Strictly: Drilling and oil-field services Message Board

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Gold/Mining/Energy : Strictly: Drilling and oil-field services

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To: AltLar who wrote (70902)	8/15/2000 4:58:07 AM
From: kormac	of 95453

Tanker shortage !! August 14, 2000. Crude oil trading in upcoming weeks will test the responsiveness of the free market on an international basis. A temporary shortage of tanker capacity has developed due to the retirement of several vessels after the recent incident off the shores of France. While several vessels are on order, it takes quite some time to build a tanker, much less several simultaneously. Meanwhile, demand for tankers to deliver foreign crude oil is high due to a strong international economy and low US inventories. Thus, the price of transporting crude oil is steadily increasing. It is now reported to be about 10% of the price of crude oil, and could double by year end. Will the price of crude oil increase to cover transportation costs even though crude oil is generally delivered F.O.B point of sale? Or will some producers have to back off on production because their profits are being eaten up by transportation costs? Seppo

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