Energy Supply Chain Extensive Shortages

What happens to a country that doesn’t have enough energy supplies? Well, it seems that we’re about to find that out the hard way. The U.S. energy supply shortage is sparking the worst shortfall of fuels in over 50 years. Most of our refineries are already running at almost full capacity and won’t be able to ramp up operations and the processing of key oil products to meet the rising demand this summer. Fuel prices have already jumped by 40% since the start of the year, and market strategists are alerting that consumers may see another 40% spike by August. A widespread shortage of fuels is threatening to throw this country into disorder, collapse domestic production, send the price of everything that requires transportation through the roof, and result in demand destruction and nationwide rationing of diesel and other oil products as the imbalance between supply and demand continues to grow.

In the U.S., drivers are already feeling the pain of skyrocketing prices at the pump. Since the beginning of 2022, gasoline prices have been soaring nationwide, and today, they broke another shocking record. American motorists are now paying a nationwide average of $4.91 per gallon, according to the latest data provided by AAA. Since January, the national average surged by 40%. It is also well above last year’s level of $3.04 per gallon. Analysts predict that the $5-per-gallon average will become the norm by the Fourth of July holiday as demand is expected to increase even further while supply remains tight.

In fact, according to analysts at JPMorgan, California’s $6-per-gallon average could ripple across the country by the end of the summer. “There is a real risk the price could reach $6+ a gallon by August,” said Natasha Kaneva, the head of global oil and commodities research at JPMorgan, adding that prices could go up by an additional of nearly 40% in the coming months. “With expectations of strong driving demand, US retail price could surge another 37% by August,” the expert forecasted. “The only way that gas doesn’t reach $6 per gallon is if demand drops due to the sky-high prices,” JPMorgan analysts wrote in a separate report.

The worst part is that even though most consumers are already struggling with the rising cost of filling up their car tanks, what they really should be worried about is the price of diesel. The entire U.S. economy runs on diesel. Diesel prices reach another record today of $5.68 per gallon, marking the highest level they’ve ever been in the U.S. since the government began tracking them, and prices will likely go even higher this summer not only because of the demand but also because forecasters are predicting that this year will see an above-average number of hurricanes, which can idle refineries for days.
This means that just about everything will become more expensive. Right now, refineries in the Northeast are already running at 95% capacity, and industry executives are warning that the only option to keep diesel supplies from completely running out this summer is a nationwide ration of the fuel. Apart from that, for prices to finally go down, the economy will likely have to go through what economists call demand destruction, which is when the price of something gets so high that people stop buying it because they can’t afford it anymore.
That consequently leads to less demand and more supply, and ultimately, lower prices. There are already signs that demand destruction is happening, and in some parts of the Northeast, diesel rationing has already begun. Unfortunately, it’s only a matter of time before these issues hit national proportions, and as drivers, truckers, and ocean carriers start to rush for more energy supplies, chaos will soon descend upon America – again.

Video Credited to: https://youtu.be/13TfWA8uCMc