The first snippet comes from Flashpoint’s Darius Lechtenberger:
“WTI crude oil and refined product prices continue to trade higher and higher with no relief in sight. European Union leaders will agree at a summit in Versailles this week to phase out the EU’s dependency on imports of Russian gas, oil and coal. The group will also discuss enhancing military defense and the potential membership of Ukraine to the EU. The task of eliminating Russian energy will be quite difficult as the EU buys 45% of its imported gas, around a third of its oil and nearly half of its coal from Russia. I anticipate that this will push Russia to weaponize their exports to Europe by retaliating with a decrease or stoppage in energy exports. Also providing price support to energy prices is a rumor that the U.S. may act alone in banning Russian oil imports. Additionally, there are reports of a slowdown in talks between the U.S. and Iran over its nuclear program as Russia negotiators acting on behalf of Iran make new demands associated with Russian trade with Iran. The U.S. is scrambling to find replacements for the heavy, sour Urals crude from Russia in the event Russian crude imports are eliminated and it is leading them to less than desirable trading partners: Venezuela and Saudi Arabia.” – Darius Lechtenberger
This article from the Wall Street Journal talks more about the amount of oil the United States gets from Russia, in addition to the application aspects that Darius shared with us in yesterday’s Buzz. If the United States moves to cut off imports from Russia, it should also consider repealing or amending the very antiquated Jones Act. The Jones act was established in 1920…over 100 years ago…specifies that ships carrying cargo between two American ports must: 1) be built in the United States, 2) be 75 percent owned by U.S. citizens, 3) be 75 percent manned by a U.S. citizen crew, and 4) fly the U.S. flag. There over 300 VLGC’s in the world….Very Large Gas Carriers….and a significant number of those would not meet the archaic requirements of the Jones Act. If the Biden administration is going to cut off oil imports from Russia, it would be wise to kick the Jones Act to the curb. It has been the opinion of many, for a long time, that the Jones Act needs to be scuttled, because it’s no longer feasible in a world that is far more interconnected in current times than in the 1920’s…that seems rather obvious, no?
World leaders continue to put more and more pressure on Russian President Vladimir Putin…but many are wondering if this is only going to cause tensions, and energy values, to increase…where the world should be looking into any way possible to de-escalate tensions, and provide Putin a face-saving off-ramp of some type. Which, considering what he has done in and to Ukraine to this point, is likely a hard ask for many.
WTI closed at $119.40/bbl yesterday and is currently trading north of $127/bbl. Yesterday’s closing averages in Conway and TET were $1.5825 and $1.6200, respectively. Values for both hubs are trading higher today.
The way things are going, we will likely see propane selling for its highest-ever values in March. The last time we saw values this high in March was in 2008, when the Conway monthly average was $1.4650 and TET was $1.4733. Thus far, in March of 2022, Conway’s average is $1.49875 and TET is $1.54150…I fear we will see things get worse before they get better.
US gasoline prices are now at their highest levels since 2008. WTI hit $147.27/bbl in July of 2008, with Brent at $147.50 that same month and year.
If the US moves to halt oil imports from Russia….WTI is going to go higher and fuel prices will follow. Gas surcharges that propane retailers will be facing could rise to as much as 50% of the base freight rate, if not higher, soon.
Jon Miller of Flashpoint Energy Partners and The Propane Buzz recorded a four-minute video to discuss some possible communication strategies propane retailers might consider using during this challenging price environment, with the hopes of controlling the narrative with your customer base and putting your business in the best position possible despite the chaos going on around us…and potentially more chaos as we move forward. Click on this link, or click on the image below: