‘End of the oil age’: Expert warns of summer fuel shortage

JIMMIE JOHNSON: FUEL PRICES ACROSS THE U-S CONTINUE TO CLIMB, BUT THAT’S NOT STOPPING AMERICANS FROM TRAVELING. THE CURRENT TRAJECTORY HAS ENERGY EXPERTS SOUNDING THE ALARM ABOUT A POTENTIAL GAS, DIESEL AND JET FUEL SHORTAGE THIS SUMMER. LET ME EXPLAIN. 

PAUL SANKEY: “Much lower refining capacity against strong demand is the fundamental problem, and it’s more related to that than it is to a very high price of crude oil.”

JOHNSON: PAUL SANKEY IS THE LEAD ANALYST AT SANKEY RESEARCH.

SANKEY SAYS THE ISSUE IS THREEFOLD – A STRONG DEMAND POST-PANDEMIC FOLLOWING A LULL IN TRAVEL, LOWER REFINING CAPACITY AND THE HIGH PRICE OF CRUDE OIL. 

SANKEY: “Refiners are struggling to know what to do because essentially, the diesel prices are so high that they’re making extra diesel, but that’s actually tightening the gasoline supply” 

JOHNSON: ON TOP OF THAT, SANKEY SAYS THE U-S HAS WITNESSED SEVERAL REFINERY CLOSURES DUE TO EXPLOSIONS, WEATHER DAMAGES AND ENVIRONMENTAL CONCERNS. 

BETWEEN 2020 AND 2021 ALONE, REFINERY CAPACITY FELL 4.5 PERCENT TO 17.7 MILLION BARRELS PER DAY, THE LOWEST SINCE 20-13.  

SANKEY: “Companies have been reluctant to put major investment into upgrading refineries because of the risk associated that everyone’s talking about, which is kind of the end of the oil age.”

THE OIL CRUNCH DOESN’T JUST STOP THERE. 

RUSSIA, THE SECOND-LARGEST OIL PRODUCER WORLDWIDE, IS NO LONGER EXPORTING ITS PRODUCTS TO THE U-S. 

JOHNSON: “So, do you see there being a scenario this summer where I pull up to a gas station, or many people pull up to gas stations across this country and can’t get gasoline or diesel?”

SANKEY: “Yes, because you could get a major hurricane season that would shut down the US refining system on the Gulf Coast, you could get a major accident, hopefully not.”

JOHNSON: AND THIS WOULDN’T JUST IMPACT GASOLINE AND DIESEL. THOSE SUMMER FLIGHTS YOU ALREADY BOOKED COULD ALSO BE IN JEOPARDY. 

SANKEY: “I mean, we haven’t seen a full resumption of jet fuel demand globally.”

JOHNSON: WILL A FUEL SHORTAGE CHANGE YOUR APPROACH TO SUMMER TRAVEL? 

LET ME KNOW IN THE COMMENTS BELOW!