Gasoline Prices Surge After Colonial Pipeline Shutdown, East Coast Fuel Shortages Loom

Tyler Durden's picture

Gasoline prices have exploded higher once again this morning - topping the Maginot Line of $2.00 for the first time since July 2015 - following reports that the main conduit for fuel from the Gulf to the East Coast has been shut due to Hurricane Harvey.

Motor fuel prices climbed as much as 6.6 percent in New York, advancing for an eighth session, while crude oil was little changed. Harvey has shuttered about 23 percent of U.S. refining capacity, potentially cutting fuel-making ability to the lowest level since 2008 and depriving the Colonial Pipeline of supplies.

Its operator was forced to shut the main diesel line late Wednesday and planned to halt its gasoline line Thursday, meaning motorists from Maine to Florida may soon see higher prices at the pump.

Colonial, which is the biggest single fuel transporter in the US, shipping more than 2.5m barrels a day on its line - or roughly one in every eight barrels of fuel consumed in the country - said in a statement late on Wednesday that its line carrying diesel and jet fuel would shut on Wednesday evening, followed by its gasoline pipe on Thursday.   

And that sent front-month RBOB above $2...

 

 

Additionaly, WTI prices are lower following news that the strategic petroleum reserve has authorized release of 500,000 barrels of crude to Phillips 66 Lake Charles refinery...

As gasoline surged to a two-year high, U.S. oil prices lost about 4 percent since Harvey made landfall as demand from refiners fell. As Bloomberg notes, this sent cracks -- the premium of the refined fuel over crude -- higher in New York, while the storm also triggered a flurry of trans-Atlantic gasoline trading and disrupted exports of liquefied petroleum gas, causing prices to rise in Asia.

“Harvey is driving cracks to the sky,” said Bjarne Schieldrop, chief commodities analyst at SEB AB in Oslo. “Crude oil prices have declined while oil product prices have increased.”

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spastic_colon's picture

should be good for about 110 dow points.............because <enter reason here>

GotAFriendInBen's picture

because this day ends in the letter "y" and gasoline is kind of yellowish in color?

espirit's picture

Time to short WMT and AMZN.

The_Juggernaut's picture

"Time to short WMT and AMZN."

lmfao!  Good luck with that one.

BritBob's picture

Falklands Oil

By a ruling of the UN, Argentina will extend its maritime platform (Politica Argentina) ; New map of the maritime platform reaffirms the sovereignty of Malvinas with UN endorsement (ElCronista); Argentina enlarges its territory 35%, with a UN endorsement ...(La Capital).To add to this euphoric atmosphere the Argentine Foreign Minister stated, ''This is a historic opportunity for Argentina. We have taken a great step in the demarcation of the outer limit of our continental shelf; the most extensive boundary of Argentina and our border with humanity,'' Foreign Minister Susana Malcorra told La Nacion, which tomorrow will publicly announce the details of this resolution. (Susana Malcorra, quoted by Dinatale M, La Nacion, Argentina, 27 March 2016).

 

But what is the truth...

Argentina's Continental Shelf Claims and The UN CLCA Commission (1 page):-

https://www.academia.edu/33898951/Argentinas_Continental_Shelf_Claims_-The_UN_CLCS_Commission

 

Swampster's picture

KILL WHITEY KILL WHITEY KILL WHITEY!!!!!!!!!!!!!!!!!!!!!!

 

Racist serial killing negro kills 5 white men since 2014...,'nazi jew media silent!

 

http://www.kansascity.com/news/local/crime/article170340652.html

What are the odds the RACIST ANTI-WHITE GLOBALIST NEOCOM ashkeNAZI JEW MEDIA will "forget" to report this news?

DIE- versity.....I'TS THE 'NAZI JEW WAR ON WHITE PEOPLE, AND WHITE COUNTRIES!

bidaskspread's picture

SPR release???? 25% of the Us refining capacity offline..hello..anyone there? Hyperinflationary event coming to a home near you.

LawsofPhysics's picture

Not according to all the shills saying that there is "no demand"...

morons.  With almost 8+ billion people all competing for the finite resources required for a decent standard of living, deflation in the value of any such resource is a fucking myth created by academic eCONomists.

bidaskspread's picture

Makes me want to go out and get an amazon prime account and stick the coming fuel surcharges to them. How is Amazon going to cover that new additional expense btw???

bidaskspread's picture

A fixed annual shipping agreement is going to be covered by volume?

A. Boaty's picture

SPR release won't help if they can't refine it.

bidaskspread's picture

Displacement of import bbls 

A. Boaty's picture

Furthermore, it is unclear what if any benefit the SPR release will do to surging gasoline prices, as the bottleneck is not oil supply but rather refining capacity: as of this moment roughly 20% of US refining is offline as a result of Harvey.

http://www.zerohedge.com/news/2017-08-31/us-releases-500000-barrels-oil-...

duo's picture

Annnnd the media has created a panic in Dallas by saying gas stations are running out, which causes everyone to run out and top off, meaning more stations run out, etc, etc.

MANvsMACHINE's picture

But don't raise that price gas station man because that would make you a gouger!

duo's picture

People are starting to lose their shit.  A soccer mom in a Navigator got into it with another woman in a Mazda 3 who only wanted to buy $10 worth.  I was there to fill up my wife's TDI and there was plenty of diesel.

Tugg McFancy's picture

Bitches fighting in the streets. Every hurricane has a silver lining.

Cloud9.5's picture

I’ve been through this.  The grid down, no AC, hundred percent humidity, and the air feels like a wet blanket.  My hope is you have propane and a grill or camp stove.  Altruism wears thin after a few days.  It may take a month or more before things return to the new normal.

Totally_Disillusioned's picture

So now maybe people may be concerned about Obummer draining the Natl Oil reserves last year?

Schmuck Raker's picture

People on the East Coast deserve higher gas prices.

Maybe that will teach them what happens when you read fake news!

MANvsMACHINE's picture

Hey I'm on the east coast and I read ZH! Does that mean that ZH is fake news? Or are you just lumping me into the retards who live beside me?

LawsofPhysics's picture

Well then, I guess it is a good thing that there is "no demand"...

/s

 

MFL5591's picture

They can all use their fake monopoly money from the stock market manipulation to pay for higher gas prices as the US continues to fund the Arab scum in Saudi.  Papa Bush loves you all!

Magnix's picture

Live in Texas, this is probably my last fill up of our two cars. numerous gas stations ran out of gas like CRAZY!

Farmerz's picture

Thats why I always have a few 5 gallon jugs of gas in the garage.

SillyWabbits's picture

Price gouging bad.

Prices exploding higher good.

Thank You Wall Street!

OutaTime43's picture

Shortages? I grew up in the 70's. Those were REAL shortages. 

Let me know when you start seeing 45 min. lines to get gas and odd vs. even last number license plate rationing. 

RedBaron616's picture

In the 1970s, I lived in a small town in the country. No lines or panic out there.

Mroex's picture

Same here, I remember getting on gas lines at 4am then just making it on time to my 8am first class in college. Had a Dodge Coronet, 8 cyl 318 cu inch engine, don't ask how bad the mileage was.

SweetDoug's picture

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When you stepped on the gas, it must have been like a toilet flushing!

 

OJO

V-V

Xscream's picture

Went 20 cents overnight in Delaware

ChrisDG74's picture

We're 1100 miles from Houston, and pump prices jumped 30 cents yesterday. Expected to go up another 20 Friday or Saturday.

Give Me Some Truth's picture

Low gas prices have been the one factor that's saved many families from running out of funds before the proverbial "next pay check." If gas prices soar and stay much higher expect even lower levels of retail spending and more delinquent credit card bills. And (of course) expect the stock market to surge and gold to crash on (pick one): surging consumer sentiment, rising GDP, falling inflation, plunging unemployment.

Up is down. Bad is good. As long as "they" tell "us" that "everything is just fine, thank you," and the stock market is rising then there's absolutely nothing to worry about. Simply trust your government and trust your mainstream media economic reporting. The only thing that might raise some alarms is if the "safe haven" assets of gold and silver suddenly started to soar (and do not unsoar - see yesterday's price action). But we don't have to worry about this hypothetical "canary in a coal mine" as the government actually does have a proven program for capping and depressing monetary metal prices as needed.  

All the important bases are covered by our benevolent and transparent central planners. Fortunately for all of us reality no longer has to be reality.

adr's picture

Give it a few days and everything will be running back to normal. Remember when the pipeline shut down for maintenance and gas prices jumped $.40?

We didn't run out of gas and there were no shortages. 

There are weeks worth of gasoline in storage right now. Besides every station has gasoline they paid for months ago. This is plain straight forward gouging by corporations and Wall St. 

RBOB should have been below $1 for the past two years, but instead it was faked up to $1.50 so a price shock like this does even more damage. 

The crack spread is bullshit. Was it negative when oil was $24 and RBOB was $1.05? The real crack spread is closer to $1.00 now. RBOB at $2.00 equates to $90 oil. So a temporary supply disruption sends gas to a $90+ WTI spread? 

Fuck Wall St. 

Oh and I'll add that the USA is a net exporter of refined petroleum, so 50% of refining capacity goes towards producing gas for other countries. How about instead of gouging this country we put an export ban on refined petroleum during emergencies like this. Fuck latin America amd Europe. No American should pay a cent more for gas when 50% of what we produce goes somewhere else. 

Give Me Some Truth's picture

Re: Price gouging ...

My late father was a gasoline distributor (jobber) and owned several stations. I can report that he did NOT ever have several months gasoline already paid for or in storage. He paid for replacement fuel every time he had to send his gas trucks to the terminal to get another load. He had some above ground storage tanks but this supply might last two days. He DID raise prices when he knew that the cost of replacing his inventory was going to go through the moon. You would too if you were in that business. If you did not, you would soon be out of business.

Southern Analyst's picture

Logged in to contribute this.

Honestly I'm not sure how this will play out, it is definitely possible that within several days everything will be back to normal.

However when I lived in Chattanooga TN back during the summer of 2008, we had several weeks where all stations were frequently out of fuel at the same time.

When the stations were replenished the owners said they received less supply than under normal circumstances, and too often it was for premium products only.

Prices for premium octane were all above $5.00/gallon in Chattanooga at that time.

http://www.nytimes.com/2008/09/30/us/30gas.html?mcubz=3

The explanation at the time was that gulf refinery capacity was reduced about 20% due to hurricanes Gustav & Ike.

https://www.cbsnews.com/news/southern-gas-shortage-hard-on-drivers/

 

Another thought on the topic of diesel. I worked in trucking during Katrina and truckload pricing went parabolic during the relief effort. Because the market shifted immediately to a consumption market with almost no outbound loads available, most trailers headed away from NOLA empty. Pricing premium for these loads increased to include round-trip cost + margin. The focused relief activity and increased inefficiency impacted local diesel pump prices as well. 

FEMA also paid far above normal market rates for houly detention charges.

There might be a short-term opportunity for carrier and freight broker equities? An analysis of trucking-related equities during the Katrina relief effort might be interesting?

Faeriedust's picture

The Great Famine in Ireland didn't happen because there wasn't any food in the country.  It happened because most of the agricultural production of Ireland -- beef and wheat -- was being exported to London at prices that Irish sharecroppers couldn't afford to pay and leaving them with only potatoes to eat BEFORE the blight hit the potatoes.

This is a normal result of Capitalism and Free Trade.  The rich eat, and the poor starve.  Or the rich drive, and the poor lose the pathetic jobs they had because they can't afford to drive to work.  At some point, either we change the system, or the rich will literally eat the poor.  And then starve, because they can't grow their own food or pump their own oil or do pretty much anything productive.

Cardinal Fang's picture

So what is that smell in Jersey? I always thought it was refineries?

Was Bruce Springsteen lying to us about not getting a job there?

Sounds like aggressive and selective pipeline management

NoWayJose's picture

The guys making the most money will be the ones that can jump off the rocket ship and find a parachute to profit again on the upcoming reversal of this already crowded trade. Others will ride the rocket ship and be on it when it explodes.

Mroex's picture

Maybe I am ignorant of how Gasoline and Diesel is distributed BUT I thought all those smelly refineries in New Jersey supplied NY and also PA. So prices rising , of course the vultures would raise prices if a refinery on Mars was damaged, but shortages, well that to me is pure BULLSHIT, just an excuse to add realism as to why the prices are rising

Blazing in BC's picture

Gas $2/gal?

I think the market will bear $20/gal

Maynard G Krebbs's picture

The fuel that's being sold today is the old inventory....why the price spike? other than PURE PROFIT ! 

sirsmokum's picture

Excuse = cut supply = jack up pricing on things the people absolutly need.  Definition of freedom is to work your way out from under these rocks these crimianls try to put on your back.

NoWayJose's picture

Funny this is happening after a month or more of big weekly drawdowns in crude inventories and huge builds in gasoline inventories... just sayin'

buttmint's picture

....never let a crisis go to waste. The oil oligarchy and Wall Street is buttfucking us all---without lube!

Gee thanks!

SweetDoug's picture

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Canucks in Ontari-ary-ary-O woke up this morning to find the gazoleen, was up 10 cents a litre. That's nearly 40 cents a gallon.

Can you imagine the outrage if this happened in the US?!

The Canucks?! They've been taking it for so long in the exhaust pipes, they don't even feel it anymore.

If only those stupid Canucks had millions of gallons of gas stored all over, eh?

OJO

V-V

ChrisDG74's picture

40 cents? That happens all the time in the Great Lakes region....

dynomutt's picture

What I learned from Sandy is that having a CostCo membership at a time like this in an impacted area is gold.  CostCo gas when the regular stations are running lines and turning out of state plates away, priceless.  Have diesel now, we'll see if food delivery has priority over driving to work...