I would like to wish everyone a safe and enjoyable Memorial Day weekend. Even though we have so much on our plates right now, we should all take a moment and pause to remember that so many Americans have sacrificed their lives for defending our democracy and the United States of America.
Memorial Day weekend marks the start of the summer driving season. Crude prices jumped much higher this week and my predictions for gasoline prices to rise is starting to happen. OPEC+ has remained very firm to their quotas and show no signs of increasing production. The US crude production is continuing to increase at a predicted clip. But US refining capacity is maxed out. Therefore, with diesel inventories finally getting under control, the spike in gasoline demand might put refiners at a breaking point. I still believe the potential for retail gasoline prices to breach $5/gallon on a national average is possible. The US petroleum industry is in a very scary position. If there are ANY hiccups in refining, prices of gasoline and diesel will skyrocket. There is no spare capacity in any spot market to plug any disruptions to supply. In addition, the EU and Hungary are looking to deal on banning more Russian petroleum products. And China is reopening their economy with discounted crude purchases from Saudi Arabia, UAE, and Iraq. All of these discounted shipments will hurt the ability for the US to import the much needed Middle Eastern crude for the East Coast refiners. Although the FED continues to push for more and more rate increases to tame inflation, the only way I see prices at the pump dropping are a slowdown in the US economy. Although there are over 11M jobs available in the US, over 1M people filed for unemployment last week. Our economy is in a very strange and unknown territory. And now the median price of a home in the US is now 8x the median US household income. The next six months will be very volatile and interesting to watch.
In local news, gasoline cost continues to rise so I expect prices at the pump to go up over the coming week. Diesel prices have remained more stable since coming off from the highs a couple of weeks ago.
Propane prices are actually starting to rise. We are currently delivering propane for the lowest price of the last five months. If you can hold 200 gallons, I would recommend placing an order for a summer fill. You are always better to “cost average” on your propane purchases than take larger one-time gallon purchases during these volatile periods. Our contracts for next heating season should be coming out at some point by the end of June.
As always, if you have any questions, comments, or concerns, please feel free to give us a call.