Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: carranza2 who wrote (101844)	5/30/2008 1:09:18 PM
From: Elroy Jetson	Respond to of 206325

You have to keep in mind that all single-hulled oil tankers are going to be pulled out of service in 2010. It appears there will be a shortfall of tanker capacity in 2010, depending on demand conditions at that time - even though shipyards are fully scheduled. Many firms like Exxon-Mobil increasingly relied on contract ships rather than building replacement tankers because they are increasingly run by accountants, becoming less of an energy firm with each passing year. If you don't own your own enough tankers in your own fleet to meet your needs as Chevron does, you need to be in the market now offering long-term contracts to ship owners so you're not caught up short not too many months from now. While prices will often dictate tankers offload at a different destination, or proceed at quarter-speed until a short-term price decline abates, long-term storage of crude in tankers is quite uneconomic. Currently it would cost you about $75k per day to charter a Panamax tanker big enough to hold one million barrels of oil. For speculative purposes that is $27 million per year to hold $136 million of oil, or roughly 20% per annum plus interest costs on the oil - let's say that's 3% for a total of 23% annually. The economics for a larger tanker are the same. That is a steep price to hoard oil. Hoarding sour crude, being less expensive would cost more, perhaps 30% annually. .