Tankers and Tycoons | 60 Minutes Archive
In a Nutshell
Post-Six-Day War Suez closure in 1971 forced oil tankers to take longer routes around the Cape of Good Hope, skyrocketing freight rates (e.g., Worldscale 200 for a 250,000-tonner yielding $4 million profit per two-month voyage) and enriching tycoons like Daniel Ludwig, Aristotle Onassis, Stavros Niarchos, and Norwegian Rexton, who turned calculated risks on spot charters into fortunes of hundreds of millions. A $36 million Rotterdam-built tanker could recoup costs in under two years, carry New York state's daily oil needs, and earn 3-10 times its price over a decade, fueling a secretive London-centered industry of high-stakes gambling on oil demand. Amid booming Oman oil ops and grueling crew life aboard automated "supertankers," these massive vessels—prone to collisions, explosions, and pollution—maximized tycoon profits at escalating risks.
These notes were generated by AI and may contain inaccuracies.
The oil tanker is the single most remarkable money-making instrument in the world. Since the Six-Day War four years ago, tanker profits have skyrocketed. Tanker tycoons, a small secretive band of high-stakes gamblers, contemplate a golden future of more oil, more tankers, more money. The world's appetite for oil shows no signs of slacking off, and the only way to get oil from foreign fields to consumers is by tanker.
Cold and rainy day before spring in Rotterdam. A big ungainly money-maker slides down the ways, carrying a quarter of a million tons of oil. Cost $36 million to build. If the market holds, owners can earn back $36 million in less than 2 years. Built with 300,000 tons of steel by 150 men over 8 months. May live 10-15 years, earning 3-4-5-10 times her cost. Half the size of half-million ton jumbo tankers building in Japan. Carries enough crude oil to power the entire state of New York for one full day.
This vessel flies the Liberia flag (Stars and Stripes) for tax convenience and avoidance. Tanker tycoons are greedy, of assorted nationalities. London is the true center of the tanker business, where money is managed, contracts negotiated, most ship owners have offices.
Tanker shipping has its own rules and mystique, depending on secrecy and trust. Owners and oil companies deal through a broker who takes a percentage from both sides.
Broker John Graham: The profits involved are enormous. Today's rate from the Persian Gulf is approximately worldscale 200. For a 250,000-tonner free of commitments, an oil company pays gross freight of about $5 million. Costs $1 million to take the ship to Rotterdam. In two months, owner makes $4 million profit on an investment of perhaps $15 million. High-risk business, like roulette: if wrong, very wrong; if right, hit the jackpot.
Worldscale and tanker fixing are basic terms. Owners can charter long-term for modest profit or gamble on spot charters (single voyage) for high stakes like $4 million per voyage. Gamble: if supply exceeds demand, rates drop, profits fall, or ship idles at anchor with costs mounting. Tanker shipping is waterborne roulette where supply/demand spins the wheel and world politics stops the ball.
Before Six-Day War, Suez Canal open to small tankers; shorter routes, lower freight rates. Now, 30 days from Persian Gulf to Europe around Cape of Good Hope, 40 days to United States. Longer transport means more money for tanker tycoons. Business is savage as profits are high. Survivors are tough, play all-or-nothing, chary of publicity.
Daniel Lugwig (likely Ludwig), world's leading ship owner, only American in the big time. Greeks: Aristotle Onassis (second to Ludwig), Stavros Niarchos (former brother-in-law). All unavailable for interviews.
Norwegian ship owner in small village outside Bergen, Norway: 72-year-old Rexton (likely Ravnkilde or similar, but per transcript), legend of tanker business. Broke or bankrupt before Six-Day War; reportedly made $600 million in last 4 years. Admired but called tough buzzard, hard master.
Rexton: No, I'm not a poor man. I'm a very rich man, but mostly on paper. ... A billion? Dollars? That's nonsense.
Reputation of number one gambler: I'm not gambling but taking calculated risks based on judgment of economic and political developments, demand for oil this year or next, then build ships to satisfy that demand. Not fixed charters for years at fixed rate where you feel safe but may be wrong.
Colatronis (Greek tanker owner): Had not one ship 6 years ago; now runs fleet bigger than many national navies, profits more than fair.
Margin of profit very important: rates at 270, expenses same, lots of money per voyage. For tanker Dynamic, on spot market, profit 700-800%.
Muscat, capital of Sultanate of Oman, far end of Arabian Peninsula, vital for tankers. Most population illiterate, primitive. Under rock and sand: billions of barrels of oil. Oil propels country from Middle Ages to 20th century. Economy fueled entirely by petroleum carried by tankers to Europe, America, Japan.
Oil from Faulwood fields near Saudi Arabian frontier. Provides income to tribesmen, modern skills. Flow computerized to avoid delaying waiting tankers (hours of waiting cost tens of thousands). 185 miles pipeline by gravity to coast; royalties to Sultan of Oman escalate.
Colatronis' Dynamic takes full month back to Antwerp.
Captain and 37-man crew spend less than 2 weeks a year on dry land. Round trips from oil field to consumer. Life deadly dull, like benign prison or monastery: no women, no family, infrequent mail. Routine running leaves little to do. Average pay $300 monthly; save year's salary for down payment on land/house in Greece. After year afloat, reluctant to go to sea. Crews hard to get.
Radio officer's wife is only woman on board; officers' wives invited but few join long dollar cruises. Captain more like manager of small business, keeping books, worrying about details than sea dog. Unattended wheel shows automation of Dynamic.
Sail amid boredom on potentially explosive bomb. Young men ignore danger.
Captain/owner Colatronis: For crew, very dangerous, hazardous occupation. Most not fully aware of cargo value or freight. Realize negligence could be catastrophic for owner.
To minimize costs/maximize profits, owners order larger, more sophisticated tankers like horizontal skyscrapers. At full speed, need 8-9 miles to stop. Daily in news: collide, explode, pollute. Called oil-leaking time bombs. Bigger they get, more dangerous and more money for tycoons.
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