Oil prices

Why More Than Two Dozen Oil Tankers Are Anchored Off the Southern California Coast

Demand has dropped precipitously due to stay-home orders around the world, but pumps are still extracting from the ground and all that oil has to go somewhere.

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More than a two dozen oil tankers are floating off the coast of Southern California in a striking illustration of the reduced demand for oil

Video released by the U.S. Coast Guard shows the enormous tankers neatly distanced from each other in the waters near the ports of Los Angeles and Long Beach. Due to reduced demand for crude product stemming from the coronavirus pandemic and stay-at-home orders, the tankers have no place to deliver their oil.

They have become floating storage tanks.

“The supply chain is being backed up, and tankers are now being used to store product that would have originally gone out to the supply chain,” Scott Lauermann, a spokesman for the American Petroleum Institute told the Los Angeles Times

Twenty-seven tankers were off the SoCal coast Thursday afternoon, the Coast Guard said. 

"Due to the unique nature of this situation, the Coast Guard is constantly evaluating and adapting our procedures to ensure the safety of the vessels at anchor and the protection of the surrounding environment," said Cmdr. Marshall Newberry, from Coast Guard Sector Los Angeles/Long Beach. "Coast Guard watchstanders, in partnership with the Marine Exchange of Southern California, are closely monitoring each anchorage to manage the increased number of tank vessels we're seeing off the California coast."

Oil prices fell to start the week with a barrel dropping below the cost of a bottle of wine. Prices rose moderately Thursday after a Wall Street rally. 

Stay-home orders around the world mean cities are locked down, air travel has dropped off and millions are working from home. But oil pumps are still extracting oil, and it has to go somewhere

Here are some questions and answers about the latest developments around oil prices.

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