Latest Fuel Supply Crisis Hits US East Coast as Stockpiles Hit Their Lowest Since 2007
© AP Photo / Ted S. WarrenPetrol prices have fallen below £1 in UK and below US$2 in the United States
© AP Photo / Ted S. Warren
A recent poll found that 80% of Americans considered inflation to be one of the most important issues determining their midterm election decisions. Inflation is the highest it's been since the 1980s, and with more Federal Reserve hikes expected before year’s end, higher fuel prices are due to translate to tension at the polls.
According to a report released by the Energy Information Administration, the US East Coast’s gasoline stockpiles are the lowest they’ve been since 2007.
Experts claim that difficulties moving fuel from the Gulf Coast refining hub to consumer centers on the East Coast make exporting the fuel to other countries a more profitable act for companies to take, resulting in shippers raking in more money by sending fuel overseas instead of supplying domestic markets. Last week, for instance, the US exported a record amount of crude oil and fuel, while some East Coast terminals are rationing gas or running out entirely.
According to TAC Energy, a fuel distributor based out of Dallas, Texas, the supply delays for the empty fuel terminals is the result of “more short squeeze caused by a variety of disruptions in supply, rather than an expectation of strong gasoline demand.”
In the stock market, a short squeeze is a quick increase in the price of a stock that occurs when demand can’t meet supply – in this case, causing the prompt-month gasoline spread to surge more than 30 cents on Tuesday, echoing the recent market shift present on the West Coast with the ongoing diesel shortage. In other words, sellers are incentivised to sell their stocks now instead of shoring up their inventories.
The resulting low inventories ahead of the winter season – and the midterm elections – have been a point of conversation for the Biden administration, which has flirted with the idea of limiting the amount of fuel shippers can export out of the country in an attempt to bolster supplies in the states. If the Biden administration manages to do this, it could save US consumers up to 5 billion dollars in fuel costs, according to reports.
The US generally relies on Europe for fuel imports during uncertain markets, but Europe hasn’t been sending as much fuel recently due to their own ongoing energy crisis.
As Americans head to the voting booths in early November, the cost of fuel could very well be the issue deciding whether or not the Democrats maintain control over Congress, especially as fuel costs in key swing states are being strongly tied to Democrat approval ratings.
Diesel prices in the US are nearly 50% higher than they were at this time last year. The price is surging due to low stockpile levels and a limited ability for companies to improve their supply.