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Are you ready to pay double at the pump this summer? Because the experts are warning about a huge price spike as fuel inventories continue to shrink, especially as OPEC+ slashed oil production, and the Saudis are telling US short-sellers who are betting prices will fall to “watch out.”
The Energy Information Association expects the price of a barrel of oil to rise almost $10 above the current average, which will have a massive impact on gasoline prices all over the country.
In some states, drivers are already paying over $4.90 per gallon, but the shock could be even bigger as seasonal demands pick up, according to Bloomberg. Adding to the worrying outlook, new research has found that US gas pipelines are at risk of outages and regulators are urging officials to take precautions before a nationwide disruption occurs.
To make things worse, national gasoline inventories dropped for the third straight week to their lowest levels for this time of the year since 2014. Furthermore, total US fuel oil production is on track to decrease this month after output fell last week by the largest amount since February 2022, data from the EIA reveals. Gulf Coast and East Coast refiners have led the decline and produced 15% and 9% less fuel oil so far this month, respectively.
Though a gallon of gas costs less than a year ago, those averages may not hold for much longer. Analysts say prices can double in the near term and put a crimp in people’s budgets. Summer gas produces fewer emissions and is more expensive to produce, whereas cheaper winter gas ignites more easily to start your car in cold temperatures. Warm weather typically draws out more drivers, too, significantly increasing the demand for gas.
“Usually when demand is up, gas prices go up,” said Anlleyn Venegas, spokesperson for the AAA.
When inventories start to dwindle and people notice that prices are rapidly skyrocketing, they tend to hoard fuel before stations run completely dry. That’s what happened in 2021 when Americans witnessed huge lines outside gas stations due to supply disruptions and higher costs. This year, one single extreme weather event left seven states without fuel, according to CBS News, including Virginia and North Carolina, which even declared a state of emergency to prevent the crisis from escalating. More recently, the entire Miamo-Fort Lauderdale area faced massive gasoline outages after a historic storm caused flooding and triggered a wave of panic buying by drivers filling their gas tanks.
More than half of gas stations in the Miami-Fort Lauderdale area were without gasoline Wednesday after flooding from last week’s massive storm caused a wave of panic buying by drivers topping off their gas tanks. And just a few weeks ago, researchers at Carnegie Mellon University published a study in The Electricity Journal that found that US gas pipelines are at risk of facing widespread outages.
They urged US officials to take action before supplies dropped to dangerously low levels. The scientists investigated vulnerabilities at production sites and outage risks at major US stations.
In new research, scientists investigated the vulnerability of power generation to outages at U.S. pipeline compressor stations. They found that at least 10% of such stations are facing serious threats of shortages, and thus are vulnerable to widespread energy supply outages. In the short term, Americans should expect more unpleasant surprises at the pump, and in the longer term, we should all prepare for unprecedented outages and a downturn unlike anything we’ve ever experienced.
Article and video via Epic Economist.