Will Gasoline Supply Keep Up with the 2021 Driving Season?

Last December when the Pfizer and Moderna COVID-19 vaccines were issued emergency use authorization by the U.S. Food and Drug Administration (FDA), many of us thought the summer of 2021 was going to be an explosive driving season. That is certainly shaping up to be the case and fuel supply is struggling to keep up with demand.

For the upcoming Memorial Day weekend, one of the most traveled weekends of the year, the Reporter reports, “AAA forecasts 37 million people will travel at least 50 miles or more from home. That is a 60% increase over last year when only 23 million people traveled – the lowest on record since AAA began tracking travel in 2000.” This heavily traveled weekend will come roughly three weeks after the Colonial pipeline shut down due to a ransomware attack. There were over 11,000 gas stations ranging from Texas to Maryland reported being out of gasoline as a result. Therefore, fuel suppliers were working off low inventories and now in need to catch stations up to their normal levels, particularly to prepare for travel which begins tomorrow.

Not only were suppliers limited, but now that fuel has returned, there continues to be a driver shortage. Everyone knows by now no matter what supply chain business you’re in that involves freight-hauling, there is a nation-wide truck driver shortage, caused by the economy being in a recession in 2020 due to COVID-19. Now that nearly half of adult Americans are vaccinated, we’re in the midst of an economic boom and it’s difficult to keep up with demand for goods. Currently in the fuels industry, it is becoming more important for companies to focus their efforts on hiring and retaining drivers more so than buying fuel at the best possible prices.

Another important component of gasoline is ethanol. It is mandated by the EPA that at least 10% of gasoline in your car must have ethanol in order to subsidize the corn industry. As a result of the economic boom, the agricultural industry is struggling to keep up with demand as well. Just three weeks ago, corn futures prices rallied the most since 1973. Prices have come off since then, but it reflects not only the spike in demand for food products, but also for ethanol (a byproduct of corn) since inventory levels remain about 12% below historical levels.

https://www.thereporteronline.com/business/aaa-travel-rebound-expected-over-memorial-day-weekend/article_baa64e9d-505f-5fa1-8c50-ba8a2acd4472.html

Written by:

I enjoy helping our customers understand the commodity markets and pricing solutions we can offer to best fit their business. My supply and trading experience in gasoline and distillate products allow me to provide a comprehensive view of our industry to make our customers feel comfortable with their fuel-related decisions.

Guttman Energy Daily Market Update Disclaimer – The information contained in this market update is derived from sources believed to be reliable; however this update could include technical inaccuracies or typographical errors and Guttman Energy does not guarantee the accuracy, completeness or reliability of this update. FURTHERMORE, THIS UPDATE IS PROVIDED “AS IS,” WHERE IS, WITH ALL FAULTS AND WITHOUT ANY WARRANTY OR CONDITION OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY. GUTTMAN ENERGY ALSO SPECIFICALLY DISCLAIMS ALL EXPRESS AND IMPLIED WARRANTIES. YOU USE THIS UPDATE AT YOUR SOLE RISK. This update and any view or comment expressed herein are provided for informational purposes only and should not be interpreted in any way as recommendation or inducement to buy or sell products, commodity futures or options contracts.