Hunt for Pipeline Space Stimulated by New York Gasoline Supply Crunch
On Monday, November 15, the value for space on the Colonial pipeline’s major line increased by 4 cents per gallon, the highest price ever recorded in the past two years, according to the S&P Global Platts data.
The overwhelmed pipeline which transports fuel from Gulf Coast to the East Coast pinpoints the challenging task President Biden’s administration is facing in tackling the skyrocketing gasoline prices.
The looming fuel shortage crisis has the White House considering tapping the US’s strategic reserves or cutting down crude exports to bring down the fuel prices. However, it’s still unclear whether either decision would have a material impact on fuel prices in cities like New York, which depends heavily on fuel supply from the Gulf Coast and other locations overseas.
Gasoline inventories in the US East Coast are nearing their lowest never experienced in the past seven years, while demand in the highly populated North East rises sharply amid slumping European imports to the fuel-thirsty regions.
According to the data compiled by Bloomberg, the wholesale gasoline prices at New York Harbor have hit their highest at Nymex futures, while the price for the same commodity weakens at the US Gulf Coast. The record-high prices are enough incentives for traders to pay more for line space to transport fuel to New York and take advantage of the soaring prices.
Besides the fuel supply tightness, the dwindling EastCoast refining capacity has made New York dependent on the Colonial Pipeline or European import.
Data from the Energy Information Administration also shows US gasoline prices have soared to their highest in the past two months, while average gasoline imports are near their lowest recorded since March.