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Use the information for the question(s) below. (3 pts) Market price of Alaska North Slope Crude Oil (ANS) =$71.75/bbl Market price of West Texas Intermediate
Use the information for the question(s) below. (3 pts) Market price of Alaska North Slope Crude Oil (ANS) =$71.75/bbl Market price of West Texas Intermediate Crude Oil (WTI)=$73.06/bbl As an oil refiner, you are able to produce $77 worth of unleaded gasoline from one barrel of Alaska North Slope (ANS) crude oil. Because of its lower sulfur content, you can produce \$78 worth of unleaded gasoline from one barrel of West Texas Intermediate (WTI) crude. Another oil refiner is offering to trade you 10,150 bbl of Alaska North Slope (ANS) crude oil for 10,000 bbl of West Texas Intermediate (WTI) crude oil. Assuming you currently have 10,000 bbl of WTI crude, what should you do? Assume that there is no transaction cost from buy/sell oil and assume that production costs are the same. a) Refine your original 10,000bbl of WTI crude oil b) Trade 10,000 bbl of WTI crude oil for 10,150 bbl of ANS crude oil, then refine 10,150 bbl of ANS crude oil c) Sell 10,000bbl of WTI crude oil at $73.06/bbl and use the proceed to buy and refine ANS crude oill
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