Posted on 12/16/2008 8:38:07 AM PST by zek157
I had to look it up.................
Driving up the prices would give reason to deliver the oil stored in the tankers. That would be a self correcting problem.
Somali pirate: Holey Shiite! We’re going to need a bigger boat. ;)
“Is it possible that a shortage of tankers could drive up crude oil prices more than the supply/demand fundamental for oil would allow? After all, what good is an oversupply of crude oil if there arent enough tankers to deliver that oil to customers?”
The tankers are already full with nowhere to go. Demand doesn’t support current production. This “shortage” isn’t a good thing for OPEC. It is a great deal for anyone that isn’t sitting on $50+ future contracts.
It makes no difference how much oil is “out there”. It’s the supplies at the refineries that count. As long as their storage tanks are full, incoming OR outgoing, the price will stay down.
I spent the better part of year around here pointing out how little excess storage capacity there is for either crude oil or refined products and how even a small success at conservation would put a real damper on prices of both crude oil and gasoline. I was routinely called to task for my position. I was told repeatedly that we could not ‘conserve’ our way out of the high prices. I know a lot of the price drop has been due to a worldwide decline in demand, but the fact still remains that once there was no place to store output prices had to fall. By definition when you have run out of space to store excess output you have a decrease in demand for the product. It’s indeed supply and demand with occasional blips from other sources.
Oil has always been a product where there was little if any ability to store it for any length of time. It was pumped from the ground, put into the transportation system, refined and sent along to the end users as a continuous stream. When something backs up that stream there are going to be consequences.
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