Tag Archives: Panama Canal

What a Thing to See

1 Reply

Who would have guessed that the voters of America would elect someone like Trump- twice? Now this guy is saying that he wants to rename the Gulf of Mexico to the Gulf of America or something similar. He is also making a lot of noise about annexing Canada as the 51st state, taking back the Panama Canal, and “buying” Greenland. His rationale is that it is for ‘national security’. He and his top supporters seem very positive about Vlad Putin and Victor Orban, but down on the EU and NATO. The nut wants to halt aid to Ukraine in its defense from Putin’s Special Military Operation. Does he see the importance of stopping Putin? I don’t think he cares.

Writer Tony Schwartz who “co-wrote” the 1987 memoir Trump: The Art of the Deal published in a 2016 article by Jane Mayer said that that-

“I put lipstick on a pig,” he said. “I feel a deep sense of remorse that I contributed to presenting Trump in a way that brought him wider attention and made him more appealing than he is.” He went on, “I genuinely believe that if Trump wins and gets the nuclear codes there is an excellent possibility it will lead to the end of civilization.” The Atlantic, Donald Trump’s Ghostwriter Tells All, Jane Mayer, July 18, 2016.

Some are speculating that a change in the world order is in the offing, so perhaps Trump wants in on it. Both Russia and China have expressed their desire to relieve the US of its hegemony role in the world. Whatever it is that Trump is planning, his words are suggestive of his past job as a real estate developer looking for property to acquire. He is renowned for a tough bargaining stance and his business history has shown that standing tough and using lawyers as battering rams is key to his success.

The explanation I’m left with when writing to an international audience is that half the adult population of the US is considerably less educated than many of us understood. While many of us were trying to achieve and grow in the 21st century, a great many citizens were decades behind and woefully undereducated for the times. Millions of people didn’t realize that a 12th grade education wouldn’t be nearly enough to weather the times and grow with civilization. They placed their bets on physical labor as a lifestyle and not even training for one of the better trades. Whereas low paying jobs may have been sufficient at one time for getting by, the cost of living in all of its dimensions inflated beyond them.

Many citizens in the MAGA population find themselves near or at retirement age with little savings after a hard life of low paying work. Add the high cost of American health care later in life and they realize they are cornered. In their minds the promise of American success has excluded them. But it’s not just in their minds. Opportunity sailed by them in the middle of the night with many job descriptions that required knowledge and skills they didn’t know they needed. They were toiling to stay afloat and unaware of the opportunities that further education or training could bring. Many are now deeply resentful of those more educated or just luckier people who found a greater piece of prosperity in changing times. Trump’s populist message rings true to them.

Passage Slowdown Through the Panama Canal and Some Rerouting at the Suez Canal

Leave a reply

The year 2023 has been a bad year to be a canal user. Between a drought aggravated by El Nino and a shooting war by Houthi terrorists, transit costs and risks have risen steeply.

The two major canals for transoceanic shipping in the world are seeing events affecting their operation which are beyond their control. The Panama Canal is suffering a slowdown in transits due to a drought reducing the water level of Gatun Lake which feeds the canal lock system. The Suez Canal is being affected by hostile Iranian-backed Houthis in Yemen threatening shipping in and out of Israel moving through the Red Sea. They claim to be after ships to and from Israel, but it doesn’t appear that their target identification is very good.

The Suez Canal does not use locks so it can pass more ships per day. While the Panama Canal suffers from drought limiting its throughput, the Suez Canal has no new physical impediments. It is affected by ship operators who elect to bypass the Houthi threat by going around the Cape of Good Hope. Since 17 November, 2023, 55 ships have rerouted around the Cape of Good Hope and 2,128 ships have passed through the Suez Canal according to Reuters.

The Panama Canal auctions-off transit slots on a daily basis. During normal conditions before the drought, there were 36 transits per day. At the start of December, 2023, that rate was at 22 transits per day and the cost of a transit has risen accordingly. As of 15 December, 2023, the transit rate was increased to 24 transits per day through both the Panamax and Neopanamax locks.

The US produces more gasoline than it consumes and most of the excess is exported from the Gulf Coast. For buyers along the Atlantic basin, the US produces the cheapest gasoline. The Gulf Coast also supplies refinery products to the Pacific rim via the Panama Canal.

Within the US, gasoline prices have been low owing to excess inventories. Because of the Panama Canal slowdown, some refineries may have to reduce production to prevent further inventory buildup, potentially resulting in increased prices generally and heating oil in particular.

Panama Canal “slots are prioritized according to highest bid in auction processes, full containers, market and customer rankings,” according to Reuters.

Panama Canal is a Pinch Point for US Energy Shipments

Leave a reply

The continuing drought in Panama has caused the Panama Canal Authority to restrict traffic to smaller and smaller vessels. The critical variable is the draft of the ship. The water in Gatun Lake which feeds the locks is getting shallower with the drought. Traffic is down to 60 % of capacity at present and is expected to drop to 45 % by early next year.

The most affected US traffic are those going between the Gulf of Mexico and Asia-Pacific ports. This has also intensified the bidding war for smaller tankers able to make the Panama Canal transit, increasing transportation rates and lengthening shipping times.

Some companies are opting to send their ships through the more expensive Suez Canal. This adds 10 days to a voyage in some cases.

This transportation bottleneck is also negatively affecting US liquified petroleum gas (LPG) and natural gas liquids (NGL). According to the US Energy Information Agency (USEIA), Asia accounts for 53.8 % of US gas liquids shipments abroad this year at 2.6 million barrels per day. Compounding the problem, vessels carrying gas liquids have lower priority than larger vessels paying larger tolls. Ships can bid to cut in line but the prices are steep, up to $2.5 million for an LNG tanker and $100k to $500k for medium sized tankers.