Venezuela unrest strips oil tankers of insurance coverage

AFX ^ | December 26, 2002

[Dog Gone]

LONDON (AFX) - Oil tankers in Venezuela may be refused all cover by insurance companies on damage claims arising from the current unrest in Venezuela, according to the International Association of Independent Tanker Owners (Intertanko).

Insurance companies have informed Intertanko "that they will not recognise any damages caused by vessels or caused to the vessel under unsecured situations like no certified docking pilots, tugs with improper and uncertified crew and uncertified personnel performing loading or unloading operations at the terminals," Intertanko said in a statement.

The document published on its Internet site was referring to attempts made since the end of last week by the Venezuelan army and navy to take back control of tankers and oil installations from strikers. Intertanko said: "We understand that no advice or notice have been issued by insurers so far but that they are monitoring the situation closely."

Multinational oil companies ordered captains of 14 oil tankers berthed off eastern Venezuela not to load oil, Ramon Martinez, the governor of the eastern state of Sucre and the energy ministry's representative in the region, said Thursday as the general strike went into a 25th day.

[Dog Gone]

Tankers won't come to Venezuela without insurance coverage. This will shut down all exports, and maybe all imports.

[Southack]

Man it feels good to be Long on oil (and gas)!

[Fred Mertz]

Another excuse to raise prices at the pump by 10% or so...

Bush better get his oil pals onboard, or things are going to get ugly.

[Dog Gone]

Oil is a commodity, traded at the New York Mercantile. Prices are set by perceived supply and demand, just like any other commodity.

Yes, prices at the pump will go up, but it's not because of any "excuse."

[byteback]

[friendly]

If it means that the murderous dictator Chavez and his Cuban thugs are ousted, I will resign myself to temporary higher gas prices.

The price of oil will drop dramatically as it is shipped from the vast resources of a free Iraq, after Dubya liberates that benighted nation.

[Dog Gone]

That graphic appears to show where and how much oil the US importing on a daily basis from foreign countries.

About 1.5 million barrels a day from Venezuela is now missing, and it's pretty clear that this takes a huge hunk out of our daily needs.

[Dog Gone]

They did a coup a few months ago. They just failed to put a bullet in Chavez's head, which may be what it takes to remove him from power.

Coulda woulda shoulda....

[friendly]

Heck they coulda offed Saddam 10 years ago in Gulf War I, too. Reminds me of an old joke:

Question: You have a handgun with two bullets, and you are in a room with Saddam, Chavez, and a lawyer. What do you do?

Answer: Shoot the lawyer. Twice.

[byteback]

About 1.5 million barrels a day from Venezuela is now missing, and it's pretty clear that this takes a huge hunk out of our daily needs.

The source for that was a DOE website. I was shocked to find out that Venezuela was that high up on the import list. Further lookin at the numbers shows that we import 12.25 % of our oil from Venezuela. Compare that with 4.65% from Iraq.

[Dog Gone]

I don't know if those numbers include imports of refined products or not. But we actually do did import a substantial amount of gasoline directly from Venezuelan refineries. That's been cut off as well.

[Humidston]

Hubby used to be in the oil and asphalt business and told me once that Venezuela's oil is very "heavy" - thus making it great for asphalt (roads, shingles), but not good as fuel oil. He said it's like the sludge you'd find laying on the bottom of a barrel. I doubt the U.S. uses Venezuela's oil for fuel.

(He's asleep right now so I have no other details.)

[Dog Gone]

I doubt the U.S. uses Venezuela's oil for fuel.

We do use it for fuel. It is heavy oil, which means exactly what you said. It's going to produce far more of those products during the refining process. But refineries are tooled to handle this grade of oil, and we import about 1.5 million barrels of it a day to refineries along the Gulf Coast.

Or at least we did until about a month ago. Additionally, we import gasoline which has already been refined in Venezuela. The cutoff is real, and it's going to be felt.

[WoofDog123]

"Yes, prices at the pump will go up, but it's not because of any "excuse.""

Some places retailers will raise prices on news on their current (price-already-set) inventory-in-the-ground of gas as soon as said news hits, which does not reflect higher cost of goods, but a huge increase in their profit margin.

[WoofDog123]

"Or at least we did until about a month ago. Additionally, we import gasoline which has already been refined in Venezuela. The cutoff is real, and it's going to be felt."

It is definitely a testament to the support this administration has for booting chavez that they have not had a peep of complaining about a huge amount of our oil getting cut off.

I would assume it would take some time (days, weeks) for the cutoff in venezuela to have been initially felt here (transit time, etc), but unless they were able to source supply in eastern mexico, it cannot have been delivered even close enough to avoid a refining disruption in the u.s.