It’s day two of the Daily Mail’s campaign against tankers parked off the British coast. In case you missed “how the Daily Mail broke the story yesterday” you might care to check out FT Alphaville’s coverage here.
The post attracted a healthy level of discourse, including the following analogy — which we like so much we mocked up graphically for readers’ pleasure (H/T Skwosh):
Of course, if you can gather the strength to read the Daily Mail’s latest tanker revelations you’ll find the following extraordinary facts on Friday:
Revealed: 50 oil tankers loitering off British coast as they lie in wait for fuel price hikes
More than 50 oil tankers are anchored off Britain – pieces in a game in which the only winners are market speculators. The losers are the millions of British motorists paying over the odds for their petrol and diesel. After yesterday’s report in the Daily Mail on how several so-called ‘oil shark’ tankers were moored near the Devon coast, dozens more vessels were revealed to be loitering off-shore
Which is amazing, since it means by the powers of the Daily Mail, 50 tankers suddenly materialised off the British coast over night. No-one — not even coast guards or shipping charterers or brokers — presumably knew they were there before.
The Daily Mail goes on:
Some are carrying aircraft fuel or fuel for homes. Others are empty, waiting to be restocked before setting off around the globe. But according to industry experts, a significant number are ‘oil sharks’ - tankers that have been cynically told to wait for crude prices to be driven up before they unload their cargo.
But they still provide a picture pointing out exactly where they all are. Go figure.
Anyway, it’s a strange day indeed when Sky News has to put the world to right instead:
Moored Tankers ‘Not Behind Petrol Price Hike’
Oil tankers that are parked off the British coast waiting for oil prices to rise are not causing petrol prices to soar, a shipping specialist has argued.
Some 10 tankers have remained anchored in Lyme Bay off the Devon coast for two months, with no sign of preparing to leave, as the value of their cargo continues to go up. The sight has provoked an angry reaction from motoring groups, with the RAC questioning the legality of the practice and the AA describing drivers as “victims”.
However, Steve Christy of Gibson Shipbrokers told Sky News Online the tankers were not to blame for misery at the petrol pumps. “People expect the economic rebound to happen next year, and that is the main reason oil futures prices are higher. The local issue has nothing to do with that,” he said. “Oil companies take advantage of the rising prediction and store oil – on land and also on board tankers.”
Mr Christy added that quantity of oil currently being stored off the British coast was insignificant compared to the vast quantity being hoarded worldwide. “I could actually argue that the oil that is there and visibly being stored is actually keeping the petrol price down,” he said.
“Global oil prices are more determined by stronger economic growth and also the weaker dollar. The rising oil price for next year is a sign of international confidence in a rising global economy.”
And just in case you were still confused as to why this story is pure sensationalism and has nothing to do with the price of petrol in the UK, reader “slick dick” offered some further helpful explanatory points:
* I doubt there is any “petrol” (ie gasoline) on these vessels at all. The gasoline contango is not (yet) steep enough and in any case you would more naturally send gasoline on floating storage to the US coast. I doubt much if any is crude either. It will almost all be diesel, heating oil and maybe jet fuel I am fairly sure given the persistent steepness of the gasoil futures contango.
* None of this product will be “unloaded” in the UK. To my knowledge there are no products berths at UK terminals capable of taking vessels this size (some of which were actual built to carry crude). The reason that these vessels are sitting off the UK coast (not inside territorial waters in most cases I suspect) is because Southwold on the Suffolk coast is one of the few places in Europe where ship to ship operations are permitted at sea. I would expect most the fuel on these ships to be transferred on to smaller vessels and taken to the main European markets, with maybe a small amount ultimately ending up in the UK. Some of the vessels may also proceed to discharge directly in the Netherlands, where there are products jetties capable of taking much larger vessels and a lot of (currently full) tank storage on land.
* The amount of fuel on floating storage will prevent price spikes in the future when (IF!) demand finally picks up
Related links:
The Daily Mail discovers contango - FT Alphaville
Is oil about to have a physical reality check? – FT Alphaville
The sting in Nationwide’s house price survey – FT Alphaville