November gasoline off to a wild start.
November is traditionally a month that’s not very kind to crude oil markets, and the same can be said for gasoline and diesel.
The start to this November was different, especially for gasoline as prices spiked in response to the explosion and shutdown of the Colonial Pipeline late in the afternoon on October 31st.
Expecting a repeat of the September shutdown, gasoline futures (financial markets that dictate the price of fuel) instantly jumped as Colonial shut down both lines. Colonial restarted line 2 (the diesel line) rather quickly and are expecting a shutdown of just a couple of days for line 1 (the gasoline line), for perspective the shutdown due to a gasoline leak in September lasted for 10 days.
The news of the quick restart of line 2 and the anticipated restart of line 1 pulled futures back sharply. In the initial reaction, gasoline futures were trading 15 cents higher, but by the close of business on November 1st the gasoline futures was up a more modest 6.5 cents.
Southeast suppliers will be closely monitoring progress of a Line 1 restart, and potentially will have to scramble to get supplies, much like in mid-September.
Another factor moving gasoline prices higher is New Jersey raising its gasoline tax by roughly 23 cents per gallon on November 1st. Currently, the New Jersey average stands at $2.28 per gallon, versus roughly $2.04 per gallon a week ago.
November is typically a weak month for gasoline prices, but some potential logistics issues may create some uneven movements throughout the country.