“Easily Make $104,000” from “Chaos in the Global Shipping Markets on January 1, 2020”

What's the Oil Shock Opportunity teased by Bull and Bust Report?

By Travis Johnson, Stock Gumshoe, November 21, 2019

Christian DeHaemer’s Bull and Bust Report ($99/yr) is out with a pitch about “Chaos in the Global Shipping Markets” that has gotten the attention of a bunch of Gumshoe readers — and it is based on something real that’s happening, so I thought we’d dig in and take a quick look today.

The spiel is, of course, over the top — here’s a bit:

“This probably won’t shock you, but unelected global bureaucrats are about to screw it all up, yet again.

“They have changed the rules and are about to cause unprecedented disruption around the globe.

“The world economy faces an economic crash of horrible proportions, and it will start in just a few months.”

And there’s some really incredible hyperbole here, none of which is anywhere near “mainstream” thinking about this issue…

“A supply shock in what is known as ‘Gasoil’ will cause chaos in the world’s agricultural, trucking, railroad, and shipping industries. As you know, global economic activity is already slowing, but this will push it over the edge.

  • In many parts of the world, trade will simply stop.
  • The cost of food will surge as farmers, unable to pay for fuel, cut back on planting.
  • Raw goods to factories and finished goods to retail stores will slow or stop all together.
  • Vehicle sales will plummet, especially big trucks and SUVs. At least one major U.S. automaker will go under unless bailed out.
  • Millions will lose their jobs and their houses just like in 2008.
  • Divorce, drug addiction, and suicide rates will skyrocket.”

All this because prices might go up for a while? That seems a bit excessive. So what’s the story? More from DeHaemer:

“Years ago, when no one was paying attention, the IMO quietly instituted a new rule that goes into effect in just a few months, on January 1, 2020.

“It will cause a massive spike in gasoil.

“You see, under this new regulation, the big ships that crisscross the world’s oceans, delivering all of the world’s cargo, must stop using a grade of fuel called ‘bunker fuel.'”

That’s true, the IMO is requiring that ships stop burning high-sulfur fuel, because that’s a major contributor to air pollution and has an outsize impact on population areas in coastal areas and near ports. The rule is that ships will have to stop using high-sulfur fuel (3.5%, the previous limit) and begin using fuel that has a sulfur content below 0.5%. That’s a little bit exaggerated, since the average “low quality” fuel used for this is now down to about 2.5%, but it’s still a big change.

And, yes, the change does come on January 1, though it has been in the works for more than a decade… and it has been clear that it can’t be postponed or renegotiated for about six months, though some folks had held out hope that the trade war kerfuffle would cause governments to agree to a postponement. And it might be that parts of the impact are functionally postponed, of course, since this is a global agreement made by treaty, but enforcement is up to individual member countries in their territories and with their fleet, but the major energy and shipping companies and associations have been moving forward with the assumption that the rules will change on January 1, as planned, and they have to be ready.

More hype from the ad:

“Four million barrels of oil a day is a massive amount. It’s more oil than Canada, Iran, or Kuwait produces. There is no way it can be replaced easily, if at all!

“But that’s what must happen unless you want the global economy to come to a dead stop. It’s a truly horrifying scenario.”

I don’t know if “replace easily” is a reasonable criteria, but diesel fuel (“gasoil”, which is used as a benchmark for a lot of similarly-refined fuels) is a huge market — the demand for gasoil has been growing and is somewhere near 30 million barrels/day, so adding some to the demand because shipping has to shift much of their current 4 million barrel use from high-sulfur bottom-of-the-barrel stuff to more refined gasoil will certainly impact prices… but one wouldn’t think it would lead to global poverty and rioting in the streets, particularly since the refineries responsible for production of these fuels have known about the change and the expected demand increase for more than a decade.

Here’s more from the ad:

“IMO 2020 Oil Shock

“Some analysts are calling it the ‘shipping Y2K.’ Others say