Meet Myriah Johnson and learn about her internship with Koch Industries
Most every undergraduate attends lectures regarding the Law of One Price; describing how the price of a commodity should behave across different regions, how to predict price movements, and how to take advantage of price discrepancies.
This is not just academic curiosity. Myriah Johnson conducted an internship in Koch's fertilizer division. One of her jobs consisted of constructing an Excel database of fertilizer prices at various locations and the transportation costs between those regions. She would then use Excel to compute regional "net prices" relative to the New Orleans fertilizer prices in what they call a "net-back analysis." For example, the sheet might say how the price difference between Oklahoma City and New Orleans, accounting for the cost of shipping fertilizer from one region to another. The results of such analyses are used to determine how to set forward contract prices, where to expand their fertilizer market, and dictate storage decisions.
Myriah also built economic models in Excel to help determine when farmers would switch the form of nitrogen they apply (e.g. liquid or solid nitrogen) to aid Koch's nitrogen storage decisions. This type of price analysis has been taught for decades in agricultural economics classes. Thanks to Myriah, we know such analyses are still in style!
