From the November 01, 2011 issue of Futures Magazine • Subscribe!

Joe LeBlanc: Taking a rare energy position


Photographs By Daymon Gardner

Joe LeBlanc was a 25-year energy trading veteran with experience trading and hedging in both the physical and futures markets when he was cajoled by a former colleague to teach a course in energy trading at Tulane University's A. B. Freeman School of Business. The next year, he became a full-time professor and went about transforming the program and facility into something appropriate for a high-end hedge fund or institutional energy trading desk. It's no surprise, as LeBlanc's experience was forged during the apex of modern energy trading following the deregulation of energy markets in the early 1990s. As commodity risk manager for The Louisiana Land and Exploration Company he integrated trading and hedging principles into every aspect of the company at a time when the market was moving from 30-year fixed price contracts to numbing volatility and deregulated utilities as well as markets.

He went on to trade for Shell and most recently Energy Partners Ltd. LeBlanc now is associate director of the Tulane Energy Trading Institute and director of its trading center. He helped forge partnerships within the industry, creating a state-of-the-art trade simulator with which students can trade live markets or a critical point in history with Reuters' news feeds and analytics, Trading Technologies' software and CME Group's price feeds. We talk to LeBlanc about energy markets and preparing students for tomorrow's trading challenges.

Futures Magazine: Joe, you have worked as a trader for 25 years; how difficult of a transition was it into academia?

Joe LeBlanc: The biggest part was the recognition that all of my friends of 25 years in the industry would challenge me by the fact that they were interested in the students that were coming out. That being somewhat of a reflection on me put a different burden on me to make sure that [the students] are ready. The worst thing that could happen would be that you develop a product, basically a student, that is not ready to work. A good friend of mine said, "Joe, you are going to teach; hell, I will hire anyone you give an 'A' to." That really made [me] think; this is not just something [I am] doing in a classroom, this is something [on which my] reputation is at stake. Once they get out there in the work place, they are a reflection on [me]. That is a burden that most people in academia don't carry. It is a reflection of the school and not necessarily them. I wish every academic was responsible for placing five kids because it would change the way they teach.

LeBlanc broke it down to the following objectives:

  1. Developing a program that has value to the market (energy companies)
  2. Creating an academic program that has a measurable and challenging academic objectives and goals
  3. Avoid any cook-book approach to the subject matter – Let the students find their "edge" in the trading space
  4. Push the school to provide the "bleeding-edge" of new technology because we are developing the "NEXT generation" of energy traders
  5. Integrate this technology in a manner that such products, which are not designed for an academic setting, into the most real-world environment found anywhere
  6. Biggest Unexpected Challenge: Your 25 years of industry relations were interested in recruiting from your program and that the product from the program (students) would become a direct reflection of you!

FM: Is it important that you had experience both in speculating and hedging?

JL: Direct and extensive experience in the combination of energy planning, mergers, acquisitions, finance, derivatives trading, hedging and marketing have been tremendous experiences that the students really enjoy. I never know what level of experience I will get in a student. I have had students with countless years of energy marketing, engineering, finance and banking experience.

One thing that you can count on when you walk into a classroom of students interested in this space [is] they want [to know my] level of actual experience [because] they tell me regularly that very few, if any, professors ever actually have worked in their field of study and have only a theoretical knowledge of the information they are providing.

A lot of the things I did at Louisiana Land [and Exploration Company] — a major independent [oil company], we had a refinery, we had all the operations and it was important for us to take a position and manage acquisitions, planning etc. — had to be creative. Independent oil companies are probably more creative in their hedging and trading than most majors because they need to be. Every merger, every acquisition, every financial decision we were considering all of the commodity market implications and doing creative things to provide us with an edge or reduce risk. It was that experience in integrating all of the financial ramifications into the commodity markets that probably was more beneficial than things that occurred at majors.

Page 1 of 6 >>
comments powered by Disqus
Check out Futures Magazine - Polls on LockerDome on LockerDome