Why the logistics of oil supply matter – The National

Why the logistics of oil supply matter – The National

The current collapse in oil demand places more stress on logistics than ever before.. Producing wells and fields can be shut-in because the sales price for oil and gas does not cover their operating costs, or because they physically have no available access to export or storage.. It depends on operating costs, transport costs to market, the costs of stopping or restarting production, taxes, and oil quality.. The current collapse in demand has affected gasoline (petrol) and jet fuel more than diesel for trucks and fuel oil for ships.. As prices fall, governments face a difficult choice: waive these rules temporarily and give up badly-needed revenue, or keep them and risk production shutting down entirely.. Disadvantaged producers include the landlocked ones - facing high transport costs to destinations where demand may be in freefall.. Heavy crudes, such as those from Canada and Venezuela, face the double whammy of higher production costs and lower sales prices than benchmark grades.. At the start of this price war, there was an idea Russian companies were immune because of their low production costs.. Crude exports from the Baltic face a long journey to Asia.. When the price for Russia's benchmark Urals grade fall below