Portable Sanitation Association International

ASSOCIATIONINSIGHT Portable Sanitation Association International News BIWEEKLY EDITION MARCH 31, 2021 Page 12 Fuel Prices: What to Expect Ahead…continued from page 11 Continued on page 13 Prices are also being affected by disruptions in supply caused by the severe winter weather in February and resulting spikes in demand for related products. Fuel oil relies on the same crude sources and refinery capacity. The container ship that blocked the Suez Canal for nearly a week in March could also have some downstream effects on fuel prices. These are events no one can control, although we can anticipate price fluctuations like these will always happen over time. Hurricanes notoriously affect gas prices because so many refineries and distribution networks in the US are located in areas affected by hurricanes. Current gas prices are also being affected by some other factors including: • The Oil Producing and Exporting Countries (OPEC) in the Middle East, as well as the country of Russia, have made voluntary oil production cuts. This has the effect of raising oil prices globally. The consequences of these cuts have been magnified by temporary supply issues in the US, due both to the impacts of the winter weather and general transportation issues. • US companies are currently investing less in finding new sources of oil, which affects market traders' perceptions of future supplies. The scaled back exploration at present is probably due to a combination of factors. Last year's low prices are likely making it too expensive to do much more exploration, and there is growing pressure to move to renewable energy sources. • Seasonal changes that tend to compound the effects of the structural changes above and the increased demand from vaccinated people returning to more normal activity levels. Often, oil traders drive up futures prices in the spring as they anticipate increased demand for summer travel. This year the traders are very likely over-correcting as they anticipate both the post-COVID bump and the usual summer travel peaks. • Maintenance at refineries and routine production changes to summer gasoline blends. In the late winter and early spring, gas prices often rise, especially in certain areas, many U.S. refineries are taken off line in March and April for required upkeep activities and conversion of production to seasonal blends. This activity raises the costs of both refining and transportation of fuel, and that is always worked into prices customers pay during these months. • Optimism regarding the impact of the recent American Rescue Plan Act on the economy. The $2 trillion this act will pump into the economy will take years to spend. But markets sometimes over-react at first, before settling back into a more realistic view of how the legislation's funds will impact production and demand long term. There are also some things that are NOT affecting our fuel prices. • Lack of oil or gas over the longer term. The US is by far the top oil producer in the world, and a net exporter of oil. We do, though, still import some oil and petroleum products, which can make our markets susceptible to international pricing, transportation, and trade issues. As the US recovers from 2021's winter storms and ramps up production in response to cuts from OPEC and Russia, US supplies will even out and prices will level off later this year. It is also likely that oil exploration will rebound somewhat as prices go up.

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