Did you see the picture above on the 'ghost fleet of the recession' in the Daily Fail...oops I mean Mail, or on Boing Boing? The article claims that 12% of container ships are anchored off the coast of Singapore because of the recession.
The trouble is that only 300 ships are anchored there, some of them container ships, some tankers and bulk carriers. Thanks to Michael Woods for doing the math and discovering that 12% just doesn't add up. If 12% of all container ships off the coast of Singapore, there would be 500. If 12% of all ships were not in use, 1 in 8 ships would be at anchor, or 1800 ships would be dangerously crowding the coast.
So this means that really only 2% of shipping vessels are anchored and completely unused, which is still quite a bit. Not a ghost fleet, but a worrying amount anyway. It's also not the only place in the world that ships are stored, so there are more out there sitting around.
A much more accurate sign of the times is the financial health of Maersk. According to the Wall Street Journal, which was hit very hard by the recession partly by low oil prices and a global drop in the need for shipping. They took 10% of their container ships out of circulation.
Is that because of peak oil? Technically yes because one big factor that contributed to the recession was the high price of oil a while back. Then when production slowed and demand dropped, crude oil's prices dropped by half. This in turn hurt Maersk's revenue.
It's a sign of a cycle that will get worse and worse over time. As demand increases again, especially with pressures put on oil supply by China with their new cheap cars and industrialization, the price will rise again to something ridiculously higher than anything we've ever seen. Think that $3 a gallon is bad? Think again. The economy will spiral down again as people stop paying for the oil or businesses can't afford it and go under, which will cause oil prices to drop again.
The trouble is that our economy isn't really based on the value of the dollar. It is at the mercy of oil prices. When the oil prices drop, then the shipping and oil companies suffer which in turn hurts the economy in its own way as well. This is why bailouts don't work in the long term, no matter what political party implements them. Bailing out a bank is a very applicable term... it's exactly like bailing out a sinking ship when you really just need to patch the hole. The hole is our dependence on oil. As it gets more and more difficult to get enough oil, the crazier these economic cycles of prosperity and being on the brink of depression will get.
2 days ago