Probe Economics LLC
Chemical Industry Business Analysis and Consulting.

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Data Models

Data & Models

Probe Economics LLC, began as an econometric modelling shop at a U.S. university; so models and databases are an important, if not the most important, core competency of the company. Most of Probe’s models go back to "Economics 101," which taught us that prices and volumes are determined by the intersection of supply and demand curves. Probe personnel have command of, and have used successfully in business situations, some sophisticated techniques, including mixed-integer programming, dynamic optimal control theory, Rockefellar duality theory, regional input-output models, and non-linear equation estimation, but these techniques all hark back to that simple, "Economics 101" principle.

Most of Probe’s modelling techniques can be found in academic journals and textbooks, but no-one, other than Probe, has applied them successfully to real chemical industry business problems. We know which techniques will work, stay within a budget and deliver results that the client can understand and use. Even though more sophisticated techniques are available, we often recommend a simpler approach for the client, in order to stay within the budget and mesh better with the client’s way of thinking and working.

One of Probe’s better-developed models is for world petrochemicals. This model, which is coded into thousands of lines of linked electronic spreadsheets, can be depicted roughly as follows:

globalmodel.gif (25296 bytes) 


Typical of many of Probe’s models, the analysis begins at the top and proceeds downward (sometimes called a "Top-Down" approach). It begins with macro factors such as a country’s resource endowment, demographics, stage of development, political system, trade strategy and economic output (GDP). The factors drive the supply and demand for petrochemicals and polymers, as well as the development of the energy and refining sector that is so important to petrochemicals. Oil prices and resource endowments determine the level of oil and gas drilling and, ultimately, the supply of hydrocarbons for use in chemical production. Demographics and income levels determine the demand for heating oil, gasoline and other refined products, which in turn determine refinery configuration and the prices of chemical feedstocks. In the end, this methodology generates internally-consistent and reasonably-accurate forecasts of chemical supplies, demands and prices by country and region.

Probe personnel have developed and successfully used similar models for chlor-alkali, other inorganic chemicals, rubber chemicals, oil and gas, uranium and a wide variety of other materials. This body of knowledge and experience positions Probe to build a model that addresses your specific business problem and provides insights and approaches that would not otherwise be apparent.

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Probe Economics LLC - 4806 Overton Circle - Vero Beach, FL - 32967 - Tel: 603-667-3636