U.S. May Be Heading for a Gasoline Crisis, Petroleum Argus Warns
HOUSTON, Jan. 24 /PRNewswire/ -- The oil industry may be heading for a crisis this spring as refiners are unprepared to meet consumer gasoline demand in the United States, according to Argus Global Markets, the authoritative weekly energy newsletter published by Petroleum Argus. Last week's surge in heating oil prices in New England are only a foretaste of the crisis looming in the gasoline market. Oil prices in the United States have risen to over $30/barrel, their highest levels in almost a decade, and heating oil prices have soared as frigid temperatures sweep across the northeast. The oil industry has been drained of product stocks by Opec's prolonged cuts in oil production and was ill-prepared for the unexpected surge in winter demand. But last week was just a hint of an even deeper crisis that looms over gasoline, Argus Global Markets warns in its lead editorial. U.S. and European gasoline stocks are at their lowest levels of the past decade. The industry has little capacity to supply much more gasoline, particularly with crude stocks depleted and distillate demand high. Runaway prices for gasoline will affect almost everyone in the U.S. Petroleum Argus notes that in an election year, this could mean political uproar. Spot gasoline prices in the U.S. are already as high as in 1996, when President Clinton speeded up a draw-down from the Strategic Petroleum Reserve to calm markets and boost his re-election campaign.
Gasoline demand this year will approach 8.5 million barrels per day, 7 percent higher than in 1996, yet stocks are lower, providing less cover. It may already be too late to rebuild stocks in time to cushion peak demand, and this threatens regional shortages and price spikes. The oil crisis will come to a head this year in the U.S. gasoline market, notes Petroleum Argus. Opec seems unaware of the danger, because it is watching the wrong end of the supply chain. When the crisis hits, it will be too late for oil producers or refiners to do much about it. Opec will lose credibility. But oil companies will receive most of the flak from consumers and regulators. In the end, the whole industry relies on consumers. To arouse their anger is commercially reckless and politically inept. |
