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Petroleum Market Update

Jan 13, 2023

2022 continued where 2021 left off with supply chain woes, Covid headlines, political unrest, and soaring inflation. The oil markets were a tinderbox, and just a spark away from igniting. On February 24th when Russia officially invaded Ukraine, we got our spark.  Oil prices skyrocketed to historic levels and the recent trend of extreme volatility continued throughout the year. There was a constant push/pull between supply and demand, being steered by several global headlines. 
The chart below is the price of #2 clear diesel out of our local terminal in Scott City and illustrates this volatility.
We started 2022 in the $2.50 range, which almost doubled during the Spring and Summer seasons. Only to fall back to the $2.50 range where they originally began. The chart also shows the annual price level for 2020 and 2021, both which were relatively flat in comparison to this year. I am afraid we are going to continue to see these sharp peaks and valleys moving forward.  As we move into 2023, the oil market seems to be poised for a rebound. Oil is currently hanging around $80 per barrel and many experts are expecting that to be in the $90 range for much of 2023, with volatile swings possibly touching the $120 mark again.  The biggest forces at play currently are OPEC, Russia, US policy and China. OPEC, Russia, and US policy will continue to manipulate oil prices to best fit their agendas, while the world watches to see if China’s economy rebounds.

Diesel supply locally has also become a hot topic over this last year. There was an article in November that gained a lot of attention that alluded to the fact that the US only had 25 days of diesel supply. News outlets as well as social media influencers ran with the story and caused many people to think the pumps were going to run dry.  I had several conversations with concerned customers myself. While I don’t anticipate the US running out of diesel fuel anytime soon, we do frequently deal with local supply issues out of Scott City which can cause challenges.

The Garden City Coop has numerous resources to help ensure your business keeps running smoothly.  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. 

Contact us today by stopping in or calling (620) 276-8301

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