When you think about the energy sector you probably first think of oil and gas. But just as there is more between heaven and earth, the energy market also comprises far more than just oil and gas. Coal, for instance, is also a very important product.
And even transport is a product that will eventually be noted on exchanges such as DME or DGCX. For them to mature they will have to include all possibilities in their product packages in the near future.
Pipelines are transporting larger amounts of oil and gas. A gas line (the North European Gas Pipeline) is being constructed between Russia and Germany that stretches across the bottom of the Baltic Sea. The BBL line is being built between England and the Netherlands, and there are many such projects in progress worldwide at the moment.
Gas and oil transport
But two-thirds of the world's usable oil is being transported by ship from source to client. There is talk of restricted capacity, as a result of which tanker companies are seeing a considerable rise in profits. Gas is now also being increasingly transported by ship and LNG terminals are being constructed at breakneck speed in a variety of harbours.
In April of this year, the cost per day of a very large crude carrier was only $35,000. By mid August that had risen to $90,000. That is about four times as much as a tanker company needs to break even. The price of oil has dropped drastically recently but global demand for oil remains high. Refineries are working full out trying to meet the demand.
But they are having difficulty supplying the demand which is why tankers are also being used to transport refined products. A consequence of this is that there is less capacity for the transportation of crude oil. Also, ships are travelling further distances and are therefore unavailable for longer periods of time. Ships are even being used for storing oil.
When political tension rises, refineries charter ships out of a fear that at any moment they could be left without oil. Furthermore, ships with single bulkheads are being replaced with double-partitioned vessels. The tanker market situation is flourishing.
But don't forget that they are subject to seasonal patterns: more fuel oil is needed in winter than during the summer months. That effects price-making.
Those wishing to invest might consider tanker shipping. For those who want nothing to do with financial markets, how about becoming a skip's captain? It could be a better career option than you think.
The lack of qualified skippers is patently obvious – captains of LNG ships have seen their salaries soar over the last three years, from $6,000 to $20,000 a month. Worth a thought?