4.
The Four Geographic Buying Cycles.
Factors affecting market conditions are occur in cycles and can be planned. DESC takes advantage of these
cycles by dividing its worldwide requirements into four buying cycles. These cycles are defined geographically.
They are:
a. Western Pacific. This area consists of U.S. military forces in Hawaii, the Philippines, Japan, Korea,
and the Indian and Pacific Oceans. Typically the products purchased are jet fuels, diesel fuels, gasoline, and bulk
fuels for ships bunkering and power generation. Contracts are awarded each December for delivery January 1
through December 31.
b. U.S. East Coast and Gulf Coast. Requirements are for JP-5, diesel, gasoline, and fuel oils. Contracts
are awarded each March for delivery April 1 through March 31.
c. Atlantic, European and Mediterranean. These contracts supply jet and diesel fuels. Contracts are
awarded each June for delivery July 1 through June 30.
d. U.S. Inland and West Coast. These contacts cover jet fuels, diesel fuels, and gasolines. Contracts are
awarded each September for delivery October 1 through September 30.
5.
Contract Information.
A contract is a written document that is a legal agreement between two or more parties. The DESC uses a
contract when buying bulk petroleum products. Contacts set the conditions of agreement between DESC and the
supplier. Some conditions set in the contact are:
a. Product Price. The purchase price is based on the price of crude oil as published in the market tables
of a named source on a specific date. An example of this is: the price of crude oil as listed in the New York
Times futures index for petroleum on March 8th of this year. This is not the only possible source for price
listings.
b. Total Amount of Product Purchased. This is the total volume of the purchase. This includes the how,
when, and who determines the actual volume of the product that is taken to the delivery point.
c. Product Quality. The DESC has developed product specifications (descriptions of physical
characteristics) of each petroleum product. These specifications differ from product to product. A few of the
specifications that can be listed are:
Cleanliness of the product.
Density of the product.
Additives required in the product.
Flashfire point of the product.
Viscosity (resistance to flow) of the product.
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QM5200
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