In my last two articles, I wrote about how the shipping industry might benefit from a free trade agreement between Europe and the U.S., as well as from the expansion of the Panama Canal. In addition to saving on fuel from a shorter route through an expanded Panama Canal, shipping companies may benefit from low oil prices.

Husky Energy Pumpjack in Alberta, Canada. Source: Husky Energy

Increased oil production in North America could help lower fuel costs for shipping companies. One company that could benefit from lower oil prices is Star Bulk Carriers (SBLK 0.08%). Its 2013 revenue was $86 million, and its cost of revenue was $46.5 million; it still suffered a net loss due to other expenses. If you are looking for dividends from this company, you will have to wait. Under the terms of its financing agreement, it is prohibited from paying dividends until after Dec. 31, 2014.

Another shipping company that suffered losses in 2013 is Diana Shipping (DSX -3.44%), which earned $164 million in 2013, with cost of revenue being $85 million. Like Star Bulk, it also suffered a net loss due to other expenses, not the cost of fuel. It earned 40% of its 2012 revenue from just three companies that chartered its ships, which means the loss of just one customer could have a serious impact on its bottom line. However, in 2011 it depended on three companies for 41% of its revenue, and 44% in 2010, so that risk has been reduced somewhat. In 2008, its board voted to suspend dividend payments and has yet to start paying dividends again.

Canada continues to produce more oil. Canada has the third-largest proven oil reserves in the world, and its Saskatchewan province set a record last year, producing 177.9 million barrels of oil. Husky Energy (HUSKF) recently announced plans to drill for oil in two areas of the Saskatchewan, which should produce a total of 20,000 barrels per day. The sites are expected to start producing oil in 2016.

United States
The U.S. continues to produce more oil. According to the International Energy Agency, U.S. oil production increased by 992,000 barrels a day last year, reaching 7.5 million barrels of oil a day. And, last October, the U.S. produced more oil than it imported, which hasn't happened since 1995.

According to the U.S. Department of Energy, Mexican oil production declined from 2004 to 2009. Part of the reason for this is that Mexico's state-owned oil company Pemex has had a monopoly on oil production in Mexico for 75 years. Last December, however, Mexico agreed to let private companies in to drill for oil. Russian oil company Lukoil just signed an agreement with Pemex to explore and drill for oil in Mexico.

The increased oil production should help shipping companies cut costs, although one already has its costs under control. Navios Maritime Partners (NYSE: NMM) had revenue of $198 million in 2013, and its cost of revenue was $15 million. It is the only one of the three companies to pay dividends; it has payed regular quarterly dividends since 2008. While it is in less need of lower fuel costs, it should still benefit from them.

Location, location, location
The amount of oil produced is one factor in oil prices; where it is produced is another. North America is a much more stable region than the Middle East, which should reduce the chances of oil prices spiking due to a military conflict. As fuel expense represents 45% to 50% of a ship's operating expense, lower oil prices could save shipping companies a lot of money.

One of the ways shipping companies save on fuel is called "slow steaming," which simply means sailing the ships more slowly to save fuel. If lower fuel prices cause more ships to sail at full speed, it could reduce demand for shipping as more goods could be transported annually with fewer ships. Another risk is that the increased oil production in the U.S. may be short-lived. In Nov. 2013, the International Energy Agency predicted that the U.S. would become the world's top oil producer in 2016, but for only four years.