The Applied Epistemology Library :: View topic

Mick Harper
Site Admin

In: London

Wiley wrote:

Here is how I understand it You are talking about Very Large Crude Carriers (VLCC) that move up to 2 million barrels of oil.

I'm talking about all oil tankers. The principle applies to them all.

The ship owners purchace these (VLCC) then charter these out.

We've been here before. You won't say who these mysterious charterers are. But, if you insist, replace all references to 'shipowners' in my argument with the words 'ship-charterers'.

To make profit the ships owner will then receive daily payments, from those that charter these VLCC.

If you say so. Let's hope these ship-charterers of yours make some...

Daily payments (earnings) - Daily operating expenses (crew and ships maintenace) - depreciation = ship owner profit.........

Yup, that just about covers it.

The big impact impact of the war, for the Ships owners are the cost of insuring each tankers hull. A 10 year old supertanker is worth $80-90 million. But the biggest worry is if your tanker is not chartered out.

Of what relevance is this? We are dealing with a peaceable Strait of Hormuz through which ships are passing, having paid their toll to the Iranians.

These owners need to be getting in $16,000 a day, by chartering their ships out, just to cover the carriers depreciation.

I'm obliged for the information.

Profit or loss is dependent on the demand and supply of VLCCs as this forces up and down the charter price.

That has always been my understanding.

The ships owner does not normally pay any tolls or fees. Under standard industry contracts, the charterer (the person or company leasing the vessel and moving the cargo) is ultimately responsible for covering voyage costs, including fees or tolls.

That's what I said.

In practice with a dark fleet operating, who knows?

Not me, squire. I don't recall there being any dark fleets in my account so I won't be bothering to find out.

The person or company, leasing the VLCC, for the purpose of moving the cargo is making their profit in a different way.

Do tell!

Total revenue from final sale of oil - cost purchase of oil + cost of moving oil, charter, tolls etc = profit

What a disappointment. That's exactly what I said.

Profit or loss is mainly dependent on having a low buying price and higher final selling price.

It is wholly dependent, I would have thought. But do go on.

Keeping down costs helps

It sure does.

but if the end user is actually willing to pay more

He won't be though, will he? He'll be willing to pay the market price but if your oil is more expensive, he'll tell you, "No thanks, we'll get it from one of the thousands of tankers willing to sell us oil at the market price."

you can still up your final selling price, if demand outstrips supply.

er... the market price is settled by demand meeting supply. If demand is outstripping supply, then the price will rise accordingly. But whatever it is either that's your final selling price or you've got a tanker of unsold oil on your hands.

But I've got a feeling you're going to stick to your guns irrespective of anything I say.

Display posts from previous: