Shipping rates are likely to increase as the average distance travelled by a single barrel of oil rises, the Wall Street Journal reports. The shift promises to benefit shipping companies and shipbuilders alike.
Oil is traveling further because the US energy boom is raising domestic oil and gas production, lowering imports. Meanwhile, Asia is demanding more hydrocarbons. On a monthly basis, China has replaced the US as the world’s biggest oil importer.
“It’s nearly three times longer from West Africa to China than to the US,” DNB analyst Petter Haugensaid said.
US crude oil production, projected to range between 6 and 8 million barrels per day (bbl/d) over the next 30 years, could reach as high as 10 million bbl/d by 2040 under an alternative resource scenario, according to the Energy Information Administration.
Last month DNV GL reported that the future alternative fuel mix for global shipping will become more diversified with time, as more than 20 percent of shipping could adopt hybrid propulsion, featuring batteries or other energy storage technologies.
Takeaway: The US oil and gas boom could raise shipping rates, as the average distance travelled by each barrel of oil rises.
Tamar Wilner is Senior Editor at Environmental Leader PRO.
Picture credit: Justin Russell via flickr