Oil Is Cheap, So Why Isn’t Gas? Ask An Insurer! Img ©
If you want to ask why cheap oil hasn’t made gas cheap, you have to consider all of the other things that go into it, as well. Let’s assume that the exploration and facilities are paid for already, and that refining the oil into gas is a small fixed part of the cost of each gallon of gas, say a few cents. A few more cents to transport the oil to the refinery, and then the gas to the gas station, at another few cents per gallon.
But there are some things behind the scenes that are making it difficult for Iran to bring this new oil to market anywhere in the world, and part of that has to do with the United States.
Oil Is Cheap, So Why Isn’t Gas? Ask An Insurer!
If you were storing your property or transporting it any distance, and that property was at risk of fire or theft, you’d want it to be covered against those risks, right? That’s why you might have Colorado Springs Renters Insurance, to protect the things that you own. You couldn’t afford to replace those things, whether the loss was due to your negligence or to someone else’s malice.
Iran has millions of barrels of oil that they would absolutely love to dump on the world market – even if it depresses the price, it’s still hard currency for them and something of a return to normal international trading in light of the nuclear deal which allowed them to have some sanctions removed.
Even though oil is cheap, they need to transport and store that cheap oil along the way. If something happened to it, they’d want to be made whole for the loss, of course. That’s why they buy insurance for the oil on tanker ships and other modes of transport.
There are companies that would like to insure that oil, including a London syndicate of reinsurance companies that covers the vast majority of oil shipments worldwide. Only about ten percent of the total worldwide coverage is placed by any other group, so you can see that this group is crucial to being able to insure the oil they’d like to ship. With that in mind, there’s a small problem.
The group of reinsurers, International Group of Protection and Indemnity Clubs, is an international firm that does business, well, internationally. They’ve got to play by the rules of each individual jurisdiction in which they offer coverage, and some of that coverage is placed in the United States.
Even in light of the nuclear deal and reduced sanctions against Iran, there are still many kinds of sanctions placed against Iran by the US government that were not included in the deal, or where Congress simply hasn’t gotten around to removing them yet. At this point in time, those sanctions mean that Iran is not able to participate in any transaction which is denominated in US currency. One of the members of the International Group is an American firm. Because they’re part of the risk sharing of the syndicate as a whole, and because dollars are involved in the transactions, the overall group is not able to offer coverage for oil and other goods from Iran.
Interestingly enough, the presence of cheap raw materials or finished goods in one location, but the inability to use or purchase them in another location, is commonly due to similar insurance issues. If one country has a law against doing business with another, and a company based in that first country is involved in the transaction, it won’t be possible.
Insurance isn’t, of course, the only issue preventing the significant cheap oil from Iran being dumped on the U.S. markets. There are other factors there, as well. But if you can’t insure a product, you can’t in good faith ship it because the company or nation that shipped it would have to absorb any losses.
Insurance factors into every aspect of life and business, and it’s an important part of those transactions. You wouldn’t work with a contractor who wasn’t insured against the risk of him damaging your home. You wouldn’t want to drive without insurance, because auto accident losses are both frequent and significant. If you owned land and found oil on it, you wouldn’t extract or ship that oil without insurance against workers compensation risks, environmental risks, transportation risks, third-party liability risks, product liability risks, and a number of other types of coverage. It just isn’t worth doing.
There are possible solutions, including an arrangement that would allow the American portion of the group to default, or not pay, their obligations in the event of a claim as a direct result of the sanctions, without leaving the other members unprotected, but those are still in progress. The ability to get insurance for cheap oil is one of the things that is preventing gas prices from being further depressed. It’s never quite as simple as asking “oil is cheap, so why isn’t gas?”
If an oil tanker full of Iranian oil exploded in a port, there would be millions of dollars of losses, including the ship, the port, the oil itself, and damages to the customer who had purchased and was expecting the oil to arrive. But it’s not just nations who need to be insured against the risk of an unlikely, yet both possible and significant loss.
If you walk down the street with your face buried in your iPhone, and you run straight into someone who’s on crutches because they just had surgery for a torn ACL, you’ll knock them down, exacerbate their existing injury, and probably cause them to need additional surgeries to repair the damage to the fix that was in place before you knocked them down. That could easily run into tens or hundreds of thousands of dollars. Losses like that mean you need personal liability insurance, and that’s best gotten as a part of your Colorado Springs Renters Insurance.
Fortunately, it’s much easier for you to secure renters insurance than to secure coverage for shipping oil across the ocean.
How Easy Is It To Get Renters Insurance?
The national average price of renters insurance is just $187.00, according to the III. That works out to as little as fifteen dollars per month. The vast majority of families can budget renters insurance easily at those prices.
Additionally, it's important to note that renters are at a significantly higher risk of experiencing loss than homeowners. Renters occupy roughly one third of total housing stock in the country, and yet they are fully fifty percent more likely to experience theft than homeowners, according to the Bureau of Justice Statistics.
It only costs a few dollars a month to protect your family, and this cheap renters insurance is a great way to mitigate the additional risks that come with being a renter.
Oil is cheap these days, but insuring oil is not. Fortunately, you only need to insure your personal liability and your possessions. That’s cheap, too. Renters insurance even comes with additional types of coverage, as well such as loss of use to protect you if a covered loss prevents you from using your apartment, and no fault coverage for small injuries suffered by guests in your home. Everyone can afford renters insurance, and it’s something everyone should have, because the risks of going without are just too great.
You can get affordable insurance in Colorado in just one minute! Just call (800)892-4308 or click to get covered - whether you need cheap Colorado Springs renters insurance quotes online or coverage anywhere else!
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