Why Do We Have To Suffer From Fuel Shortage?
The fuel shortage has plagued every nation in 2022 and this has caused many people to abandon their cars. The huge hike in fuel prices across the world is a thing of concern for people. This is because the number of vehicles that use fuel is higher than the number of electrical vehicles. Without fuel, millions of cars across the globe cannot start, meaning that people won’t have means of transport.
They’d have to rely on public transport, and given the large population, this can be a problem. Car owners in the US are already bemoaning the costly fuel prices across the states. For so many months now, several Americans have parked their cars because they couldn’t afford to fuel their vehicles. Both gas and diesel are affected, and it seems that neither will have a price decrease anytime soon.
What could have caused the price hike and scarcity of fuel? This article will shed some light on it. We accept guest posts similar to this fuel shortage article from our readers.
How Fuel Price Has Caused Fuel Shortage
Last year, the average price of diesel sold in the US was 3.18 dollars per gallon. While for gas, it is sold for 3.04 dollars per gallon. The average price of diesel sold in the US this year is 5.56 dollars per gallon. While for gas, it is sold for 4.59 dollars per gallon.
If we compare the fuel prices this year to last year, we can see a significant difference. Furthermore, energy experts have predicted a further increase in fuel prices due to an imbalance in demand and supply.
At the end of June, the price of gas slightly went down by 0.05 dollars. The price decrease made people optimistic, but cautious because the decrease wasn’t much.
The fuel hike and scarcity have affected other sectors in America. Rising oil prices could affect thousands of products. For example, automobile dealers have said that car prices have gone up.
What Increased The Price of Fuel?
Why are oil prices so high? The price increase is due to:
There are many contributing factors to the increase and scarcity of fuel. Among them is the 2019/2020 pandemic that swept across the world. US residents couldn’t travel, work, visit, or relax outdoors due to the lockdowns. Due to this, there was less demand for fuels like aircraft fuel, diesel, and gas.
Increase In Crude Oil Price
Another major factor is that crude oil prices increased, which in turn affected its by-product. Crude oil is a raw material, and diesel, gas, and kerosene are refined from it. Therefore, if crude oil price increases, the prices of these commodities will increase. In addition, if there is a low supply of crude oil, there’ll be diesel and fuel shortages. This fact is also backed up by the United States Energy board in May. The board said that crude oil is responsible for the fifty-nine percent increase in gas prices this year. This is a five percent increase from last year’s gas price.
In the same vein, oil traders and buyers are also affected by fuel hikes and scarcity.
The traders are worried about the unstable oil price, which they attributed to an imbalance between demand and supply.
Fuel Supply Is Less Than Demand
There was less oil supply but high demand this year, which led to a gradual rise in oil prices. Oil refineries were not so quick to refine much oil due to less demand during COVID-19. Because of less demand, there was excess oil which was later wasted and caused the refineries to lose millions. At the end of the pandemic, oil refineries stopped producing excess oil. Once the lockdown ended, people traveled more and many automobiles were back on the road. This means that the demand for fuel suddenly increased. However, this posed a big problem because there was a gas and fuel shortage. Oil refineries were not well-prepared in time to meet the sudden demand. At the end of the day, there was too much demand for fuel, but less production and supply of fuel.
Another contributing factor is the Russian-Ukrainian war because these two countries export crude oil to other countries. Since the start of the war, oil exportation has stooped, leading to oil and fuel shortages.
The United States Has Few Refineries
In addition to less oil supply, the United States has very few refineries, unlike other countries. Out of the few refineries available, some of them close down during COVID-19 to avoid excesses and loss. Only a handful was in operation to cater to the few that demand fuel. This further decreased the supply of oil and fuel.
Fortunately, things changed a bit in 2021 when the lockdown was lifted. Movements of people, automobiles, aircraft, and sea transports increased. Unfortunately, there was a sudden huge demand for oil and fuel, which were in short supply. But their prices were not as much as now.
Then later that same year, hackers attacked a US pipeline that supplies diesel and gas to other states. The hacking closed down the pipeline for nearly a week, before it started its operation again. US energy experts mitigated the hacking problem by providing quick solutions. But they couldn’t calm the panicked residents who started emergency fuel purchases. The panic purchase destabilize the United States fuel market and caused price fluctuations.
Financial analysts have said that fuel shortage and price hike has more effect on the poor people in America. Some of them can’t afford to buy gas to cook, fuel their cars to move around, and so on. Fuel shortage also has an impact on the employment rate. There have been cases of people missing their interviews due to a lack of transportation.
Therefore, a balance between the demand and supply of crude oil and fuel is needed.
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