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We like to think that when we deposit a dollar at the bank, it goes into a big vault and we can pull out that same dollar at any time. But that¿s not how the U.S. banking system works. Banks take that money and invest it to make money themselves, so cash gets spread around. This, naturally, leads to a big risk: What happens if those investments go sour? Well, you¿d be out of luck. You can¿t get your dollar back.
The Federal Reserve doesn¿t like that scenario, so it prohibits banks from putting all the cash it has on deposit on the line. In fact, the Fed forces banks to keep a portion of their assets at the Federal Reserve itself, to make sure that some of your assets won¿t get squandered if the bank¿s bets go south. These are called ¿reserves,¿ (hence, Federal Reserve. Got it? Good), and usually amount to 10% of the total cash kept in checking accounts.
These reserves are never exactly 10%, and banks like to keep a little extra in reserve ¿ not, as you might think, to make you more comfortable that they¿re in good financial shape, but rather so they can take that excess and lend it to other banks and make money off it. (They¿re banks, they can¿t help themselves.) The rate at which they make these loans is called the Federal Funds rate, which is set by the Federal Reserve¿s Federal Open Market Committee.
When you hear people chattering about how the Fed cut or hiked interest rates, this is what they¿re talking about: the interest rate banks can charge for lending money from their reserves. This begs the question: If these are essentially loans between banks, why is the Fed Funds rate so important for the rest of the economy?
Well, simply put, because loans make the financial world go round. Bank A lends Bank B $10,000 at a Fed Funds rate of 5%. Bank B then lends out $10,000 to a small business at 7%. The small business then takes that money and expands the business and hires new workers. Now someone is employed, Bank B has made interest off the loan, and Bank A is the richer for making it all happen. It¿s perhaps overly simplistic, but you get the idea. When you want the economy to thrive, you make lending cheaper.
Of course, sometimes you don¿t want the economy to thrive. In fact, you might want it to cool down, mostly to avoid money flooding the system and causing inflation. In that case, the Fed raises interest rates, making it difficult to lend or borrow.
Home / Markets / Industries / Energy
Tuesday, May 27, 2008
Pure Biofuels Completes Expansion of InterPacific Oil Biodiesel Facility and Prepares to Commence Full Scale Biodiesel Production
Comtex
LOS ANGELES & LIMA, Peru, May 27, 2008 (BUSINESS WIRE) ----Pure Biofuels Corp. (OTCBB:PBOF), a biodiesel corporation with operations in Peru, today announced that it has successfully completed construction and testing of its expanded InterPacific Oil biodiesel production facility, which was expanded to 10 million gallons per year (MMgy) from 7.5 MMgy. The Company expects to commence production and ramp up to full 10 MMgy capacity within the next several weeks.
Pure Biofuels' Chairman Chris Tewell commented, "We are extremely pleased to have completed the expansion of our InterPacific Oil plant and to prepare to commence full-scale production of biodiesel. This accomplishment marks the first significant milestone of our business strategy aimed at becoming a leading biodiesel producer in South America."
The InterPacific Oil plant is Peru's first biodiesel processing facility having commenced operations in 2001. Since then, InterPacific has produced more than 30 million gallons of biodiesel. Pure Biofuels acquired InterPacific in December 2007. The combined output of Pure Biofuels' new 52.5 MMgy biodiesel facility in the Port of Callao, set for completion in the second quarter of 2008, and the InterPacific Oil biodiesel facility, will total 62.5 MMgy, making Pure Biofuels one of Latin America's largest producers of biodiesel.
About Pure Biofuels Corporation
Pure Biofuels is committed to becoming a leader in Latin America's rapidly emerging biofuels industry. Pure Biofuels' flagship project, the Callao Port biodiesel refinery near Lima, Peru, is scheduled to complete construction in the second quarter of 2008 and to commence full production capabilities by mid-2008. The Company believes Peru's economic growth and expansion, illustrated by recent exponential growth in foreign direct investment, and GDP growth over the last five years, adds to Peru's promise as an attractive location for alternative fuel production and development. In addition, rating agency DBRS in 2008 assigned investment-grade credit ratings to Peru's long-term foreign and local currency debt. For more information about Pure Biofuels, please visit: www.purebiofuels.com
About Biodiesel
Biodiesel is a clean and renewable energy source derived from vegetable oil that can be used in unmodified diesel engines. Biodiesel improves overall engine performance, is 100% compatible with existing diesel vehicles and infrastructure, and has proven reliable in over 50 million miles of road testing. Biodiesel significantly reduces harmful exhaust emissions, which contribute to global warming; is non-toxic at any level; and is the first and only fuel to have passed the Clean Air Act. The United Nations expects biofuels to account for a full 25% of world energy needs by 2025.
Notice Regarding Forward-Looking Statements
This news release contains "forward-looking statements," as that term is defined in Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities Exchange Act of 1934, as amended. Statements in this press release which are not purely historical are forward-looking statements and include any statements regarding beliefs, plans, expectations or intentions regarding the future. Since the forward-looking statements relate to future developments, results or events, these statements are highly speculative and involve risks, uncertainties and assumptions that are difficult to assess. You should not construe any of these statements as a definitive or invariable expression of what will actually occur or result. Such forward-looking statements include, among others, the expectation and/or claim, as applicable, regarding the construction of the Callao Port refinery. Actual results could differ from those projected in any forward-looking statements due to numerous factors. These forward-looking statements are made as of the date of this news release and the company assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements. Although the company believes that the beliefs, plans, expectations and intentions contained in this press release are reasonable, there can be no assurance those beliefs, plans, expectations, or intentions will prove to be accurate. Investors should consider all of the information set forth herein and should also refer to the risk factors disclosed in the company's periodic reports filed from time to time with the Securities and Exchange Commission and available at www.sec.gov.
SOURCE: Pure Biofuels Corp.
Investor Relations ICR, Inc. Ina McGuinness/Lena Adams 1-310-954-1100
Copyright Business Wire 2008
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