Oil prices are back to the top of their recent range, with WTI crude pushing higher into the $66/bbl range. Fuel prices are also elevated: diesel has traded above $2/gal for the past week, and gasoline has cost more than $2/gal for a full month. With Memorial Day weekend – the kickoff for summer driving season – around the corner, don’t expect any relief from high prices in the near future.
Moreover, analysts are expressing concern that gasoline supplies could tighten over the next few weeks. Starting in June, the US will experience its peak season for gasoline demand, which in some regions will begin with the lowest inventory levels in almost 30 years. According to Mansfield’s SVP Supply, Andy Milton, “Convenience-store chains are going to really struggle to keep everything at adequate levels.” This shows to be groundbreaking news, as inventory levels this low are usually only seen after a large hurricane knocks out refineries around Texas and Louisiana.
With the nation already vulnerable from the recent Colonial Pipeline (CPL) cyberattack and the recovering economy from COVID-19, the effects may be greater than initially anticipated. According to Milton, gasoline supply and demand has not been this foreboding since Hurricane Katrina back in 2005. The above-average Atlantic storm season starting June 1 will be a significant problem for distribution this year, with many companies stockpiling fuel in Florida to combat the ever-growing hurricane shortage threat.
Over the past few days, fossil fuel companies have been dealt a few severe blows. Activist investors at Exxon and Chevron are voting to require the fuel giants take more responsibility for their emissions. Shell was sued in a Dutch court, and the court ruled that Shell must reduce emissions faster to comply with the Paris Climate Accord. These reports are just a glimpse of the actions being demanded by shareholders as the global economy pushes the energy sector to eliminate fossil fuels altogether. Investors have said that oil companies have “failed” to keep up with the evolving world, which could cause harmful effects on climate change. These rulings and votes are just the beginning of a massive movement for the world to evolve to renewable energy sources.