PANIC DRIVES UP GAS PRICESFriday, May 14, 2021
BY BALFORD HENRY
AS Petrojam's petrol prices continue to rise, the State-run refinery is confirming that the increases are due to the effects of the shutdown of the largest US fuel pipeline network.
According to General Manager Winston Watson, the oil refinery has adequate supplies, so there is no problem in supplying the local market.
“But as you know, our price is linked to the US gulf reference price and so, if you have a shortage in the US, what is going to happen is that the shortage will be reflected in the marketplace. This drives up the price in the US, which affects the prices in Jamaica, because we are part of the same marketing system,” said Watson.
West Texas Intermediate (WTI) crude oil prices showed a jump in prices from US$63.73 per barrel to US$67.98 per barrel.
Petrojam's Gasoline 87 (E-10) has jumped to $147 per gallon, including Special Consumption and ad valorem taxes totalling approximately $50; and gasoline 90 at $151.2387, including $54 per gallon in Special Consumption and ad valorem taxes totalling approximately $55.
US fuel pipeline system, Colonial Pipeline, shut down last Friday after a cyber-attack, prompting concerns about a spike in gasoline and diesel prices ahead of the peak summer driving season.
Colonial Pipeline is a 5,500-mile system which runs between Houston, Texas and Linden, New Jersey, and transports more that 2.5 million barrels of fuel every day. That's about 45 per cent of all fuel consumed on the heavily populated US East Coast.
Colonial Pipeline initiated the restart of pipeline operations on Wednesday, but the company says that it will take several days for the product delivery supply chain to return to normal.
Some markets served by Colonial Pipeline may experience, or continue to experience, intermittent service interruptions during the startup period, Colonial Pipeline warned, adding that it will move as much gasoline, diesel, and jet fuel as is safely possible and will continue to do so until markets return to normal.
“As we initiate our return to service, our primary focus remains safety,” Colonial Pipeline said in a company statement. “As part of this startup process, Colonial will conduct a comprehensive series of pipeline safety assessments in compliance with all Federal pipeline safety requirements,” the company added.
“This is the first step in the restart process and would not have been possible without the around the clock support of Colonial Pipeline's dedicated employees who have worked tirelessly to help us achieve this milestone,” Colonial Pipeline continued.
However, there are other contributors to the panic buying. Gasoline inventories in the Gulf Coast region are estimated at 85 million barrels, or roughly 3.5 billion gallons, well above the five-year average, according to data from the Energy Information Administration. But, despite plentiful supplies, residents are buying gasoline faster than tanker truck companies can refill storage tanks at gas stations, according to the Gas Buddy Outage Tracker.
“There's no shortage of fuel but there's a shortage of drivers,” said Alfonso Arguindegui, chief executive officer of Laredo-based tanker truck company Arguindegui Oil, which serves industrial customers and gas stations in South Texas.
The gasoline panic buying in the US that's been triggered by the pipeline outage has spread to at least one corner of the country ostensibly well-supplied with fuel.
Residents of Brownsville, McAllen and other cities in the Rio Grande Valley of Texas rushed to local gas stations Wednesday. Social media posts showed long lines for fuel in the border communities that echoed scenes witnessed during past hurricanes and the deadly freeze that gripped Texas in February.
The rush to fill up was almost certainly unnecessary. The region is hundreds of miles away from areas affected by the loss flows on Colonial Pipeline, which as of Wednesday evening had restarted following an earlier ransomware attack.
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