Colonial Pipeline Shut Down

The Colonial Pipeline has been shut down since Friday, May 7th after a cybersecurity attack.  It is the largest fuel pipeline in the United States that runs from Texas to New Jersey and transports roughly forty-five percent of the East Coast’s fuel supply.  Colonial transports 2.5 million barrels per day of gasoline, diesel, jet fuel and other refined products through 5,500 miles of pipeline.  The pipeline connects refineries from the Gulf Coast to more than fifty million people in the South and East.

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Will Pennsylvania Raise Gas Taxes Again? Update

Last December I wrote about the proposed Transportation and Climate Initiative (TCI), which would require wholesalers of gasoline and diesel in participating states to buy carbon credits to sell their fuel.  As a result of the COVID-19 pandemic, the TCI jurisdictions have adjusted their timeline for developing the program, and a final Memorandum of Understanding is now expected in the fall of 2020.  TCI notes that work on the program details will continue, as will engagement with stakeholders.

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The Squeeze is On

The thinly traded holiday gasoline market bottomed out on December 24th with a NYMEX low of $1.2352 per gallon. Here we are a few days into the New Year trading at a high of $1.4146. Here’s what happened to push prices higher.

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Who Wants to Blink First and Raise Prices?

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On May 22nd we were hoping for a market correction prior to the holiday weekend. On that day the front month NYMEX RBOB contract settled at $2.2636. Climbing from May 2nd, close @ $2.0803. A whooping $0.18 price move inflicting severe pain on your local gas station distributor leaving retail gasoline margins negative in some markets and begging the question, who wants to blink first and raise prices?

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Say “High” to Summer Gas Prices

Gas prices are rising to record levels as the summer travel season is upon us. With higher gas prices, “the EIA says the average U.S. household will spend an additional $190 to keep their cars’ gas tanks filled this summer.”[1] As evidenced in 2008, when gas prices rise, consumers start to change their buying behavior. Currently, American consumers are not seeing the $4 per gallon levels of 2008 but will make small changes in their lifestyles to compensate for the increased prices. Some consumers will cancel their summer vacations, but economists expect to see smaller, less drastic changes in discretionary spending. For instance, when a consumer pays more at the gas pump, they would be less likely to purchase items in convenience stores.

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