Dozens Of Oil Tankers Wait Off California's Coast As The Pandemic Dents Demand

By Jackie Northam

Published April 27, 2020 at 4:29 PM CDT

The oil tanker Pegasus Voyager sits off the coast as a man sits and watches in a park in Long Beach, Calif., on April 22. Many vessels are parked between Long Beach and the San Francisco Bay Area with nowhere to go due to lack of demand and nowhere to store the oil.

The scale of oil market turbulence is on stark display along the California coast. About three dozen massive oil tankers are anchored from Los Angeles and Long Beach up to San Francisco Bay, turning into floating storage for crude oil that is in short demand because of the coronavirus.

About 20 million barrels of crude are on board the tankers, according to Reid I'Anson, global commodity economist at Kpler, a data company. "That is definitely far outside what is normal for the region," he says, referring to California's coastline. "Typically, we'll not see more than, you know, maybe 5 million barrels tops kind of floating."

With dramatically fewer cars on the road and planes in the sky, I'Anson says there is a limited need recently for gasoline and jet fuel. That has caused a glut in the market and a shortage of onshore storage.

Keeping oil on tankers is not optimal. "It's very expensive to hold this crude on these vessels," I'Anson says. But there are few alternatives. "What else are you going to do? There's nowhere else you can take this crude ... globally, no one needs crude right now."

The U.S. Coast Guard is monitoring the increasing number of large vessels around the ports of Los Angeles and Long Beach to make sure there are no collisions or groundings, and to see if the tankers are discharging oil or sewage into the water.

"Things are pretty crowded," says Capt. Kip Louttit, executive director of the Marine Exchange of Southern California, an arm of the Coast Guard that operates vessel traffic service.

He says currently there are 26 ships anchored off the ports of Los Angeles and Long Beach — triple the number normally seen there. They include three cruise ships and 20 tankers, according to Louttit. "Our information is that one may be out there as long as July," he says.

Louttit describes the congestion as abnormal but says it does happen from time to time. In 2014 and 2015, an unusually large number of container ships also anchored along the coast, he recalls.

There are 48 designated places to anchor ships at Los Angeles and Long Beach. Some arriving vessels are having to navigate around the idled tankers, but Louttit says the anchored ships are off to the side of the traffic lanes.