2

There was another post about this but oil is going for -32 dollars a barrel. What if I acquired A million barrels of oil. I’d be sitting on 32 million with which I could theoretically use to buy an oil tanker, hire a subcontractor that would provide the crew and still have some money left over. That or I could buy warehouses.

I know this is ridiculous but I just don’t see what’s stopping someone from doing this. Do you need proof that you can safely store the oil before you buy it?

People are saying it costs more to store than its worth but from my research (however uninformed it was) I'm not sure it does.

3
  • 2
    If it were that easy to buy an oil tanker, the person you are buying the future from would probably do that rather than pay you to take delivery of the oil in the first place. (Not that it's impossible, since that's the negative-price trades are happening, but the negative price reflects the difficulty.) – chepner Apr 21 '20 at 11:58
  • 1
    Please don't make a duplicate question just because you disagree with the answers. Either make your own answer and add it to the existing question or comment on the answers you disagree with and ask for clarification. (Edit: but don't just comment to say you disagree... SE isn't a discussion forum.) – glibdud Apr 21 '20 at 11:59
  • 1
    The answer is the same - if you can transport and store the oil (safely and legally) then yes you could profit. The fact that very few were willing to do it at zero and let the price go largely negative tells me that it's not as simple as you think. – D Stanley Apr 21 '20 at 12:23
12

A million barrels of oil would be a high end tanker, and second hand prices seem to be about $60 to $100 million dollars, so there is a bit of a hole in the budget before you start thinking about running costs. Then there is the issue of finding a suitable deepwater port in Oklahoma.

Also, there is the cash flow problem. You need to have the cash to get the facilities in place, and you probably won't get paid until the goods are delivered. Then you have to think about insurance, and complying with all the EPA and OSHA rules.

Finally the oil price isn't likely to be high any time soon, you are likely to be stuck holding it for some time, whilst all the other storage facilities are full. That's likely to eat into your margin. Finally, as crude, there are a limited number of places you can offload it - you can't sell it retail.

1
  • 4
    The fact that the price is -$32/barrel indicates that, on average, people expect it'll cost $32 to receive and store a barrel until they can sell it. If oil company could do it themselves for $30, they wouldn't pay an extra $2 for someone to take it. The OP doesn't have any infrastructure or expertise in this area, and this answer is a nice back-of-the-envelope calculation to show why it'll will cost them more then $32 to receive and store a barrel of oil. If it didn't, everyone would do this, driving the price back up. – Nuclear Hoagie Apr 21 '20 at 15:45

Not the answer you're looking for? Browse other questions tagged or ask your own question.