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Oil storage tanks in Carson, California, on Saturday. Photo: Robyn Beck/AFP via Getty Images

There is so much crude oil in the world and so little demand for it that owners of the oil are asking companies storing other liquid products — ranging from ethanol to vegetable oils — if they can rent their tanks.

The big picture: The odd development reveals how the novel coronavirus pandemic is upending the logistics running and feeding America. It’s not easy to convert storage, but it’s likely happening or will happen soon, experts say.

The intrigue: Kip Middendorf, managing director of Wolf Lake Terminals Inc., in Indiana, said he's been approached by owners of oil to use his tanks.

  • "If they're finding a company like ours, they’re scouring the Earth looking for tanks," Middendorf said, noting their company is relatively small.
  • "I have no doubt that a number of companies are repositioning their assets to provide this storage."

By the numbers: Middendorf, who is also chairman of the International Liquid Terminals Association, which represents all these companies, estimates that about 20% of the non-oil storage could be converted to crude oil storage.

  • That equals about 260 million barrels of potential capacity, though it’s not clear how much of this is already under contract for other uses.
  • That's far more than what the Energy Department has at its disposal to lease to companies out of the nation’s Strategic Petroleum Reserve. There’s under 80 million barrels of excess capacity there.

Yes, but: It's not so simple to temporarily fill a tank meant for, say, vegetable oil, with crude oil. Middendorf said he's considering doing it. But it's not clear whether he'd be able to repurpose his tank back to using it for vegetable oil (in his case, this includes soybean and canola).

  • "There’s a whole process to determine if that tank would ever be clean enough to go back into service for food grade products again," Middendorf said.
  • Ultimately, if the price is right (high enough), companies will accept, though Middendorf wouldn’t dish on the prices he’s been offered.
  • "There is a premium for storing crude right now if we were to take the contract. I’m not going to jump into what are the prices," Middendorf said.

The bottom line: This is unlikely to stem a massive supply glut caused by so many of us not driving or flying, but it could make a difference to individual companies.

Go deeper: World locked down and drowning in oil

Go deeper

Ben Geman, author of Generate
Aug 5, 2020 - Energy & Environment

Shale's struggles will persist despite a rise in oil prices

Illustration: Sarah Grillo/Axios

WTI, the benchmark U.S. oil future, traded Wednesday morning at its highest since early March — highlighting how the worst of shale's crisis is seemingly over, though more bankruptcies likely lie ahead.

Why it matters: Its price at the time — $43 — is still too low for many producers to do well, though it varies from company to company.

50 mins ago - Health

U.S. tops 88,000 COVID-19 cases, setting new single-day record

Expand chart
Data: COVID Tracking Project; Chart: Axios Visuals

The United States reported 88,452 new coronavirus cases on Thursday, setting a single-day record, according to data from the COVID Tracking Project.

The big picture: The country confirmed 1,049 additional deaths due to the virus, and there are over 46,000 people currently being hospitalized, suggesting the U.S. is experiencing a third wave heading into the winter months.

Updated 2 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Health: Large coronavirus outbreaks leading to high death rates — Coronavirus cases are at an all-time high ahead of Election Day.
  2. Politics: Top HHS spokesperson pitched coronavirus ad campaign as "helping the president" — Space Force's No. 2 general tests positive for coronavirus.
  3. World: Taiwan reaches a record 200 days with no local coronavirus cases.
  4. Sports: MLB to investigate Dodgers player who joined celebration after positive COVID test.
  5. 🎧Podcast: The vaccine race turns toward nationalism.

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