Tag: boom

Oil tankers head for China as drop sparks boom

Add oil shippers to the list of winners from this year’s collapse in crude.

The price plunge has spurred China, the world’s second-biggest importer after the U.S., to accelerate bookings of oil cargoes. It will also shave almost $20 billion a year in fuel costs across the maritime industry if prices that dropped 18 percent since last November hold around current levels, according to data compiled by Bloomberg.

While the oil slide is hurting nations from Saudi Arabia to Iran that depend on energy for revenues, companies including airlines and cement makers are benefiting as their fuel costs decline. Ship owners serving the industry’s benchmark Middle East-to-Asia trade routes are reaping the best returns from charters in years as the slump drives down the industry’s single biggest expense.

The number of supertankers sailing toward China’s ports matched a record on Oct. 17 and is still close to that level now. The country added 35 million barrels to its inventories in the past three months as the nation fills its strategic petroleum reserves, OPEC said yesterday.

“The Chinese, among others, seem to be responding to the lower oil price with additional demand,” Paddy Rodgers, the chief executive officer of Euronav NV (EURN), an Antwerp-based owner whose fleet is part of the world’s largest pool of tankers, said by e-mail Nov. 10.

Oil companies booked ships to load 148 million tons of Persian Gulf crudes in the 12 weeks since Brent fell below $100 a barrel. The orders are up 5 percent from a year earlier, according to lists of charters compiled by Bloomberg.

The shipping industry consumes as much as 3.5 million barrels a day in fuel, according to Trafigura Beheer BV, an oil trader. Prices averaged about $73 a barrel on Nov. 11, about $15 a barrel less than a year earlier, according to data compiled by Bloomberg. The year-on-year slump amounts to annualized savings of $19 billion.

The price slump will curb investment in higher-cost production projects and drive a rebound in the second half of next year, Abdalla El-Badri, OPEC’s secretary-general, said in Vienna on Nov. 6.

Shipping isn’t the only industry benefiting from cheaper oil. American Airlines and United Airlines both said they beat quarterly estimates last month with a boost from higher fares and falling fuel costs. Bernd Scheifele, the chief executive officer of HeidelbergCement AG, the world’s third-biggest cement-maker, said on a Nov. 6 conference call that each $0.10 cut in the gasoline price represents $12 million in savings for the company.

At a time when China’s economy is growing at the slowest pace in decades, its oil imports are rallying. The world’s second biggest economy purchased 25.5 million metric tons a month in the January-to-September period, heading for a record year. Falling prices may add to those figures as winter approaches.

“The main traders, they are typically more active in the tanker market when prices have dropped,” said Moerkedal of RS Platou Markets. “When you look at chartering in the last couple of weeks China has definitely been one of the most active buyers of oil.”

Source: Bloomberg

Shale: Wall Street easy money evaporating

shalebustNo one expects the President of the US to have the time or the scientific background to delve into the geophysical complexities of shale energy. He naturally relies on competent advisers. What if the advisers, instead of being competent, like in so many US government agencies today, are in the sway (and sometimes perhaps pay) of the shale energy companies and their Wall Street investment bankers who have hundreds of billions of dollars riding on promoting the shale hype?

The current US Shale boom is being sustained on steroids, otherwise known as the Fed’s never-ending Quantitative Easing zero-interest-rate policy, a stance that shows no sign of reverting to normal interest rate levels as the economy continues to be depressed since the collapse of the 2007 real estate mortgage securitization bubble. In effect, shale drillers are able to keep in business only because Wall Street and other investors continue to throw money at them like it was falling from trees. Tim Gramatovich, chief investment manager for Peritus Asset Management LLC, an $800 million fund, notes, “There’s a lot of Kool-Aid that’s being drunk now by investors. People lose their discipline. They stop doing the math. They stop doing the accounting. They’re just dreaming the dream, and that’s what’s happening with the shale boom.”

Given the endless zero interest rate regime of the Fed, investment funds are desperate to find investments that yield higher interest. They are so desperate they are pouring money into shale gas and shale or tight oil companies like never before. The companies are operating at losses, loaded with debt and the credit rating agencies rate their debt as “junk”, i.e. in a market downturn, likely to default. One such company, Rice Energy, sold its bonds in April with a rating of CCC+ by Standard & Poor’s, seven steps below investment grade. That is below the minimum risk/quality level that major investors, such as pension funds and insurance companies, are allowed to buy. S&P says debt rated in the CCC range is “currently vulnerable to nonpayment.” Despite that, Rice Energy was able to borrow at an astonishingly low 6.25 percent.

“This is a melting ice cube business,” said Mike Kelly, at Global Hunter Securities in Houston. “If you’re not growing production, you’re dying.” Of the 97 energy exploration and production companies rated by S&P, 75 are “junk” or below investment grade. The shale “revolution” is but a Ponzi Scheme disguised as an energy revolution.

F. William Engdahl is strategic risk consultant and lecturer, he holds a degree in politics from Princeton University and is a best-selling author on oil and geopolitics , exclusively for the online magazine “New Eastern Outlook”

Open the boom… ‘What? Baboon?’ So black cops arrest her

Kenya-Haunted_Baboon
Boom… Baboon, it all sounds the same anyway.

She said “open the boom” but the security guard heard her say “you baboon”, reports the Pretoria News. Next thing she was arrested, driven in the back of a police van to the Sunnyside police station and locked up for the next five hours in a communal cell with about eight black men.

Now Deborah Lynn Greaves of Centurion has won R50 000 from the police.

Greaves, 50, of Centurion instituted a R300 000 damages claim against the minister of police following her ordeal.

Her nightmare started when she was due to attend a training course at a conference facility in Sunnyside.

She tried to park inside a basement parking garage but was told by the security guard that parking was reserved and she should park in the street.

Greaves said she had previously parked inside, even though she did not have an access card.

That day, she parked in the street but when she returned the next day, she again tried to park inside.

Again she was denied entry, but this time, she said, the security guard was aggressive and screamed at her. He wanted her to park outside.

She phoned a colleague to arrange parking inside the parking garage for her, as she felt her car was unsafe outside. The colleague handed her his access card so she could drive into the basement.

But when she left that afternoon, the security guard refused to open the boom for her to exit. Greaves said she told him to “open the boom” and that “the way in which you do things is stupid”.

He apparently mistook what she told him as “you are a baboon” and that he was “stupid”.

Nevertheless, he opened the boom and she drove off.

She returned the following day and while attending training she was called by the course co-ordinator. He told her the police were waiting for her outside.

She was told by two policemen that she was under arrest.

Greaves was threatened that if she did not get into the police van, she would be cuffed.

The police drove her at high speed to the police station.

She said she was terrified and was being thrown around in the back of the van.

At the police station she was told that she was being held for crimen injuria.

She had to spend five terrifying hours in a cell with men, under conditions she described as filthy. Her lawyer had her freed on a warning at about five that afternoon.

Greaves said she was so traumatised that she had to receive counselling from a psychiatrist, who diagnosed her with post-traumatic stress disorder.

The police initially denied all the allegations made by Greaves in papers before the Pretoria High Court.

Her lawyer, Konrad Rontgen, was ready to proceed on Monday, but just before the case was called the police indicated they would settle the matter by paying Greaves R50 000.

Greaves said she was happy it was over, but she was disappointed with the settlement amount.

“This does not compensate me for the humiliation, fear and embarrassment I had to endure. I still get nightmares and I become extremely fearful when I see a security boom.

“This was totally unnecessary and now the taxpayer has to pay for the wrongs of the police. All I wanted to do was to park.”

The charge levelled against her was that of crimen injuria, but the prosecutor refused to entertain this and dismissed the case. – Pretoria News