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> cost of storing that oil is getting really high If anything, this is a wild understatement. Each contract represents 1000 barrels of toxic waste. You can't

by User23 7y ago

> cost of storing that oil is getting really high If anything, this is a wild understatement. Each contract represents 1000 barrels of toxic waste. You can't just have that stored in a shed or something. And all the commercial regulation compliant storage is gone. I'd be willing to bet you will have a hard time even finding a tanker truck to take it to a buyer, since the tanker owners themselves are going to be using those trailers as temporary storage facilities. Anyone stuck taking delivery of barrels right now is in for a world of hurt. The legal fees alone are going to be ruinous.

RobLach 7y ago
In the USA at least, EPA enforcement has been drastically relaxed to allow a bit more freedom in regard to this issue in exchange of public safety and environmental stability. I wouldn't be surprised if someone doesn't see the opportunity to just dump oil from their tankers to take on an additional lucrative storage contract from a speculator caught off guard. ELPC just released this report for example claiming the number of facilities regulated by the EPA that are out of compliance have doubled in the last year. http://elpc.org/wp-content/uploads/2020/04/Region5Report_FINAL_April2020.pdf http://elpc.org/wp-content/uploads/2020/04/Region5Report_FIN...
- jacobolus 7y ago
  > EPA enforcement has been drastically relaxed to allow a bit more freedom EPA enforcement has been relaxed because the toxic sludge dumpers with influence in the Trump Administration have always wanted to gut environmental regulations and avoid legal liability for giving their neighbors cancer, but now they have a convenient excuse.
jliptzin 7y ago
Forgive me if this is a stupid question but they can’t hold a gun to your head to force you to take the oil, right? Can’t you just refuse the delivery if you have nowhere to store it? Is there language in the contract for this kind of situation?
- User23 7y ago
  That's not a stupid question it's an excellent one. If you don't take delivery you're in breach of contract. The penalties for that are going to depend on how the judicial process works out. This has never happened before, so I don't know how it will play out other than that it's going to be wildly messy. Probably far messier than anyone, myself included, is imagining.
  - SilasX 7y ago
    >That's not a stupid question it's an excellent one. If you don't take delivery you're in breach of contract. The penalties for that are going to depend on how the judicial process works out. That sounds incorrect. The whole point of having standardized, commodified units trading on organized exchanges is that you don’t have to reinvent the dispute-resolution wheel — or turn it over to super slow courts — for every foreseeable thing that can go wrong. So there should be a specific procedure and penalty you can look up. I asked the same question and got this answer that seems more correct and along the lines of my intuition, that the exchange holds it (or rather, directs others to home it) and bills your account for the cost: https://news.ycombinator.com/item?id=22929334 https://news.ycombinator.com/item?id=22929334
    - User23 7y ago
      The contract[1] assumes that Cushing has storage capacity. IANAL so I don't know how material that will be, but I continue to expect that lawyers will get involved and this will be a mess. [1] https://www.cmegroup.com/content/dam/cmegroup/rulebook/NYMEX/2/200.pdf https://www.cmegroup.com/content/dam/cmegroup/rulebook/NYMEX...
  - markdown 7y ago
    At the risk of sounding stupid, I have to ask... Would it be possible to simply pump the oil back into the ground wherever the closest oil field is?
    - saagarjha 7y ago
ClumsyPilot 7y ago
This is a very good point - unlike tree logs or something, you can't just pile up oil. I dont even think youd be allowed to burn unrefined oil in mass.s
deleted 7y ago
[deleted]
gwbas1c 7y ago
> since the tanker owners themselves are going to be using those trailers as temporary storage facilities. Can the tanker just take the oil it's holding to the buyer, then replace it at profit? Example: Tanker is paid to hold Joe's oil Bob needs a tanker to bring oil to Matt. Tanker brings Joe's oil to Matt, and replaces the oil at a profit.

by User23 7y ago

RobLach 7y ago

In the USA at least, EPA enforcement has been drastically relaxed to allow a bit more freedom in regard to this issue in exchange of public safety and environmental stability. I wouldn't be surprised if someone doesn't see the opportunity to just dump oil from their tankers to take on an additional lucrative storage contract from a speculator caught off guard. ELPC just released this report for example claiming the number of facilities regulated by the EPA that are out of compliance have doubled in the last year. http://elpc.org/wp-content/uploads/2020/04/Region5Report_FINAL_April2020.pdf http://elpc.org/wp-content/uploads/2020/04/Region5Report_FIN...

jacobolus 7y ago
> EPA enforcement has been drastically relaxed to allow a bit more freedom EPA enforcement has been relaxed because the toxic sludge dumpers with influence in the Trump Administration have always wanted to gut environmental regulations and avoid legal liability for giving their neighbors cancer, but now they have a convenient excuse.

jliptzin 7y ago

Forgive me if this is a stupid question but they can’t hold a gun to your head to force you to take the oil, right? Can’t you just refuse the delivery if you have nowhere to store it? Is there language in the contract for this kind of situation?

User23 7y ago
That's not a stupid question it's an excellent one. If you don't take delivery you're in breach of contract. The penalties for that are going to depend on how the judicial process works out. This has never happened before, so I don't know how it will play out other than that it's going to be wildly messy. Probably far messier than anyone, myself included, is imagining.
- SilasX 7y ago
  >That's not a stupid question it's an excellent one. If you don't take delivery you're in breach of contract. The penalties for that are going to depend on how the judicial process works out. That sounds incorrect. The whole point of having standardized, commodified units trading on organized exchanges is that you don’t have to reinvent the dispute-resolution wheel — or turn it over to super slow courts — for every foreseeable thing that can go wrong. So there should be a specific procedure and penalty you can look up. I asked the same question and got this answer that seems more correct and along the lines of my intuition, that the exchange holds it (or rather, directs others to home it) and bills your account for the cost: https://news.ycombinator.com/item?id=22929334 https://news.ycombinator.com/item?id=22929334
  - User23 7y ago
    The contract[1] assumes that Cushing has storage capacity. IANAL so I don't know how material that will be, but I continue to expect that lawyers will get involved and this will be a mess. [1] https://www.cmegroup.com/content/dam/cmegroup/rulebook/NYMEX/2/200.pdf https://www.cmegroup.com/content/dam/cmegroup/rulebook/NYMEX...
- markdown 7y ago
  At the risk of sounding stupid, I have to ask... Would it be possible to simply pump the oil back into the ground wherever the closest oil field is?
  - saagarjha 7y ago

ClumsyPilot 7y ago

This is a very good point - unlike tree logs or something, you can't just pile up oil. I dont even think youd be allowed to burn unrefined oil in mass.s

deleted 7y ago

[deleted]

gwbas1c 7y ago

> since the tanker owners themselves are going to be using those trailers as temporary storage facilities. Can the tanker just take the oil it's holding to the buyer, then replace it at profit? Example: Tanker is paid to hold Joe's oil Bob needs a tanker to bring oil to Matt. Tanker brings Joe's oil to Matt, and replaces the oil at a profit.