How MarketBuilder Works
MarketBuilder is based on a branch of economic game theory called “agent-based models”. MarketBuilder models are built by constructing a network of interrelated “agents” that describe the supply chain for a particular commodity. In most cases, agents will correspond to the major players in the market – for example, drilling companies, refineries, and mid-marketers would each be considered an agent. The “secret sauce” in the model is that each of these agents represents a profit-seeking entity that seeks to maximize its own profit relative to the constraints built into the system (in the same way that the real market behaves). As these agents interact with one another, the resulting equilibrium between supply and demand determines the market price of each commodity.
In MarketBuilder, economic agents are graphically represented as “nodes”. Nodes contain detailed economic fundamentals – logic and data – that can be grouped together to form larger nodes. Links between nodes allow the transmission of commodities and prices throughout the model. From a user standpoint, we often describe setting up a model as using “economic Tinkertoys”. Each model is constructed by linking nodes to one another through a graphical drag-and-drop interface. It’s faster and easier than with Tinkertoys but MarketBuilder is doing so much more behind the scenes. Complex models are built iteratively. For example, a model of a refinery can be built as a basic element in a model. The refinery model might be composed of 50 separate processes. However, once it is completed, the refinery model can be reused as a “node” in even more complicated models. The MarketBuilder simulations are directly based on the model diagram. When the required nodes are connected, a very complex system can be simulated.
Easy to use tools can build incredibly complex models
The Graphical Creation Process
Users create MarketBuilder models by dragging and dropping components (“nodes”) onto a map. This creates a visual representation of the system that MarketBuilder converts into an economic model. These drag-and-drop components describe the technical considerations of the energy industry. Constraints are what make the job of modeling a physical commodity market extremely complex, but MarketBuilder simplifies this dramatically. Fortunately, most components have already been built and can be used off-the-shelf. If necessary, new components can be built up by aggregating simple components or added through the .net programming interface. However, in nearly all cases, all of the modeling can be done in the visual interface without any programming.
Easy to Use
The large number of off-the-shelf components makes constructing economic models much easier. These components have been extensively tested to encapsulate the spatial and technical complexity of physical commodity markets. If a component needs to be added or expanded, this can usually be done directly through the visual interface without any programming whatsoever.
Using the graphical interface, complicated components can be constructed from simpler components. This allows users to re-use preexisting models and build up a component library. For example, a refinery model is shown on the left. This model is constructed of smaller components. The refinery model can, in turn, be used as a “node” in larger and more complex models. Information about pre-built libraries can be found in the “Data and Models” section of our web site.
Once a diagram of a model is created using that graphical interface, the model is completed - the diagram essentially is the model. One advantage of this approach is that every model is fully transparent. It is easy to see what is going on at a high level and then drill down into the details by clicking any element. A second advantage is that as the model gets changed over time, so does the documentation, so that they are in sync and up-to-date. In many cases where the model corresponds to specific geographic locations, MarketBuilder enables users to easily construct and visualize the model on a MarketBuilder GIS compatible map.
The picture of the model IS the model!
MarketBuilder models are all created graphically. This makes complex models easier to understand, visualize and maintain. A palette of pre-built components can be easily dragged onto the map to extend the model.
A model hierarchy keeps things organized
Entire models – like a refinery – might be represented as a single node on the map. A model hierarchy allows component models to be viewed as nodes of larger models. As shown, the model hierarchy is also represented in a Microsoft Explorer interface on the left which enables another way to navigate. For example, complex nodes contain details that can be expanded or hidden
Drill down into a model for details
To get details of what is happening within a particular node, it is possible to drill down for a closer look. MarketBuilder makes it easy to go from a high level macro-economic view down into technical details of a model. This helps to ensure that the executive summary is consistent with the actual model.
Getting the Data Out of the Model
MarketBuilder data can be exported into Excel, Access, or any SQL database. This makes it easy to maintain a model with MarketBuilder and also move data into other applications. The look and feel of MarketBuilder is similar to Microsoft Office – you can copy and paste, drill down by using folders, and use any other standard Windows feature.
As used in this document, ‘Deloitte’ means Deloitte LLP (and its subsidiaries). Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.