When the Colonial Pipeline was hacked, supply and demand for fuel was moved off a consistent slow climb.
We had started to get back into doing things, not just here but across the country and particularly along the heavily populated East Coast that this pipeline serves. The rest of the story is like the 2020 toilet paper fiasco — panic buys happened quickly, there was hoarding, and suddenly we had a shortage.
The price of gas went skyward.
But wait … the pipeline was fixed, right? And it’s been fixed for a while now, right?
So where’s our drop in gas prices?
Where indeed?
The truth lies in that opening paragraph. Supply and demand will always be the driver of prices, be it gasoline or anything else we seemingly can’t get along without. That is economics.
Honestly, though, it looks like our supply friends are enjoying the bump.
While we won’t defend anything for them, it’s entirely possible that to get any amount of fuel over that 10-day shutdown the operators paid quite a bit more than they passed on to consumers. Maybe, maybe not.
At any rate, the pipeline went back to full capacity between May 13 and 17, and it was after that when we got into normal operations.
It’s the second week of June, and over the weekend, a fair number of stations in the region were mere pennies — if any — below where it topped out at during the shortage.
This after the shortage sent prices rising by half a dollar or more.
The summer blend price change is only about 15 cents a gallon. So, no, we’re not buying that as a reason prices remain a bit high.
But we do buy into the economics. We understand the impact of the lockdowns and restrictions on our freedoms from government, plus the government’s handing out of stimulus money and in many cases providing more incentive not to work than to return.
That part alone is an equation that is driving demand for fuel, and for prices to climb. But it is not the full picture.
Consider that during those lockdowns, there was reduced domestic supply. Plus, in February, extreme winter weather disrupted operations along the Gulf Coast.
There’s demand, there’s inventory, and then there’s the spot where price is going to land.
Observers of the industry have reported for a couple of weeks now that fuel demand continues to be the highest post-coronavirus. It keeps resetting a new high. There’s little doubt left anywhere that summer will be busy with many taking to the highway to go places.
Some will go for pleasure, others to catch up with family they haven’t seen in a long time.
On the good side, it’s a sign of normalcy. Things are open, people are moving about, and the markets are responding accordingly.
We simply hope the supply and demand get back in sync sooner rather than later. Nobody wants pain at the pump.
— Champion Media
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June 09, 2021 at 11:34PM
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Equation for fuel pricing is complicated - Laurinburg Exchange
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