On Tuesday, Bloomberg reported that due to the EU’s ban on petroleum products from Russia, the eastern states in the United States may face gasoline shortages over the summer.
The outlet reported that US seasonal gasoline stores are presently sitting at the lowest levels seen in a decade. Making matters worse is that the routine maintenance of oil refineries during winter months has lowered outputs, which is further depleting the already lower reserves.
The report went on to point out that despite being a net-exporter of gasoline, the US infrastructure is designed to produce a surplus of gas along the Gulf coast for export, while the east coast, lacking the pipeline infrastructure for cheap delivery, actually relies on gasoline imports from Europe traditionally, especially during peak demand periods in the summer. As a result, the east coast is set up with extensive infrastructure to receive seaborne shipments, and is not prepared to receive supplies from overland shipments from other parts of the US.
On February 5th, the EU will see a ban on the import of Russian petroleum products take effect, which will limit the supply of gasoline in Europe. Faced with its own shortages, Bloomberg maintained it is likely Europe will choose to limit exports to supply its own consumers, and that will impact the supplies to the US east coast. Bloomberg predicted it would be possible to see a new round of $5 per gallon prices for gasoline at pumps on the eastern seaboard.
Bloomberg noted companies would have to look for new fuel sources to avert shortages. One option they cited would be to reroute exports from the Gulf coast to the Caribbean, and then ship those supplies on to the east coast infrastructure. While it might be possible to arrange other shipments from suppliers in Asia or the Middle East, the outlet noted the logistical hurdles might be too great to view such changes as a viable option.
The US has been increasing its purchases from India lately in an effort to make up for diminishing supplies coming from Europe. Kpler analysts have noted that New York has received roughly 89,000 barrels of Indian gasoline and diesel this month. That was the highest shipment volume from India to that destination in four years.
India has been increasing its purchases of Russian crude over the last year, often at deep discounts due to sanctions limiting Russia’s ability to find buyers, and it reportedly is looking to increase its import volumes going forward. Analysts note if the east coast requires additional supplies, India should have the capacity to supply it.
Bloomberg goes on to point out however that since delivery times from India require an entire month, which is three times longer than deliveries from Europe, increasing dependence on that nation may still result in shortages and supply disruptions.
Also there is the issue of the fact the US has sanctioned Russian fuel, and while India is producing the gasoline, the crude feedstock it is using is coming from Russia.
