Good morning everyone!
Happy Friday! Unfortunately I do not have much more to report after the long update last week. Gasoline retail prices have officially blown out higher and surpassed the national average of $5/gallon. Diesel prices are once again flying higher as well due to the tightest market I’ve ever seen. This week, our refinery utilization surpassed 95%, leaving us less than 5% spare capacity in the US. I’ve only witnessed this tight of a market a few times and they were short lived. Crude prices also caught fire and WTI blew through $120/barrel this week. World demand for crude is continuing to hold steady and we just cant’ shift supply needs around fast enough. It’s like Wack-A-Mole! Until demand drops significantly, we are going to be stuck, and unfortunately I see higher prices on the horizon. Major banks thought consumers had about 6-9 months of spending runway left, but now they are revising the call down to 3-6 months. And if crude prices blow out to $150/barrel, the consumers in America will be defeated by end of summer.
Gasoline retail prices are inching ever so closer to $5/gallon in Central Wisconsin. And my call on diesel was way off. I really thought we had diesel under control and gasoline was going to be the rocker ship. But diesel retail prices are inching close to $5.50/gallon in Central Wisconsin. If there is ANY refinery issue in the Chicago Spot market, we could see $6/gallon retail diesel and over $5.50/gallon gasoline. Wowza…
Propane continues to be a dim light of hope. Propane is now 60% cheaper than diesel when comparing BTU’s or available energy. Propane has incredible value compared to natural gas and diesel right now. I highly recommend cost-averaging during these volatile times and filling your propane tank now. We hope to have our contract pricing for next season out in the next few weeks. The numbers are starting to settle out and I’m cautiously optimistic for propane this year. As long as crude production stays at record levels, propane should be able to remain less volatile than it’s neighboring products. And for now, I see NO headwinds for slowing down on crude production. If crude demand slows in the US, there are plenty of other countries that will take our crude and refined products! The more crude production, the more propane!
As always, if you have any questions, comments, or concerns, please feel free to give us a call.
Best regards,
Jon Crawford