the global marginal refiner, what is the crude price differential between these two crudes?

Reset to base values. Now change the gasoline price from $105/Barrel to $110/Barrel. What is the crude price that creates a zero margin? Is it higher or lower than the crude price you found in question 1?

Reset to base values. Now change the residual fuel price from $40/Barrel to $45/Barrel. What is the zero-margin break-even crude price now? Based on the results you found in questions 8 and 9, how would you characterise the relationship between product prices and crude prices?

. Reset to base values. Now suppose the product prices change as shown in the table below. Re-do the analysis of heavy and light crudes to determine their relative prices. What are the crude price differentials now? How do they compare to those you found before? . Based on your answers in question 10, how would you characterise the influence of product prices on crude price differentials?

. Move to the Conversion Investment tab. In this analysis, we assume for simplicity that product prices, crude prices and operating costs stay fixed for the life of the refinery (a real analysis would treat this differently, of course). Again, the white cells are cells you can change. There are a few more inputs here than in the Distillation Refinery tab. You still see the same input cell for the crude price and the same cells for the product quantities out of distillation. What is new here are a cell inside the Conversion block to accommodate the capital cost and a cell for the conversion unit`s operating cost. Also, the light product prices on the right are now input as deltas to the gasoline price.

There are a few other inputs you can change, although it will not be necessary for purposes of this assignment. These are the capital spend profile, the discount rate, the depreciation rate, and the corporate income tax rate. (For those financial aficionados among you, we are assuming an exponential depreciation rate and are not distinguishing "book" tax from "tax" tax.)

Note that the conversion unit redistributes product yields from distillation in favour of light products (column R).