Good morning!
Although crude oil prices continue to trade in a narrow range, refined products are just a mess across the United States. The United States continues to export refined products and crude oil to help alleviate the supply disruption from Russian sanctions. But we cannot put enough products into the market fast enough. We did experience a slight reduction in crude prices this week when the United States announced that they would allow a variance in sanctions on Venezuela to allow Chevron to negotiate crude purchases for American refineries. But the relief was short lived due to China announcing plans to reopen the economy. As I have been writing for a while now, we don’t necessarily have a crude oil problem. We have a refining and logistics problem. We don’t have the world capacity to refine product fast enough or move those products to places of need efficiently. And because refiners maxed out refining capacity to make diesel, gasoline is in shorter supply going into a driving season that does not seem to be slowing down. Many believed consumers would change spending habits at these prices. THey are not. Gasoline prices jumped much higher this week on anticipated supply issues. Couple our refined product shortages with the driver shortages, and you will see gas stations running out of fuel this summer. In fact, I would expect all gas stations to run out of fuel at least once this summer if demand stays strong. So if you get to a station while traveling this summer and they are out of gas, go easy on the staff. 🙂 It’s a mess out there folks!
In local news, diesel supplies seem to be finally balancing out from planting season demand push. But gasoline prices out of the Chicago market have rocketed higher. Gasoline retail prices could easily approach $5/gallon in the coming months. So as diesel retail prices come down to earth, gasoline retail prices could shoot to the moon.
Propane prices are now at the lowest price in months. I am starting to suggest customers taking delivery in the coming month or so, or at least 200 gallons if possible. A strategy of “cost average” is the best for the coming year. Do not try and time the market. The volatility is still too extreme to place big bets. Contracts for next heating season will start to come out in June. Stay tuned for more info!
As always, if you have any questions, comments, or concerns, please feel free to give us a call.
Best regards,
Jon Crawford