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Nearly 50 Supertankers Are Waiting for BP

Forget the president’s latest Friday-afternoon jaunt to Louisiana. Here’s the news that really got buried headed into the weekend: Former Shell Oil President John Hofmeister had his first substantive and detailed talk yesterday with Coast Guard officials in Louisiana regarding the viability and importance of deploying supertankers to the Gulf in an effort to recover the oil in the water before it ruins any more coastline.

Hofmeister has been extraordinarily tenacious in pursuit of this idea, and hopefully this breakthrough signifies serious movement toward action.

After all, it is not as if BP would have trouble finding supertankers to clean up the Gulf.

In all the world, there are 538 VLCC’s, or Very Large Crude Carriers. The English, especially those in the shipping trade, sneer at the term “supertanker” that we Americans have popularized for these massive vessels. “It’s a bad tag,” a wise young tanker broker in London told me this morning. They prefer instead to describe the ship’s line and its DWT, or dead weight tonnage, because those things convey more useful information. Pardon me, but I prefer the term supertanker, because in the Gulf of Mexico we’ve got a super problem. Anyway, VLCC is a little dry.

In any case, as of this morning, of these 538 supertankers dotting the oceans of the world, 47 were basically inert, being used for something the young English broker called “floating storage.” That is, they were full of crude oil, going nowhere. And half of these are full of Iranian heavy crude, which for various reasons no one seems to want. The point of this being that we’ve got a glut of crude on the market at the moment, and it is cheaper to store the oil on 47 of these tankers than sell it. This phenomenon is what is known in the petroleum business as a “contango,” where the delivery price exceeds the market price that you can get for the oil.

Read more: http://www.esquire.com/blogs/politics/bp-oil-spill-cleanup-costs-060410#ixzz0qQDWPhXc
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