I've got a FROeelin..

a freelin that's probly wrong ... oh yeah

*** 05/09/2008 *** and was in a twisterd kinda waze...

I may have cut my FRO and tossed it to the sea so the FROships could sail faster, but I certainly don't think my hairstyle buoyancy compensation plan is responsible for the FRally in FRO as of late. I do have a ridiculous idea or 2 as to why I think this BOOM in Oil prices may have an unexpected affect on FRO...normally - high oil cost = low demand = tanker bad....tanker stock down..:(

but perhaps at some optimum rate of oil cost the table turns due to the related rate of insurance premiums. So as insurance premiums go through the roof raising tanker day rates, but not profit margins - everybody loses right...?

wrong...!

Frontline tanker with the largest fleet of VLCC's dans le monde may have leveraging power to lower many operating costs on a per ship basis, and some that are particularly peculiar now that oil is 80 to 125 a barrel. Savings on the cost of insurance and crewing operations is where larger scale shipping companies may have financial advantages compared to smaller competitors who cannot spread out their risk portfolios to satisfy underwriters or dockside logistical suppliers and service providers when negotiating insurance rates or operational port facility rates respectively. Competitors actual rates to customers are raised across the board to accommodate for rising industry rates for common services like insurance etc...

The margin breaks at some point and extra profit FRO has from this difference allows them to experience significantly higher margins than smaller competitors...

***05/09/2008 --> Unreliable Fact-Checking Update *** HAHa...the irony here is delightful - the above theory turned out to seemingly to be quite humorously twisted... - turns out FRO's smaller competitors like NAT may be achieving the lowest overall per vessel running rates in the SuezMax industry at least... and by outsourcing the above mentioned hypothesized services....guess who a major outsourcing service provider is to NAT --> Frontline Tanker Ltd.! HAhA......So interestingly, FRO cannot achieve the lowest per ship rates but can leverage it's operations to provide OSsvcs enabling others to lower their rates...hmm--> i have a lot of ideas about this right now but before i start conjecturing....I'm going to go to Friday night... :)


or..

there's always the downside... if the price of oil goes down ... demand will go up and tankers will be even busier ...


every campaign of business pleasure or otherwise probably requires a standby oil reserve to garauntee smooth operations against a diverse set of contingencies... bla bla bla .... this is starting to sound like it belongs on blarchive.com

almost forgot - I said two ways... - as the price of the cargo goes up the overall shipping cost becomes less of a percentage of the total cost to buyers - so incremental tanker day rate increases may not be as big of a nuisance as they once were

in other words - I have no idea...but FRO goes up and FRO goes down...churning out dividends all year round..