Thursday, 15 March 2012

Armed pirates are a better bargain than government.

Oil shippers spend a fifth of a cent per gallon to defend against pirates.  US governments already grab 43 cents per gallon and have three more assaults lined up to capture another 25 cents per gallon.  Who would you rather deal with? Pirates or predatory regimes? 
The senior VP of Maersk Line writes: Pirates vs. Congress: How Pirates Are a Better Bargain

 h/t Ace of Spades' summary.
An oil tanker with 2 million barrels of crude may spend $5000/day for armed support off Somalia and burn thousands of gallons extra bunker oil to run at top speed through the area but it just doesn't compare to governmental predation. On top of that, the pirates only collect about 1% of the money in the pirate business! ($74 million out of $7 billion).
"While worrying about pirates I also worry about the effect of MARPOL Annex VI and the cost of complying with increasingly harsh emissions control requirements, something that will cost our industry roughly $6 Billion a year to comply with now and that figure will go up as tighter standards kick in in the 2014 time frame. I worry about the requirement to cold iron in LA, something that is very expensive and disruptive. And since while common for Navy ships to go on shore power, commercial ships never do it and are not fitted with a system to do so, a modification is required that will cost the equivalent of one ransom for each ship it is done on. I worry about things like a proposal fronted by the World Bank, UNEP and others for a $50/ton carbon tax on ships bunkers, which will cost our industry about $17.1 Billion dollars per year. I worry about invasive species related ballast water mandates which will cost our industry approximately $15 Billion a year and I worry even more about California not going along with federal ballast water control mandates and instead implementing their own program at even greater cost to us. So tree huggers and environmentalists are costing us a heck of a lot more than pirates ever will."
If you continue reading Stephen Carmel of Maersk Lines,  you will learn:
The ships that go round Cape Hope instead of the Suez do it chiefly because they are too big to fit through the Suez Canal, not to avoid pirates.   Insurance companies are making excellent profits on their piracy policies which obviously means they haven't had to pay out on many of them.  US policy criminalizing the payment of ransoms is a step backwards because a system that worked to recover ships and personnel is being stopped but a cure for the piracy has not replaced it.  And a parting thought for environmentalists:  In America, anti-dredging rules mean that less and less can be carried per ship on the Mississippi; some of the larger ships that will be coming through the Panama Canal will find no place to dock on the East Coast; and half the Great Lakes ports will be closing soon.  There's a price being paid.

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