Added Benefit Costs of Action
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As an oil refiner, you are able to produce $76 worth of unleaded gasoline from one barrel (Bbl) of Alaska North Slope (ANS) crude oil. Because of its lower sulfur content, you can produce $77 worth of unleaded gasoline from one barrel of West Texas Intermediate (WTI) crude. Alaska North Slope crude oil is currently selling for $71.75/Bbl, while West Texas Intermediate crude oil is currently selling for $73.06/Bbl. Another refiner is offering to privately trade you 10,150 Bbls of ANS crude oil for 10,000 Bbls of WTI crude. (Assume you currently have at least 10,000 Bbls of WTI crude in inventory.)
What should you do?? What is the added benefit <cost> to you of this course of action?
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Solution Summary
An oil refiner project is examined. The added benefit cost of different courses of action are determined.
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