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Subject:  Interesting thoughts on shipping Date:  12/5/2008  1:15 PM
Author:  Starrob Number:  667 of 5166

Here is someone's opinion on how oil prices effect shipping and how shipping effects oil prices. For those interested, I would attempt to verify the claims but it is something interesting to maybe factor into the equations of those who like predicting oil prices (which I don't think can be done very accurately over the near or long term):

"When the Turn Comes for CL, it could be vicious
My rough estimate says that at any given time in recent years about 600 to 700 million barrels of crude oil are at sea, enroute from exporters to consuming countries.

As a shipowner, about the only cost I have much control over is my fuel cost. Financing and insurance costs are a function of time--so much per month or year. Maintenance is also mostly a function of time, but it might be defered during economic downturns. Crew costs are also a function of time--so much per month, or per shift.

Fuel burned is a function of speed--the drag goes up as a function of the speed--roughly at the square of the speed--double the speed equals more than double the fuel, but half of all the other costs. So at any time, there is an optimum speed--the higher the cost of fuel, the slower to steam to optimize profits. The lower the fuel cost, the faster you show go, up to the limit posed by higher drag on the ship's hull."

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