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Understanding Their Role
Crude oil is often extracted far from where it is refined and consumed. The US imports 12 million barrels a day from other countries, much of which is transported on ships. Oil tankers are massive vessels, with the largest carrying the equivalent of 84 million gallons (2 million barrels) of crude oil. Since they carry so much oil, the cost per gallon of tanker transport is relatively low. Less than 1% of the end cost of gasoline is from crude tanker shipping.1 However, their great size and weight also makes tankers difficult to steer and stop.2 Although the number of tanker spills is declining over time, an individual accident can cause a severe environmental disaster.
A tanker transaction involves three parties: a broker, charterer, and shipowner. The broker connects the charterer, or the company needing to move crude oil with the shipowner, or the party that owns and operates the tanker.3
Tankers last around 30 years.4 Since oil prices and the geopolitical environment fluctuate considerably over this time span, it can be difficult to match supply and demand for tanker shipping.
“The petroleum transportation industry recognizes that one spill is too many.”
- API 5
1 American Petroleum Institute. “Tankers: Fueling American Life.” See: http://www.api.org/oil-and-natural-gas-overview/tr...
2 Rodrigue, J.P. and Comtois, C. and Slack, B. The Geography of Transport Systems. 3rd Edition. New York: Routledge, 2013. ISBN: 9781136777394. Available online at: http://people.hofstra.edu/geotrans/index.html
3 Maersk. “The Tanker Business.” See: http://www.maersktankers.com/aboutus/pages/thetankerbusiness.aspx
4 Rodrigue, et al. The Geography of Transport Systems. Chapter 5.
5 American Petroleum Institute. “Tankers: Fueling American Life.”
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Trends and Challenges (click for details):
Trend: LNG Fuel
Challenge: Oil Spill Response