Energy Solutions for Our Members

May 12, 2023


Energy Solutions for Our Members
By: Michael Nigro, Energy Risk & Pricing Analyst 
Garden City Coop perspectives 5.2023 / GCC Petroleum Division
 
Petroleum supply is an ever moving, constantly changing situation influenced by a number of factors from a global perspective right down to the fuel at the pumps in our local area. It may seem odd that a hurricane in the gulf or refinery issue in the middle east could directly have an impact on local prices, but that shows how interconnected the many layers of the petroleum industry can be despite how broad it is.
 
The U.S. Energy Information Administration (EIA - eia.gov) is one entity that collects and publishes data. As of the third week in April, the EIA reported Crude Oil stocks at 967.5 million barrels (Petroleum Balance Sheet). This is down 14.4% from this same point one year ago. These inventory reports of stocks held by US firms can provide some signals for impacts on inflation and forecasts on demand.
 
For the short term energy outlook, the latest forecasts anticipate global production to drop and the demand to remain unchanged for the remainder of this year. On its own, this would be a strong indicator that we will be seeing tighter supplies and higher prices. However, the continued threat of recession and the recent banking sector challenges has resulted in a more bearish influence.
 
The nature of petroleum distribution will always have some level of uncertainty for end users on receiving product. Supply has a chance to encounter hiccups whether they are planned or unplanned. From maintenance cycles, to refinery problems, to pipeline issues, a disruption can and does occur from time to time. Many may recall the Keystone pipeline spill in Washington County Kansas last December – just one example of an unforeseen incident with devastating consequences economically and environmentally. In addition, suppliers are always working toward striking a balance between amounts of product and the demand for it to be bought and moved in a given timeframe. Oftentimes the forecasts suppliers use and the actual demand in our region don’t line up and we can see basic economics kick in where prices may dip during a period of oversupply and prices may inch up in periods of shortages. Sometimes these ebbs and flows follow global trends, other times they may not. These factors and more are what create potential adversity, unpredictability and volatility in the petroleum supply world.   
 
Garden City Coop reliability
So what does this mean to you as a customer? Garden City Coop has been committed to providing energy solutions to our various customer base as reliably and as affordably as possible for over one hundred years. GCC primarily obtains supply from the Scott City terminal but has access to and the ability to pull from other surrounding terminals as well. We offer a wide range of fuel contracting options that can help mitigate the extreme volatility in fuel prices, allowing you to better budget your fuel costs for the year. We can also make certain you have access to fuel when supply gets tight by securing physical product and storing it in our 3-million-gallon fuel storage facility. These features give us some advantages and flexibility to offer various options to you depending on your specific needs.
 

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