AM-01-34 ONLINE MARKETPLACES FOR TRADING CRUDE OIL AND PRODUCTS – WHEN WILL THEY TAKE OFF?

Description:

This paper examines petroleum marketplaces from three perspectives. First we take a retroactive look at why things have gone the way they have. We’ll examine some of the most fundamental business assumptions and beliefs that many of the petroleum marketplaces shared. This will help us explain why, for example, there’s little liquidity on online exchanges, why the rate of customer adoption is not faster than once expected, etc. Secondly, we will offer a forward look at where things seem to be going and where they may ultimately go. This is an examination of value creating capabilities that an online exchange or marketplace needs to provide to its customers to enable them to increase revenue or decrease costs. Only when there is lasting value created for the customer, would the online exchange or marketplace be able to capture a portion of those benefits as revenue for itself. Finally, we make a number of recommendations to help companies better decide how to proceed and what to look for when evaluating an exchange or marketplace.