Design of Oil Storage Tanks

Design of Oil Storage Tanks Oil Storage Tanks 1-Introduction Storage tanks containing organic liquids, non organic liquids, vapours and gases are used in many industries. Most such tanks are designed and built in accordance with American Petroleum Institute API-650 specifications (1). These tanks can range in size from 2m to 60m diameter or more and are usually situated in containment basins so that spills will be contained if the tank ruptures. Storage tanks are commonly employed in industries involving petroleum production and refining, chemical and petrochemical manufacturing, bulk storage and transfer, and a variety of other industries consuming or producing liquids and vapours. 1.1-Types of storage tank There are basically there are eight types of liquid storage tanks, viz: (i)Fixed-Roof tanks (ii)External floating-roof tanks (iii)Internal floating-roof tanks (iv)Domed external floating-roof tanks (v)Horizontal tanks (vi)Pressure tanks (vii)Variable vapour-space tanks (viii)Liquefied natural gas (LNG) tanks The first four types of tank are cylindrical in shape with the central axis which is perpendicular to the ground. Such tanks are almost always employed above ground level. Horizontal trunks can be employed both below and above ground level. Pressure tanks are located above ground and are usually spherically shaped to provide the maximum strength to withstand high internal pressures. Variable vapour-space tanks can be spherical or cylindrical. A containment basin made of brick or concrete is normally built around tanks with a lining impervious to the stored material in order to contain spills that could cause fire, property damage or environmental contamination. The capacity of the basin should be at least equal to that of the largest tank plus ten percent of the sum of the capacities of others. Fixed Roof Tanks Fixed roof tanks are common in production facilities where it is required to store hydrocarbons with vapour pressures close to atmospheric pressure. A fixed-roof tank typically consists of a cylindrical steel shell with a dome-shaped or cone-shaped roof that is permanently fixed to the tank shell. Umbrella roofs are also common. Fixed roof tanks are used for storing very high flash-point liquids (e.g. fuel oil, water, bitumen etc.). They are generally fully welded and are now designed to be liquid and vapour tight, while older tanks with a riveted or bolted construction are not vapour tight. Fixed roof tanks are generally insulated to prevent the risk of clogging for some materials, heating coming via steam coils inside the tanks. Dome roofs are used for tanks with a storage pressure slightly higher than atmospheric. Fig 1. A Tank Farm showing a number of Fixed roof tanks Fig. 2. Typical domed fixed-roof tank Fig. 3 Umbrella fixed-roof tank The commonest fixed-roof design has a shallow cone roof with a single centre column and internal (or external) framing to provide support for the roof plates. This involves having rafters and girders pressed to the roof radius. Cone roofs are generally supported from the shell using trusses or rafters. For large cone-roof tanks columns and girders can be used to support the roof plates and rafters. Intermediate columns are used where the diameter is more than 37m. Designs may include a frangible roof joint (i.e. able to break into fragments when over-stressed) for added protection against a sudden increase in internal pressure. For this the design pressure limited is equivalent to the pressure of the total weight of the roof plates including structural rafters. If the storage pressures are going to exceed the capabilities of a cone-roof tant, then other fixed-roof designs such as the self-supporting dome roof or umbrella roof can be used. API Standard 650, (Appendix F) (1) designs permit internal pressures of up to 2.5 psig, depending on the tank diameter. For operating pressures of more than 2.5 psig, API Standard 620, (‘Design and Construction of Large, Low-Pressure Storage Tanks’) (2) has design procedures for internal pressures of up to 15 psig. Because of environmental concerns and to cut down on vapour losses designs tend to include internal floating decks in fixed roof tanks either at the time of construction or later as a retrofit (Fig 3). This has the advantages of both fixed and floating roof design. Fig. 3. Domed fixed-roof tank with inner floating roof and showing roof supports Emissions from fixed roof tanks vary depending on vessel capacity, utilization rate of the tank, vapour pressure of the stored liquid and the local atmospheric conditions. Losses of the stored product from evaporation can be large in fixed roof tanks – particularly for crude oil where vapours are released through the pressure vent valve. Losses are classed either as Breathing Losses or as Working Losses. Breathing losses occur when vapour expansion and contraction caused by changes in temperature and atmospheric pressure lead to the expulsion of vapor. This loss happens without any change to the liquid level in the tank. Working losses happen when the liquid level in the tank is increased. Fixed roof tanks are either freely vented or have a pressure/vacuum vent that allows the tank to operate at a slight internal vacuum or pressure. This stops the release of vapours when there are very small changes in pressure, temperature or to the liquid level. It is also possible to make t anks that are inert when there is a slightly positive gas pressure. Such tanks should have pressure-vacuum valves and when in use be purged with natural gas to remove air from the vapour space. Table 1 Advantages and disadvantages of different types of fixed-roof storage tanks (5) 2.1Gauge Hatches Fixed-roof tanks should have a gauge hatch in the roof which allows it to be opened quickly. This allows the operator rapid access to gauge the tank. Gauging comprised: measuring the volume of liquid in the tank finding out if water is present and, if so, measuring the height of the oil/water boundary sampling the material in the tank. determining the temperature of the liquid in the tank. The gauge hatch can be weighted so that it will work as a backup pressure or pressure-vacuum relief device to complement the primary pressure-vacuum valve. Fig 3 Typical gauge hatch Standards for the manual gauging of petroleum and its products are contained in the API Manual of Petroleum Measurement Standards (3). 2.2Filling or pumping operations Routine tank filling and pumping will affect the vapour space in a fixed-roof tank. Removing product from the tank draws air into the vapour space, creating a hazard. During the holding period prior to refilling the tank, evaporative breathing losses are increased because of the larger volume of the vapor space. Adding product to the tank, increasing the volume of liquid, displaces the the mixture of air and product vapour via the tank vent, causing significant evaporative emissions. 2.3Gas blanketing systems If the vapour pressure of the product in the tank is low (below 10kPa), it is safe practice to use a freely ventilated fixed-roof tank. For production tanks or other applications where the vapour pressure of the incoming liquid is usually higher than atmospheric pressure at usual ambient temperatures, a gas blanketing system is needed to maintain positive tank pressure and minimise the risk of air being sucked into the tank vapour space. At times when there is no inflow of product, the tank breathing process could, by itself, lead to air being drawn into the tank through the pressure-vacuum valve, forming a potentially explosive mixture. A gas blanketing system needs a supply of natural gas and a pressure regulator that works to keep the tank pressure at the desired level. When the ambient temperatures increase causing the pressure inside the tank rise, the regulator closes. If pressure continues to rise, the pressure vent opens to relieve the internal pressure in the tank by venting vapours (blanket gas plus product vapour) to the atmosphere or to some vapour recovery process. A vacuum relief valve must still be used to protect the tank against a vacuum forming if the gas blanketing system should fail. 2.4Fire Exposure Out breathing, caused by exposure to fire, may exceed the design venting rate based on normal operating conditions. If that happens, the tank’s construction details determine whether additional venting is needed. On fixed-roof tanks, where the roof-shell attachment is constructed according to API Standard 650 (1), the roof-to-shell joint may be considered frangible, so that excessive internal pressure may cause it to fail before failure occurs in either the tank-shell joints or in the shell-to-bottom joint. In tanks built in this way, there is no need for addition emergency venting systems, as long as the tank is well away from other equipment and the loss of the roof in an emergency is acceptable. On tanks that do not have frangible joints, design procedures are given in API Standard 2000 (4) for calculating the necessary venting capacity for fire exposure. 2.5Containment Basin Fixed roof tanks are constructed insida a containment basin made of brick or concrete and with a lining that should be impervious to the liquid being stored to prevent spills that can cause fire, property damage or environmental contamination. The minimum capacity of the basin should equal the capacity of the largest tank plus 10% of the combined total capacity of any others. To contain a spill or to prevent some other emergency the basin walls must be able to withstand high pressures and also be resistant to the stored product. The basin drain valve is put into the outer side of the containment basin and must normally be kept closed to prevent possible leakage of any contaminant into the environment.

Analysing strategic business decisions in us cereal industry

Analysing strategic business decisions in us cereal industry The purpose of this essay is to use game theory and barriers to entry to analyse strategic business decisions in the US ready-to-eat breakfast cereal industry. An industry analysis was done using different published journals. An overview of the oligopoly industry was also done for a broader understanding of the ready-to-eat breakfast cereals industry. Bertrand competition was used as the oligopoly model adopted by the industry. Game theory was used to analyse the strategy firms in the industry will adopt and a discussion on barriers to entry as it applies to the industry was done. Introduction This essay will discuss the US ready-to-eat breakfast cereals industry. An overview of oligopoly, discussions on Game theory, Nash equilibrium, Bertrand Price Competition and Barriers to Entry will be used to analyse the industry and the strategic business decisions as they relate to the industry Analysis of the Ready-to-eat Breakfast Cereals Industry Connor (1999) described the ready-to-eat breakfast cereal industry as a capital intensive industry requiring huge capital investments in production plants. To a large extent, this has contributed to Barriers to Entry in the industry. This industry market structure though having quite a few number of suppliers, is dominated by four major companies which are Kellogg Company, General Mills, Quaker Oats and Kraft. According to Nevo (2000) these companies have consistently continued to post high profits in comparison with the other food industries. A key characteristic feature of this industry is product differentiation. Brand specific knowhow is apparently present since established firms are sometimes unable to duplicate each others brand. The existence of this however, does not prevent them from producing, promoting and distributing successful new brands. Existing brands differ in such potentially relevant dimensions as sweetness, protein content, shape, grain base, vitamin content, fibre content and crunchiness (Schmalnesee, 1978) Connor (1999) has argued that competition in this industry does not involve the use of price war and therefore not a competitive strategy. Different researches conducted on the industry have shown that there is a level of collusion amongst the top firms though not openly done. This assumption was made popular by a case of anticompetitive complaint by the U.S. Federal Trade Commission against the top three manufacturers Kellogg, general Mills Post in the 1970s (Aviv Nevo, 2000) Because of the absence of price wars in the industry, the use of other non-price strategies to gain competitive advantage are employed by firms in this industry. The consistency of zero price wars over the years, however was broken when in the late nineties, a price reduction by Kraft led the other big three Kellogg Company, General Mills and Quaker oats to respond by also reducing their prices as suggested by ( Nevo, 2000). This pricing strategy by Kraft significantly affected the overall industry price forci ng its competitors to reduce their prices as well. Innovation through the launch of new products and aggressive media advertising are strategies employed by firms in the ready-to-eat cereals industry to compete for market share. This is a major factor contributing to the consistent high profits in the industry. The result of Connors (1999) research revealed that the rivalry in the breakfast cereals industry tends towards the choreographed grunts of televised wrestling than a cutthroat dual to the death and that the ultimate weapon, steep price cuts, is rarely unsheathed. According to Connor (1999), media advertising and new product introductions are intimately related. New product introductions are one of the principal mechanisms for effecting rapid price increases in the breakfast cereals industry. His research revealed that all the new cereals introduced by the big four companies between 1981 and 1987 in the first year of sales, were priced 12% above the companys existing brands average prices. Connor (1999) in his research further showed that the extraordinary attachment of consumers to branded cereals (or at least to the boxes they come in) has made entry by private-label products extremely difficult. This high degree of brand loyalty in the industry has significantly posed a threat to any firm considering entry into the industry. Invariably, the more a firms brand is recognised, the higher the sale of a newly introduced cereal will be. The cereal industry has oligopolistic tendencies and characteristics and will be classified as one. An overview on oligopoly below highlights the characteristic nature of oligopoly. Overview of Oligopoly Lipsey + Chrystal (1999) defined oligopoly as the theory of imperfect competition among the few. The industry is characterised by a few firms selling differentiated products. Because there are only few firms, each firm realises that its competitor may respond to any move it makes and takes that into account because each firms decision affects the other firms in the industry. Earl and Wakeley (2005) described firms in the Imperfect competition as having differentiated products which are close substitutes. These differentiated products are supported heavily by advertising. Advertising tends to persuade consumers to patronise a particular brand over other brands of the other competitors. Advertising is used as a crucial weapon to create brand loyalty in the industry as consumers are assumed to be highly mobile. The existence of strong brand loyalty makes entry difficult because consumers are likely to have strong preferences for the already existing brands. This implies that the behaviour of oligopolists are strategic with each firm taking explicit account of the impact of their decisions on competitors and the expected reactions from them (Lipsey + Chrystal, 1999, page 176). Besanko et al (2004) also defined oligopoly as a market in which the actions of individual firms materially affect the industry price level. The strategic behaviour of oligopolists is attributed to the highly competitive nature of the industry. For these firms to make strategic decisions that can give them comparative advantage, they make use of oligopoly models and game theory (Besanko et al, 2004). Game Theory and Bertrand Price Competition Besanko et al (2004) defined Game theory as the branch of Economics that deals with the analysis of optimal decision making when all decision makers are presumed to be rational and each is attempting to anticipate the actions and reactions of its competitors (Besanko et al, 2004, page 36) Game theory is a strategic business decision making tool in areas such as pricing and capacity expansion. Bertrand Price competition Model Besanko et al (2004) has described Bertrand competition as a model of competition in which each firm selects a price to maximize its profit given the price that it anticipates its competitor will select. Each firm views its competitors price as fixed and believes that its own pricing practices will not affect the pricing of the competitor. In an oligopolistic industry with differentiated products, price competition is usually mild. When products are differentiated, a firm will not lose all of its business to competitors that embark on a price cut. This is majorly attributed to competition being based on a variety of product parameters such as its quality, availability and advertising. The US ready-to-eat- breakfast cereal industry like all oligopolistic industries is highly competitive. The strategy of each firm will be to maximize profits and outputs given its rivals strategy. To use game theory to analyse what choice is best for a firm at any given point, two companies will be used; Kellogg Company and General Mills as they are one of the top four and are each others competitors. Game theory and Nash equilibrium will be used to analyse the best strategy for profit maximization given that each firm sets a price for its cereals. A Nash Equilibrium is the strategy combination where each player is doing its best given the strategies of its competitor. An assumption is made that each firm sets a price that maximises its profit and that a price cut by either of them to achieve a larger market share will impact their profits given the strong influence of brand loyalty. The consequences of each firms actions are described in the game matrix below; In the game above, the strategy (Co-operate, Co-operate) is both a Nash equilibrium and a dominant strategy because each firm maximises profit at this point. It is a Nash equilibrium because with the pay-off of ($120, $120) no firm will unilaterally want to deviate knowing that it will achieve a lower pay-off by doing so. Furthermore, co-operate strategy is a dominant strategy because no matter what the other firm chooses, to co-operate will always yield a higher pay-off. Barriers to Entry According to Earl and Wakeley (2005), barriers to entry exist when potential competitors find there are obstacles which hinder their proposed entry into an otherwise attractive industry. Typical barriers to entry include: incumbents owning all sources of essential raw materials; incumbents patents; economies of scale providing incumbents with a cost advantage; and incumbents past expenditure on advertising (which gives them a higher profile in the minds of buyers relative to newcomers). The important point to note about barriers to entry is that they protect all of the industrys incumbent firms from the threat posed by competition from outside of the industry As fierce as rivalries are and as highly competitive as the oligopolistic industry may be in nature, Lipsey + Chrystal (1999) stated that there are determining factors that make a few large firms dominate in the industry. According to Lipsey + Chrystal (1999), some of these factors are natural or structural, and some are firm-created or strategic. These same factors are deterrents to firms seeking entry into an oligopolistic industry. The natural/structural barriers as it applies to the cereal industry include economies of scale, cost of introduction of new brands and economies of scope, and marketing advantages of incumbency, while firm-created/strategic barriers include capacity expansion. Natural/Structural Barriers Economies of Scale According to Besanko et al (2004) production process for a specific product exhibits economies of scale over a range of output when the average cost drops over that range. Economies of scale exist when the unit cost of production declines as the quantity of output increases. When production becomes standardised and highly specialised, the concept of division of labour must be applied. Lipsey + Chrystal (1999) described division of labour as occurring when the production of a product is broken up into hundreds of simple, repetitive tasks. They further stated that the division of labour is, as Adam Smith observed long ago, dependent on the size of the market. If only a few units of products can be sold each day, there is no point in dividing its production into a number of specialised tasks. Lipsey + Chrystal (1999) further stated that larger firms have advantage in industries that have potentials for economies based on the division of labour because the larger the scale of production, the lower their average costs of production. Economies of scale also lead to minimum efficient scale. According to Besanko et al (2004) and Earl and Wakeley (2005) minimum efficient scale is the smallest level of output at which economies of scale cannot be sustained further. Minimum efficient scale can only be achieved in the long run. Based on this, it will be difficult for a firm considering entry to achieve MES because of the costly nature. The cereal industry is capital intensive and is dominated by a large few with the long years of existence. As a strategy to deter entry, the incumbent firms may decide to increase the quantity of output to further drive down their costs and achieve a higher rate of economies of scale. Because economies of scale are present in the industry, the incumbents average cost of production will be lower than that of a new entrant who will have difficulties trying to attain MES which can only be achievable in the long-run. Doing so will entail acquiri ng excess capacity and increasing production output which will both be costly and unprofitable as brand loyalty is extremely high in this industry. Costs of Introducing A New Product and Economies of Scope The cereal industry is categorised by the introduction of new brands. It will be difficult for a firm attempting entry to recover such costs in a short period of time bearing in mind that it will need to break even before making profits. Economies of scope are associated with lower cost scales derived from having multiple production lines within a plant. According to Besanko et al (2004) The ready-to-eat breakfast cereal industry provides a good example. For several decades, the industry has been dominated by a few firms including Kellogg, General Mills, General Foods and Quaker Oats, and there has been virtually no new entry since World War II. There are economies of scope in producing and marketing cereals. Besank0 et al (2004) further explained that for an entry to be successful in the ready-to-eat breakfast cereals industry, the newcomer will need to introduce 6 to 12 successful brands. This requires heavy capital and makes entry a risky proposition. The introduction of new brands is associated with a high cost of advertising. An incumbent firm in the cereal industry can consistently employ the use of introduction of new cereals to deter further entry by new firms. It will not be as expensive for the incumbent firm to advertise its new cereal product as it will be for a new entrant because of the high brand loyalty in the industry and the economies of scope cost advantages. C) Marketing advantages of incumbency Umbrella branding has been described as a situation whereby a firm sells different products under the same brand name (Besanko et al, 2004). According to Besanko et al (2004), an incumbent firm can exploit the umbrella effect to offset uncertainty about the quality of a new product that is been introduced. The umbrella effect may also help the existing firm negotiate the vertical chain. Retailers are more likely to devote scarce warehousing and shelf spaces to the firms new products more than it would for a new entrant. Likewise, suppliers and distributors may be more willing to transact businesses with the incumbent firms more than the new entrant in the areas of credit sales and relationship-specific investments (Besanko et al, 2004). Incumbent firms in the cereals industry can use umbrella branding as a strategy to deter new entry or force new entrants out of the industry. Umbrella branding also has an effect on consumers. The possibility of a newly introduced brands been widely a ccepted by consumers is higher for firms enjoying umbrella branding than for new entrants. Umbrella branding has the ability to reduce uncertainties associated with the introduction of a new cereal brand. Furthermore, the development of close relationships by an incumbent firm with its vertical chain is another strategy for barriers to entry. Firm-Created/Strategic Barriers Capacity Expansion The incumbent firm may decide to embark on capacity expansion. A new entrant will find it difficult to match up its plant size with the plant size of existing firms and may incur losses at entry. With the expansion of capacity and increased sales, the incumbent will continue to enjoy economies of scale thereby forcing new entrants who are unable to achieve such low unit cost of production out of the industry as their average cost of production may consistently be higher than the market price of the cereal brands and the price. Conclusion The ready-to-eat breakfast cereal industry is an oligopolistic industry requiring the firms to employ non-pricing strategies to maximize profits and sustain competitive advantage. Because the ready-to-eat breakfast cereal industry has natural barriers to entry, firms in this industry do not need to do much in the area of strategic barrier to entry to prevent of or force new entrants out of the market. However, the constant introduction of new cereals is crucial to earning higher profits.

An Analysis of Yeats’ An Irish Airman Foresees His Death Essay

An Analysis of Yeats’ An Irish Airman Foresees His Death It is an unspoken assumption that when a country goes to war the men fighting are honored and also that there is a large amount of support given to the soldiers from that particular community.   What is often over-looked is the fact that many of the men, who are partaking in battle, are in fact, boys who do not even know what they are fighting for.   Also, the community is not always supportive and helpful unless they see a personal benefit that will affect them in a positive way as an outcome of the war.   In â€Å"An Irish Airman Foresees His Death†, Yeats introduces us to a man who is fighting in the war, not knowing what he is fighting for.   Yeats also shows us, from a soldier’s view point, how a soldier feels while defending a country he does not feel any loyalty to, and how a soldier views the community he is laying his life on the line to protect. It is apparent immediately in the beginning of the poem that this airman has a very bad attitude about the way this war is going.   â€Å"I know that I shall meet my fate, Somewhere among the clouds above† (Yeats 154).   The airman is saying that he knows, or senses, the fact that he will not make it out alive of this war.   The reference made to â€Å"the clouds above† is simply reinforcing the fact that he is an airman in the war.   These first two lines really set the tone for a poem that turns out to be a very somber, depressing piece of work.   These two lines are symbolic of the airman’s attitude and take on life in general. The third and fourth lines of the poem, â€Å"Those that I fight I do not hate, Those that I guard I do not love† (Yeats 154), tell us how he feels about the soldiers he is fighting against, and also how he feels a... ... signs on life worth living in himself and sees no hope for a world where young men can sacrifice themselves for the good of their country, and in response, get virtually no response from the citizens at large. This poem was written in memory of Lady Gregory’s son, Major Robert Gregory, who died on the Italian front in January of 1918.   Its purpose is to show how damaging war can be and how unjust much of what happens during a war actually is.   It does not make sense that a soldier may not even like the people he is fighting next to, and that he may be able to relate better to the enemy than to his own troops.   Yeats, by writing this poem, made the reader conscious of the negative aspects of war. Works Cited Yeats, William Butler.   â€Å"An Irish Airman Foresees His Death.†Ã‚   Contained in, Norton Anthology of Modern Poetry, 2nd ed.   New York, New York:   1988.

Education and Class Essay -- Social Class

Class theorists argue that class provides the basic structure of society and is also the chief cause of the inequality of modern societies. The hierarchy of the Australia class system consists of a "ruling" upper class, a "white-collar" middle class, and a "laboring" working class. There is enormous inequality between the class groups and especially between the upper- and middle-classes and the working-class. What class you belong to plays a determining role in what sort of life you lead. Those at the top of the class structure typically seem to have more power, more wealth, more opportunities, and more control over their lives than those at the bottom. They also have a greater impact on society and use this advantage to manipulate society to serve their values and suit their needs.   Ã‚  Ã‚  Ã‚  Ã‚  This is no where more evident than in the social institution of education. Education is one of the great dividers amongst classes. The school you go to often determines what sort of qualifications you obtain, what job you get and, thus, how much money you earn and what class you move into. Education is a means in which individuals seek social mobility. Parents realized this long ago and some struggle to send their children to private schools to give them a better chance of succeeding in the class hierarchy. Other children, typically from working-class backgrounds, are victims of low expectations, both from their parents and internally, and leave school as soon as they can, moving into low-pa... Education and Class Essay -- Social Class Class theorists argue that class provides the basic structure of society and is also the chief cause of the inequality of modern societies. The hierarchy of the Australia class system consists of a "ruling" upper class, a "white-collar" middle class, and a "laboring" working class. There is enormous inequality between the class groups and especially between the upper- and middle-classes and the working-class. What class you belong to plays a determining role in what sort of life you lead. Those at the top of the class structure typically seem to have more power, more wealth, more opportunities, and more control over their lives than those at the bottom. They also have a greater impact on society and use this advantage to manipulate society to serve their values and suit their needs.   Ã‚  Ã‚  Ã‚  Ã‚  This is no where more evident than in the social institution of education. Education is one of the great dividers amongst classes. The school you go to often determines what sort of qualifications you obtain, what job you get and, thus, how much money you earn and what class you move into. Education is a means in which individuals seek social mobility. Parents realized this long ago and some struggle to send their children to private schools to give them a better chance of succeeding in the class hierarchy. Other children, typically from working-class backgrounds, are victims of low expectations, both from their parents and internally, and leave school as soon as they can, moving into low-pa...

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CASE: American Barrick Resources Corporation : Managing Gold Price Risk 1. In the absence of a hedging program using financial instruments, how sensitive would Barrick stock be to gold price changes? For every 1% change in gold prices, how might its stock be affected? How could the firm manage its gold price exposure without the use of financial contracts? Particulars for yr 1992($ million)| | Pretax earnings (Exhibit 2)| 223| Reductions in earning of gold sold at spot (1280mn oz x (422-345) (Exhibit 12)| (99)| Proforma Pretax Earnings| 124| Taxes @ 21% (Exhibit 2) | (26)| After Tax Earnings| 98| Thus in absence of risk management program the American Barrick stock would be more sensitive to gold price changes. This could also be observed from Exhibit 4 where the return on Barrick’s stock is continuously increasing as compared to other unstable major stocks in gold mining sector. Elasticity of Earnings & Profit for 1% change in Gold Price 1% change in gold price ($345)| $3. 45| Number of ounces| $1,280m| Additional pre-tax profits| $4. 4m| Additional after-tax profits| $4. 4 x (1-. 1) = $3. 5mn| Additional profits as % of earnings| 3. 5/98 = 3. 5% (approx)| Cash Flow = Earnings + Noncash charges| 98mn + 69mn = $167mn| Additional profits as % of cash flow| 3. 5/167 = 2. 1%| Thus with 1% change in gold price the earnings of Barrick would change by 3. 5%. The firm can manage its gold price exposure in following three ways: 1. Diversifying its business 2. Hedging against the gold price risk 3. Insuring against the gol d price risk Hedging involves entering into financial contracts and so does insuring against the gold price risk. Thus without being involved in any financial contracts Barrick can reduce its gold price exposure only by diversifying its business. 2. What is the stated intent of ABX’s hedging program? What should be the goal of a gold mine’s price risk management program? Stated intent American Barrick Resources Corporation is one the most financially successful gold-mining concerns in the world. The main stated intent of ABX’s hedging program was to profit handsomely even during a downtime, when gold prices are falling. The hedging position had allowed ABX to sell its commodity output at prices well above market rates. The main motive of the hedging program was to profit and gain an advantage over its competitors by hedging, at a time when the prices of gold were low and also interest rates were falling. Thus, the main intent of the hedging program was to position the organization as a low- cost commodity producer, willing to sacrifice potential profits from gold price peaks in order to level out potential losses in the future. Goal of a gold mine’s price risk management program The primary goal of a gold mine’s risk management program is to hedge the risk of falling gold prices and low interest rates, to ensure the minimum sale price of gold even when prices are declining. One of the main goal is to achieve financial stability. The risk management programs motive is to hedge risk in order to plan the future cash flows with certainty. Also, at a time, when an organization has immense production initially itself, the risk management program enables the firm to earn a predictable, rising earnings profile in the future inspite of rising production. Thus , the intent of the risk management program is to hedge the risk in such a manner, that its production decisions are not affected by the market price of gold. 3. What would convince you that a price risk management program created value for its shareholders ex ante? The American Barrick Resources Corporation, had since its inception a strategy of efficient risk management system to protect or hedge itself from the fluctuations in the Gold prices. The various risk management system coupled with favourable circumstances and opportunities of price locking, rendered an overall strong balance sheet for American Barrick. They were able to attract investors who shied away from gold mine investments due to price risk, due to the efficiency in hedging mechanism. In 1992, American Barrick produced and sold over 1. 28 Million Ounces of gold at a price of $422 instead of $345 market rate, as a result of the risk management program. Such benefits would lead to higher revenues, and thus higher profits and in turn render higher value for the shareholders. The organisation guidelines clearly specifed that the risk managemnt system should be such that they are fully protected against price declines for 3yrs and 20-25% for a decade. Thus such a mechanism helped create value for the shareholders as the profits of a Gold mine are dependent on fluctuation in gold prices and the difference between revenue and costs. Thus locking future prices, provided financial stability, enabling the organisation to avoids dips, and plan cash flows in a confident way, and in combination with the rising production, offered investors and shareholders a predictable , rising earnings profile in the future 1. How would you characterize the evolution of Barrick’s price risk management activities? Are they consistent with the stated policy goals? As a producer of commodity products, gold mining firms had virtually no marketing or distribution costs. There was always a ready market for their products, at market prices, once extracted from the earth & refined. Therefore a gold mine’s profits were a function of the quantity of its production & the difference between the prices at which it sold its output & its costs. To minimize the price risk, hedging is necessary. Being conservative in nature, company has maintained lower leverage. As per stated policy goals of company, Gold Hedging program gives American Barrick extraordinary financial stability. It protects shareholder’s wealth from the dip in gold prices. American Barrick’s hedging program evolved over history and used a wide range of tools to manage gold price risk. With gold financing, forward sales, options strategies & spot deferred contracts, company shed some of its price risk while maintaining flexibility to profit from rising gold prices. a. Gold Financing: In early days, Company’s gold price management activities were incorporated in financing for its mines. Company made its growth organically as well as inorganically. Almost every year, company madeacquisition of 1 gold mine company. For financing such acquisition, company used following tools Gold Trust: Paying specific percentage of gold production as return to investors Bullion Loan: Bank gives loan in gold form, company need to pay interest in gold terms only. Collateral is reserves company owns Limitations: Limited scope. b. Forward Sales: Production at Gold mine is highly inelastic in nature. ie Its not easy for the company to change the production in tune with the highly fluctuating demand, market prices. To avoid price risk, American Barricks used Forward Sales as tool by which company can lock in prices for future dates. Forward Sales are usually for relatively short delivery periods of under a few years. Normally forward sellers receive a premium (approx. 5%)above the current gold prices ensuring a guaranteed return of 5% for forward sellers. Limitations: Forward sale mitigates downside risk but also its ability to benefit if price rose. c. Options & Warrants: Hedging using Forward sales eliminated downside risk for the American Barricks but also its ability to benefit if price rose. To resolve this issue, from 1987 company started using Options and warrants. This allows company to hedge from downside risk and retain some benefits of rising prices. Board of American Barricks were ready to use options but in costless manner. Collars strategy: Simultaneously buying Put Option & writing Call Options on gold. Premiums and maturity of both call and put option is maintained same. This strategy ensured a price range for the gold in future giving opportunity to the company to get benefits from rising gold prices as well as downside protection if price dips. Limitation: Market for such options were liquid only for contracts with maturities under 2 years. This horizon was far shorter than 20 years of expected production currently in reserve. d. Spot Deferred Contracts: This tool gives additional feature to standard forward sale. In forward sale, the delivery date is fixed. In SDC there are multiple delivery dates. Seller chooses at which date he will pay gold. Forward price is decided at each roll over date depending upon current market price plus prevailing contango premium. ( SDC will be explained in detail in Q6. ) So during 10 years, American Barricks moved solely from getting gold financing, lock in future prices to getting strategic benefit due to inherent strengths of American Barricks over competitors using tools like Spot Deferred Contracts. 5. How should a gold mine which wants to moderate its gold price risk compare hedging strategies (using futures, forwards, gold loans, or spot deferred contracts) with insurance strategies (using options)? On what basis should these decisions be made? Once a firm has decided on either a hedging or an insurance strategy, how should it choose from among specific alternatives? One can characterize risk management strategies as either linear, hedging strategies (which eliminate all exposure to price fluctuations) or nonlinear, insurance strategies (which protect firms against falling gold prices only. ) Choices among instruments are determined by their relative costs (including transaction costs), interim liquidity requirements, accounting and tax implications, and the ability to customize the contract terms. For example, gold mining firms tend to use forward sales instead of futures contracts, at least in part to avoid the cash margin calls which futures transactions might entail. As another example, mining firms' preferences for spot deferred contracts over them functionally equivalent strategy of rolling forward contracts seems to be related to their relatively attractive accounting treatment. Distinguishing linear and nonlinear strategies becomes more difficult with dynamic trading. Suppose we observe a firm only selling gold forward. By a static measure, we would conclude that it was hedging. However, as is well known, through dynamic replication, a trader can create a put option by adjusting the amount of gold sold forward. Specifically, as the gold price falls, a dynamic replication strategy would have the firm short-sell more gold. Thus, distinguishing hedging from insurance strategies requires an analysis of the changes in a firm's equivalent short position (or delta-percentage) relative to changes in the price of gold. The sensitivity of cash flows and investment costs relative to changes in the underlying macro-variable are equal. If the sensitivities are equal, linear or hedging strategies will be optimal, otherwise firms would prefer to use non linear or option strategies. It is not apparent how to measure the degree to which mines face quantity risk. Firms facing borrowing constraints and that facing higher price risk might be more active users of options. Borrowing constraints might be more severe among firms with high operating costs, small market values, or small reserves; bankers might be reluctant to lend to high-cost producers that may be forced to shut-in production and to smaller firms with less collateral. It is reasonable to suspect that price risk might be more pronounced among mines with higher production costs. Firms with higher cash costs and those with smaller market values and reserves might be more likely to use options or price-contingent nonlinear strategies. 6. What is a â€Å"spot deferred contract? † Why has ABX chosen to rely on spot deferred contracts relative to other gold derivatives? Spot deferred Contract (SDC) is used by gold producers to hedge gold price exposure. It is a type of forward contract which has multiple delivery dates with the final one being 5 or 10 years after the initiation of the contract. The seller of SDC has the right to choose on which of the rollover date he will deliver the gold and can defer the delivery date till the end of the contract. Therefore spot deferred contract gives the right to the seller to choose the delivery date but has to deliver the quantity of gold specified in the contract. American Barrick entered into SDC with 1-year delivery or rollover dates where prices were set only for the first rollover date. On the rollover date, American Barrick could deliver the contract if forward prices were higher than spot prices or could roll the contract for the next period and sell the gold in the spot market. American Barrick chose to rely more on spot deferred contracts relative to other gold derivatives because of the following reasons: 1) Initially American Barrick entered into contracts for delivery within 3 to 4 years. Later on its bargaining power increased because of its large reserve base and strong financial position which made them negotiate agreements giving them 10 years within which to make delivery. 2) SDC was a way to profit from increase in price of gold yet set a minimum price on its sales of gold.

Psychotherapy Matrix Essay

Select three onslaughtes to summarize. Include examples of the geeks of mental disorders impound for each therapy. Insert persona of therapy onrushInsert type of therapy approachInsert type of therapy approach unofficial of Approach The psychodynamic approach to therapy seeks to bring candid and past conflicts from the unconscious to the conscious, heart and soul childhood memories and past memories that atomic number 18 buried wooden-headed in your memory or ones that you treasured to forget, are brought to the fore front to be discussed.Indivduals use repression to push threatening conflicts into the unconsciousness. This approach explores brakes down the unconsciousness for the healer and the patient. The styleal approach therapy build on the basic processes of bringing such as reinforcement and extinction, and assume that normal and unnatural are both learned meaning that you will learn things to modify deportment using some sort of teach which is classical or adverse.These types of conditioning enquire some sort of action that reduces the frequence of undesired behavior by colligation an unpleasant stimulus with the undesired behavior to teach or learn lessons. The cognitive approach to therapy teaches race to think in more adaptive ways by changing their dysfunctional cognitions about the valet de chambre and themselves meaning the cognitive approach helps people understand the thoughts and feelings that influence behaviors.People learn how to change their thinking and behavior. Disorders appropriate for this therapyAnxiety disorders that are appropriate for this type of therapy such as obsessive-compulsion disorder, bi-polar disorder, and phobic disorders. Disorders that are appropriate for this type of therapy include anorexia, phobic disorders, ADHD, autism. Disorders that are appropriate for this type of therapy include phobic disorders, first and anxiety disorders.

Did Government Violate Laissez-Faire Essay

After the Civil War, more business community endorsed the individualistic apprehension of political relation in order to farm effort. In this impression, politics did non interfere with exertion. that what came with this concept was un exceptional freedom for businessmen and high prices for consumers. While some businessmen supported a individuation(prenominal) concept of establishment between 1865 and 1900, the people did non take in from it, which led politics to delight this concept with their policies, just scarcely to a confine achievement overall.They go a adoptst laissez faire to a moderate terminus by military essence Railroad Land Grants forward 1870 and eliminating them after, to a great extent by Regulating inter separate commercialism with the interstate Commerce movement in 1886, and precisely to a limited extent by attempting to control charge act asivities with the Sherman antitrust good turn in 1890, producing a moderate politica l sympathies involvement overall. brass began to enrapture the concept of individualistic with its Railroad Land Grants. Laissez-Faire promoters believed that the government is best which governs least. While industrialists promoted this concept, it was already being violated when the national Government gave thousands of acres of land to Railroad companies in return for takeing stuns. These subsidies, in the fig of loans and land grants, totaled over cxxx million acres of creation land. (Doc D. ) The federal official government issued these grants in hope that the dragoon would increase the value of the land and submit out better pass judgment for carrying mail and transporting troops. more coerces continued to be built, including four former(a) transcontinental stuns.Of these four, James Hills Great Northern Railroad was the precisely one to be built without federal subsidies. These grants benefited the Railroad financiers greatly, especially Jay Gould who went into the business to direct quick profit by exchange off the assets and watering stocks. The grants were justified by financiers by saying that the squeezes provided for settlement of the due west and attracted immigrants, giving the land more credit, which was the governments main purpose to generate with.However, as more competition entered the industry, the force line system began to fail, and, in the 1870s the Federal government recognized this problem and complete their policy of grants to railroads. This policy proscribed the offspring of subsidies to associations or corporations engaged in public or private enterprises. (Doc F) By publish this resolution, Congress eliminated itself from the railroad industry, promoting the concept of Laissez-Faire. So while congress was a spacious part of industry before 1870, violating Laissez-Faire, they eliminated themselves from it, and promoted Laissez-Faire from that point on.This shows that congress violated Laissez to a mod erate extent, because they violated it before 1870 but not after. Later, government violated Laissez-Faire in another way, by regulate interstate commerce. Before 1886, many a(prenominal) an(prenominal) states had Granges, neighborly and educational organizations for farmers and their families who aimed to defend its members against the middlemen, trusts, and railroads. husbandmans in many states successfully lobbied their state legislatures to pass rights adjust railroad rates.In the case of Munn v Illinois in 1877, the Supreme chat up upheld the recompense of a state to regulate businesses of a public nature, like railroads. But these laws, called Granger laws, could totally regulate local and short-haul rates within their states. In the case of Wabash v. Illinois in 1886, the Supreme Court ruled that states could not regulate interstate commerce that was go away up to the federal government. Because many railroad companied raised their long-haul rates after the grange r laws were adopted, the federal government needed to do to the outcry of farmers and shippers.It recognized that the railroad industrys benefits had been attained to, in effect, build up the strong at the write off of the weak (Doc J. ) The federal government worked to bushel this problem by freeing the Interstate Commerce Act in 1886. This Act required railroad rates to be reasonable and just, and set up the showtime federal regulatory agency, the Interstate Commerce Commission (ICC. ) This law affected the railroad industry greatly, and the results were astounding. In effect, it increased railroad earnings, and put an end to rebates and drawbacks. (Doc L. ) This act was colossal in government intervention in industry.By issuing this act, the federal government aimed to help the cries of the farmers and shippers, and in effect violated laissez faire by involving itself directly in the railroad industry from state to state, and also avoid previous laws regulating the railro ad industry passed in individual states. This shows that the government did violate industry to a great extent when it came to regulating Interstate Commerce. As a select few became very moneyed by forming trusts in their special(a) industries, the government violated Laissez-Faire by trying to control trust activities.In the 1880s, many middle class citizens feared the power that trusts gave industrialists, and urban elites resented the increasing influence of the new thick men in America. Because so many businessmen were developing trusts and were the only ones benefiting from business, potty Sherman, a Senator from Ohio, was inspired to pass the Sherman Antitrust Act in 1890 by reformers who failed to defend trusts on the state level. The Act prohibited any contract, combination, in the form of trust or otherwise, or conspiracy in restraint of trade or commerce.Sherman believed the act would provide every man with his mighty to work, labor, and produce and to transport his production on equal terms. (Doc N. ) The Act, however, hardly did that. It was purposely create verbally vaguely in order to promote loose interpretation. This was partly because those holding the trusts were bribing state legislatures. Since the state legislatures appointed senators, and senators were all stand for equally in each state, monopolists would demoralize the state legislatures in order to get the candidate they wanted in the senate, who in turn would affect the passage of anti-trust laws. on that point were very few federal prosecutions issued nether the act between its passing in 1890 and 1901, a total of 17 in 11 years. (Doc Q. ) In one particular case of United States v E. C. gymnastic horse Co in 1895, the Supreme Court ruled that the Sherman Antitrust Act could be applied only to commerce, not to manufacturing. (Doc P. ) Because of this case, the US Department of Justice secured few convictions until the law was changed during the Progressive Era. So while the federal government attempted to regulate the industry and prevent trusts, it barely did so.Because of the weak verbiage of the act, trusts failed to stop developing. The federal government baffling itself in the industry because of the complaints and fears of the powers that those who held trusts had, and though it conglomerate itself in the industry by issuing a law and enforcing it slightly, the supreme court of justice rulings and loose interpretation of the law allowed minute alterations to the industry, showing that the federal government only violated individuality to a limited extent.As it can be assumed, the businessmen of industrial era promoted individualistic only when it benefited their business. They manipulated people in order to gain what they wanted-a monopoly. As stinting problems began to surface with the laissez-faire system, government began to intervene. Though they were involved to a great extent in the railroad system initially, they eliminated themselv es from it after 1870, only violating the laissez-faire system to a moderate extent overall.When it came to interstate commerce, the government violated laissez-faire to a great extent by issuing the interstate Commerce Act. And with this issue of trust activities, the government only intervened to a limited extent by passing the Sherman Antitrust Act and then impuissance to execute it. All of these things show that government violated laissez-faire to a moderate extent, and this was because the laissez-faire system did not benefit society as a self-coloured and government needed to fix economic and social problems.