Sunday, February 28, 2016

Low Oil Prices and Suez Canal



I came upon a very interesting article in CNBC linked below

In essence because oil prices are so low ships are avoiding using the Suez and Panama canals and going the extra miles around the Cape of Good Hope and Cape Horn to save paying the toll on using the canals.  Shipping charter rates are so darn low that wasting the extra time for the far longer journey and paying the extra fuel is far less than paying the toll to the Egyptians or the Panamanians.

Of course the solution is to lower the toll to use the Suez or Panama Canals to levels such that it is more economical to use the canals rather than making the far longer voyages.  There have been over 100 voyages that went the longer routes and each voyage emitted an extra 6,500 metric tons of CO2.  This is equivalent to adding 100,000 cars to the road.  Also bunker C fuel for ship engines is full of sulfur and these ships spew acid rain forming gases of SOx and NOx.

Eventually the price of oil will increase and hopefully very shortly the Egyptians and Panamanians will lower the tolls on their Canals.  Sadly for Egypt and Panama they each spent many billions of dollars expanding their canals thinking China would expand at a fast pace and shipping would boom for a long time to come.  These are two very poor countries and revenues from their canals are a large part of their economies.


Perhaps Al Gore can go on a speaking series on cruise ships that would have used the canals but now go the longer routes.  Folks can then listen to him for five or six extra days explaining how green he is and why low oil prices are bad for the world.  If I was aboard a ship with Al Gore I would go over bored (get the pun)

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