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Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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Gasoline Prices Set To Soar This Summer

A shortage of tanker truck drivers in the United States made headlines recently, sparking fears that Americans may face higher prices at the pump this driving season, just as travel—and gasoline demand—begins to really recover. Yet not all agree there are good reasons for this fear.

In an article for Forbes, Suzanne Rowan Kelleher noted several experts' opinions that were on the calm side. According to these experts, the tanker truck driver shortage was a temporary problem, not a dramatic event that would send prices at the pump soaring.

The American Automobile Association said in a statement that while it expected a bigger jump in gas prices this month, the tanker truck driver shortage would not lead to higher summer season prices.

"Last week, media reports surfaced that a shortage of fuel tank truck drivers may impact gasoline availability this summer," spokeswoman Jeanette McGee said. "As gasoline demand increases, gas stations are working to adjust delivery schedules to keep pace. However, deliveries may be delayed in a small number of markets this summer causing select stations to see low to no fuel at some pumps for short periods, one or two days."

According to the National Tank Truck Carriers, however, as much as 20-25 percent of its fleet was parked because of a shortage of qualified drivers. This, according to CNN, is more than double the level of idled tanker trucks this time in 2019.

"We've been dealing with a driver shortage for a while, but the pandemic took that issue and metastasized it," the executive vice president of the NTTC, Ryan Streblow, said. "It certainly has grown exponentially."

Related Video: Good Luck Getting Gas This Summer

Another industry insider said, as quoted by CNN, that some tanker truck drivers had taken last year's collapse in fuel demand—and the resulting loss of work—as a hint to take early retirement. The workforce in the tanker truck driving business is aging, and schools where new tanker truck drivers are trained were closed early in the pandemic, cutting off new supply. So, while energy experts are brushing off the shortage of drivers, the driving industry itself appears to be a bit more concerned about the situation.

And it's not just driver shortage that will be affecting prices this summer. The cold spell that froze Texas in February brought a lot of refining capacity offline, and not all of it has fully recovered to normal production rates. The Texas Freeze shut down as much as 6 million bpd in refining capacity on the Gulf Coast, which made up a third of the national total.

These two factors, coupled with the expected surge in demand as vaccinated Americans take to the roads in droves, have caused some market observers to expect substantially higher prices this summer. However, some expect drivers will have no problem absorbing the additional bill.

"If we get to that herd immunity, I don't think $3.50 for gasoline is going to stop anyone," John LaForge, head of Wells Fargo's Real Asset Strategy division, told Reuters at the end of April. "That's why you can probably see higher prices into the summer, because for the last year, a lot of people have not been driving... and people want to get out, so they'll absorb it."

"If people look at what they were paying for gasoline last year, it was extraordinarily cheap," U.S. energy policy expert Jay Hakes told Forbes' Rowan Kelleher, "because we had the biggest drop off in oil demand—probably in history, certainly in modern history—where all of a sudden, within a week or two, people weren't flying and they weren't driving."

So, prices at the pump will likely jump during the summer, which is not so extraordinary as they tend to do that every driving season. Even if the jump is higher than usual, it is unlikely to discourage travel after a year of lockdowns.

By Irina Slav for Oilprice.com

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