Video shows dozens of oil tankers off L.A. coast with nowhere to go

[Tom Kirkman + 8,860]

Oil, oil everywhere, but not a job to spare.

Currently there is a temporary halt to all immigration into the U.S.

Perhaps a temporary halt to overseas oil imports (not including neighbors Canada & Mexico) could be considered.

Stunning video shows dozens of oil tankers off L.A. coast with nowhere to go

Video released by the U.S. Coast Guard shows a flotilla of oil tankers anchored off the ports of Los Angeles and Long Beach as the coronavirus pandemic continues to affect global demand for oil.

 

Video of tankers: https://www.dvidshub.net/video/749266/oil-tankers-anchor-southern-california

 

Dozens of tankers — each the length of two or three football fields — are seen lining the Southern California coast.

The Coast Guard has increased its presence around nearly 30 ships that are acting mostly as floating storage tanks for oil. The crude product is going unused as closures of businesses and restrictions on travel — meant to slow the spread of the virus — continue to cause a falloff in demand for oil.

"The supply chain is being backed up, and tankers are now being used to store product that would have originally gone out to the supply chain," said Scott Lauermann, a spokesman for the American Petroleum Institute.

Oil prices crashed at the start of the week, with one benchmark falling below zero — traders were paying others to take it off their hands — but have since regained some of that ground.

Prior to the pandemic, the world demand for oil was roughly 100 million barrels per day. Some estimates say the global demand is now down by 30 million barrels a day, Lauermann said.  ...

 

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Related Business Insider article:

'There is no reason to be bailing out Middle Eastern overproduction': Analysts break down how to prevent further oil price volatility

• US oil prices have recovered with West Texas Intermediate trading just above $17 barrel as of 09:15 EST on Friday.
• International prices recovered, however, following President Trump's comments that he ordered the US Navy to "shoot down" Iranian gunboats if they harassed American ships at sea.
• WTI prices have been highly volatile over the past week due to a lack of demand and storage space, particularly in Cushing, Oklahoma.
• Markets Insider spoke with analysts to ask how the US oil market can prevent further volatility.

 

... Markets Insider rounded up some of the most insightful predictions from analysts about how to make oil prices less volatile. 

Check them out below:

Will Rhind, founder and chief executive of GraniteShares
"OPEC needs to realize the magnitude of the situation they have not only blundered into, but actively aggravated, and cut production many times over."

"If not, the US should consider banning petroleum imports and retooling to refine domestic crude production — there is no reason to be bailing out Middle Eastern overproduction."

...

Patrick Healey, founder and president of Caliber Financial Partners
"Removing restrictions that are in place on the nation is really the only solution to stabilize energy prices."

"Allowing people to work again, allowing commerce to resume, giving people a reason to start driving again will create the demand that's necessary to stabilize prices."  ...

 

[Douglas Buckland + 6,308]

I am guessing that oil will go negative again when the next futures contract comes due (if that is the correct terminology. I am referring to what just occurred when the price went negative).

Any comments from the crew that actually know this stuff?

[Ironflimmer + 18]

15 minutes ago, Tom Kirkman said:

 

Will Rhind, founder and chief executive of GraniteShares
"OPEC needs to realize the magnitude of the situation they have not only blundered into, but actively aggravated, and cut production many times over."

 

US would be smart if they nationalized domestic crude production and spared it only for domestic use. In that scenario, US would simply leave the global oil market and be neither importer nor exporter. In that case, they could lock oil prices at whichever level they decide and earn taxes and secure jobs.

As it is now, US have explored and drilled oil to make profits to greedy investors seeing fantastic wealth in black gold, but this is now backfiring as there is simply just to much volatility in this trade.

Blaming OPEC does not make sense, since OPEC is not a friend of US and never have been. They are drilling oil to make profits for themselves and so it should be. OPEC is of course not interested in competition from US Shale. OPEC is not big brother any longer, but even though it is still a large player, it is only one player amongst many. Everybody wants to sell their oil. So one should blame every single oil producing country, as even US has drilled more oil each year since the financial crisis ended. 

Never blame others: Look at yourself and think, how you should have handled this better and adjust!

[Douglas Buckland + 6,308]

When has the US ever nationalized an industry?

[Ironflimmer + 18]

46 minutes ago, Douglas Buckland said:

When has the US ever nationalized an industry?

It hasn't as far as I know - but I've heard that it is contemplating part-ownership in the oil industry, but whether it is a hoax or not, I don't know.

It was merely a suggestion, since if US does not nationalize it, it will destabilize economy, loose jobs, loose taxable income and increase need for imported crude.

[Douglas Buckland + 6,308]

5 minutes ago, Ironflimmer said:

It hasn't as far as I know - but I've heard that it is contemplating part-ownership in the oil industry, but whether it is a hoax or not, I don't know.

It was merely a suggestion, since if US does not nationalize it, it will destabilize economy, loose jobs, loose taxable income and increase need for imported crude.

Perhaps, but the nationalization of any industry will have huge implications for the entire economy.

Probably better to just ‘eat the pain’ and come out stronger.

[Jan van Eck + 7,558]

1 hour ago, Douglas Buckland said:

When has the US ever nationalized an industry?

I have this vague recollection that the railroads got nationalized during WWI, somewhere around 1918, until some Court overturned that.  And I suspect, but do not know, that the rail industry also was nationalized during the Civil War.   I recall the US steel industry was nationalized briefly during the Korean War by Executive Order of Harry Truman, and some Court again overturned that one.  Disclaimer:  I have not checked these out, this is all from vague memory, but it has happened very sporadically and typically gets tossed.  Nationalization of industry is not favored in the USA. 

[James Regan + 1,776]

CNN LIVE ADRESSING THE DEMOCRATIC CAUCUS 

[Geoff Guenther + 317]

3 hours ago, Douglas Buckland said:

Perhaps, but the nationalization of any industry will have huge implications for the entire economy.

Probably better to just ‘eat the pain’ and come out stronger.

So far as I know it only happens when the industry would collapse and cause a national emergency. Savings & Loans were nationalised under Reagan and I think they were then shut down.  Similarly banks and car manufacturers were temporarily nationalise under Bush and Obama. Those nationalisations pushed for the companies to buy back the government's stake and, if I recall correctly, made the government a tidy profit.

[Douglas Buckland + 6,308]

3 minutes ago, Geoff Guenther said:

So far as I know it only happens when the industry would collapse and cause a national emergency. Savings & Loans were nationalised under Reagan and I think they were then shut down.  Similarly banks and car manufacturers were temporarily nationalise under Bush and Obama. Those nationalisations pushed for the companies to buy back the government's stake and, if I recall correctly, made the government a tidy profit.

Was this actually nationalizing the industries or another bailout mechanism?

[Geoff Guenther + 317]

15 minutes ago, Douglas Buckland said:

Was this actually nationalizing the industries or another bailout mechanism?

I suppose it would depend on whether the companies could right themselves or not. If they couldn't the bad companies were nationalised, if they could then the companies paid the money off as bailout money.

I have no idea what the mechanism was for the S&L nationalisations.

[Jan van Eck + 7,558]

2 hours ago, Douglas Buckland said:

Was this actually nationalizing the industries or another bailout mechanism?

They were bailouts.  Also, the S&Ls were not nationalized, what happened was that as they became insolvent  they were seized by regulators as the Government had Federal Deposit insurance guarantees on the deposits, so that gave the regulators the authority to eject the management and install their own people.  the banking institutions were then sold to new owners, with the money from the sale used as restitution for the deposit insurance payouts.  At least, in part!  The rest, the FDIC "ate." 

Strictly technically, I think the S&Ls are not under the FDIC program, but a parallel one with another bureaucratic name, but the same function. 

[Bob_W + 37]

Quote

Perhaps a temporary halt to overseas oil imports...

With no place to unload, isn't there already a de facto halt to imports?

[Gerry Maddoux + 3,627]

The thing with Truman trying to nationalize steel manufacturing was because the United Steelworkers Union (may not be exactly the right name) were threatening a strike, which didn't set well with old Harry. But the case was even worse for him: it was a Supreme Court decision that I believe stands today--a president can't seize property. 

The cars were just bailouts, as I recall, though the US government may have taken a temporary ownership role that was agreed upon by both parties. At any rate, a president can't unilaterally seize property, but he (or she) could ban importation of foreign oil. 

The reason a Saudi-leased or owned super-tanker isn't halted, de facto, from importing if there is "no place to unload," is because there actually is a place to unload. In the Wall Street Journal recently a guy was quoted as saying he was shutting in offshore wells in the GOM totaling 20,000 bod because the refineries told him they could buy so cheaply from the (then) two Saudi tankers. Apparently, the Saudis are willing to undercut any bid to the Cushing Hub by "selling off the boat," which will in effect freeze all ingress and egress at the hub, which will basically bottlestop US production. 

This should be at least temporarily banned until our own system can get unjammed. Dennis and others keep pointing out that refineries have to have a certain amount of heavy crude, which is true. But Mexico has Maya and Canada has plenty of heavy. I imagine we could trade LTO to Mexico and Canada on even par for heavy--both trading partners win and the Saudis can go ahead at their Motiva refinery but can't "sell off the boat."

[Geoff Guenther + 317]

25 minutes ago, Gerry Maddoux said:

Apparently, the Saudis are willing to undercut any bid to the Cushing Hub by "selling off the boat," which will in effect freeze all ingress and egress at the hub, which will basically bottlestop US production. 

Wow! If that's true they are really playing hardball. I'd also expect to see the Brent/WTI spread open up for a couple of months.

[surrept33 + 609]

7 hours ago, Douglas Buckland said:

When has the US ever nationalized an industry?

Freddie Mac and Fannie Mae since 2008? They were publicly traded companies before that, but the government owns almost all of the stock and the Treasury gets 100% of the dividend now.

 

 

[0R0 + 6,251]

15 hours ago, Douglas Buckland said:

I am guessing that oil will go negative again when the next futures contract comes due (if that is the correct terminology. I am referring to what just occurred when the price went negative).

Any comments from the crew that actually know this stuff?

Yes, that is likely, but this time people know not to hold the contracts near expiration if they don't have storage in hand. So it is not going to be that deep. It is amazing how the USO fund had so much demand when it was losing cash to the rest of the market, they pretty much raided it and whomever remained long into the expiration - presumably a hedge fund(s). 

[Douglas Buckland + 6,308]

10 hours ago, Geoff Guenther said:

I suppose it would depend on whether the companies could right themselves or not. If they couldn't the bad companies were nationalised, if they could then the companies paid the money off as bailout money.

I have no idea what the mechanism was for the S&L nationalisations.

The question was, ‘Has the US ever actually nationalized a company?’

This is not asking if they were bailed out, or if the government bought shares in them, I am talking about a congressionally mandated assumption of an American company.

[Bob_W + 37]

1 hour ago, 0R0 said:

Yes, that is likely, but this time people know not to hold the contracts near expiration if they don't have storage in hand. So it is not going to be that deep. It is amazing how the USO fund had so much demand when it was losing cash to the rest of the market, they pretty much raided it and whomever remained long into the expiration - presumably a hedge fund(s). 

I'm not convinced that people learn that easily. 

With even less storage available, the price could go lower than last time.

[Douglas Buckland + 6,308]

7 hours ago, surrept33 said:

Freddie Mac and Fannie Mae since 2008? They were publicly traded companies before that, but the government owns almost all of the stock and the Treasury gets 100% of the dividend now.

 

 

Is that a ‘nationalization’?!!!

[Jay McKinsey + 1,490]

32 minutes ago, Douglas Buckland said:

The question was, ‘Has the US ever actually nationalized a company?’

This is not asking if they were bailed out, or if the government bought shares in them, I am talking about a congressionally mandated assumption of an American company.

There is no black and white definition of what nationalization is. Congress mandated assumption of controlling interest in GM. I think most consider that a nationalization.

United States[edit]

• 1775: Postal roads in the former Thirteen Colonies placed under control of the U.S. Post Office lead by Postmaster General Benjamin Franklin by decree of the Second Continental Congress during the American Revolution. Succeeded by the U.S. Post Office Department enabled by the Postal Clause of the U.S. Constitution, and eventually the U.S. Postal Service after the Postal Reorganization Act of 1970.
• 1917: Merck & Co. seized by the U.S. federal government during World War I under the Trading with the Enemy Act, later became a private company, separate from the original Merck Group operating in Germany.
• 1917: All U.S. railroads were operated (but not owned) by the Railroad Administration during World War I as a wartime measure. Railroads were returned to private control in 1920 under the Esch-Cummins Act.
• 1918: The U.S. telephone system was nationalized on July 31, 1918, and placed under control of the Post Office Department. It was returned to private ownership on July 31, 1919.^[77]
• 1939: Organization of the Tennessee Valley Authority entailed the nationalization of the Tennessee Electric Power Company.
• 1971: The National Railroad Passenger Corporation (Amtrak) is a government-owned corporation created in 1971 for the express purpose of relieving American railroads of their legal obligation to provide inter-city passenger rail service. The (primarily) freight railroads had petitioned to abandon passenger service repeatedly in the decades leading up to Amtrak's formation.
• 1976: The Consolidated Rail Corporation (Conrail) was created by the Regional Rail Reorganization Act to take over the operations of six bankrupt rail lines operating primarily in the Northeast; Conrail was privatized in 1987 under the Omnibus Budget Reconciliation Act when it was acquired by CSX Transportation and the Norfolk Southern Railway, although it continues operations as an asset management and network services provider. Initial plans for Conrail would have made it a truly nationalized system like that during World War I, but an alternate proposal by the Association of American Railroads won out.
• 1989: Resolution Trust Corporation seized control of hundreds of failed savings and loan associations under the Financial Institutions Reform, Recovery, and Enforcement Act in response to the 1980s savings and loan crisis.
• 2001: In response to the September 11 attacks, the airport security industry was nationalized and put under the authority of the FAA-controlled Transportation Security Administration under the Aviation and Transportation Security Act.
• 2008: Some economists consider the government's takeover of the Federal Home Loan Mortgage Corporation and Federal National Mortgage Association to have been nationalization (or renationalization).^[78][79] The conservatorship model used with Fannie Mae and Freddie Mac is looser and more temporary than nationalization.^[80]
• 2009: Some economists consider the government's actions through the Troubled Asset Relief Program and the Emergency Economic Stabilization Act with regards to Citigroup to have been a partial nationalization.^[81] Proposal was made that banks like Citigroup be brought under a conservatorship model similar to Fannie Mae and Freddie Mac, that some of their "good assets" be dropped into newly created "good bank" subsidiaries (presumably under new management), and the remaining "bad assets" be left to be managed under the supervision of a conservatorship structure.^[80] The government's actions with regard to General Motors in replacing the CEO with a government-approved CEO is likewise being considered as nationalization.^[82][83] On June 1, 2009, General Motors filed for bankruptcy during the automotive industry crisis, with the government investing up to $50 billion in debtor-in-possession financing and taking 60% ownership in the company. In addition to a U.S. Government ownership, the Governments of Canada and Ontario also took ownership of 7.9% and 3.8% of General Motors, respectively.^[84] President Barack Obama stated that the nationalization was temporary, saying, "We are acting as reluctant shareholders because that is the only way to help GM succeed"^[85]

 

[Jan van Eck + 7,558]

7 minutes ago, Jay McKinsey said:

Congress mandated assumption of controlling interest in GM. I think most consider that a nationalization.

sorry, no.   It is not.

[Jay McKinsey + 1,490]

2 minutes ago, Jan van Eck said:

sorry, no.   It is not.

How do you define nationalization?

[Douglas Buckland + 6,308]

4 minutes ago, Jan van Eck said:

sorry, no.   It is not.

Correct!!!!! Thanks Jan. All that I am trying to ascertain is if the US government ever actually nationalized an American industry.

Edited April 26, 2020 by Douglas Buckland
Ggg

[Jan van Eck + 7,558]

Just now, Jay McKinsey said:

How do you define nationalization?

 Forced taking.