If paying ransom to Russian hackers to free the oil flow on the Colonial Pipeline, lifting the Jones Act, waiving EPA clean air restrictions in 17 states wasn’t enough to break the price of crude oil, how about the shutdown of a bridge over the Mississippi River that closed traffic to barges and created a massive selloff in grains that spilled over to the energy complex.

Successful Farmer reported that, “on Tuesday, a bridge inspector discovered a “significant fracture” that has indefinitely closed the Hernando de Soto Bridge that carries Interstate 40 across the Mississippi River between Memphis, Tennessee, and West Memphis, Arkansas. As of Friday morning, there are currently 52 vessels with a total of 901 barges in the queue, according to the U.S. Coast Guard’s 8th District office. The Tennessee Department of Transportation (TDOT), in conjunction with the U.S. Coast Guard, is conducting an inspection on the cracked beam. “It will be up to TDOT officials to determine if the bridge is safe enough for maritime traffic,” Carlos Galarza, petty officer, Coast Guard’s 8th District, told Successful Farming late Thursday afternoon. On Thursday, the CME Group’s farm markets fell sharply, due to the closure of the bridge. At the close, soybean prices had plunged 58¢, corn dropped its daily limit of 40¢. That grain market crash hurt oil whose ties to ethanol and biofuels are intertwined. One would expect a big bounce back if ship traffic is resumed because I am assuming the Chinese still need to eat even if the Mississippi is shut down for a while.

And our demand for oil will not go away because of the pipeline hack. Panic buying on gasoline caused shortages and havoc. Yet gas prices should peak as soon as more supply starts coming from the pipeline, because of the waiver of the Jones Act and EPA restrictions as well as supply on its way to the U.S. from Europe, the outlook for the summer still has us looking at the highest average prices we have seen in years.

Now, as Energy Secretary Granholm says, the pipeline hack would not have been an issue for you if you own an electric car! So, all your internal combustion engine drivers get what you deserve! Of course, an electric car would have done you no good during the Texas power outages where alternative energy failed when put to the test. Yet Granholm is invested in electric cars both physically and financially. Fox New reported, “As the Biden administration doesn’t seem to be slowing down on its green energy agenda that includes electric vehicles, Granholm has until late August to fully divest up to $5 million in stock options from Proterra, a company that makes electric buses, car batteries and charging stations. A top Republican senator has asked for an investigation into the secretary’s holdings and whether they present a conflict of interest with her department playing a key role in the Biden administration’s infrastructure plan that calls for $174 billion “to win” the electric vehicle market. Fox News also reported that that Biden’s energy secretary is facing renewed backlash for canceling the Keystone XL pipeline permit after she admitted this week that using a pipeline is “the best way” to transport fuel.

At a Tuesday press conference, Department of Energy (DOE) Secretary Jennifer Granholm was asked by a reporter about the “feasibility of using rail cars” to transport fuel across the country as the nation faces a gas shortage from a Russian cyber-attack. The energy secretary said the Department of Transportation was looking into the use of rail cars to transport fuel and that “these are not easy solutions,” as there are a lot of variables with rail transportation. Pipelines are the best way. So, I assume that means that the Energy Secretary should support the Keystone Pipeline. Enbridge Line 5 as well as the Dakota access line because there is no doubt that that is the best way to transport fuel. Build more pipeline and build them now.

I told Maria Bartiromo on “Mornings with Maria” on the Fox Business Network that we were near a short-term peak on gas and AAA agrees. AAA says that Motorists in the southeast can expect to see fuel flowing at local pumps in coming days. Late on Wednesday, the Colonial Pipeline announced the restart of pipeline operations. While it will take several days for operations to get back to normal, this news will help to ease the supply strain seen on the East Coast – especially in southern Virginia, the Carolinas, Georgia and Tennessee. These areas are experiencing reduced fuel availability in parts of their markets.

“The restart of the pipeline is very positive news for motorists,” said Jeanette McGee, AAA spokesperson. “While impact won’t be seen immediately and motorists in affected areas can expect to see a few more days of limited fuel supply, relief is coming. Station pumps will be full of fuel in several days. This is an especially good update ahead of the Memorial Day holiday.”

From the time the pipeline was taken offline on Friday until Thursday morning, the national gas price average increased 7 cents. That pushed the average to $3.02 this week – the highest average since October 2014. The national average is likely to continue to see fluctuation in the coming days and states where prices have spiked will see some relief as the pipeline becomes fully operational.

For motorists traveling through the south and southeast this weekend, AAA offers these tips, “If you are planning to travel this weekend throughout the south/southeast coast: If you own more than one car, use the most fuel-efficient model. Plan – bring groceries and other necessities with you to reduce making trips while you’re at your destination. Fill up before getting to your destination. Use the AAA Mobile app to locate gas stations and call ahead to see if they have fuel. Avoid driving during high-traffic times of day. Pack lightly. Remove unnecessary and bulky items from your car and don’t use your roof rack or a special cargo carrier. It takes more fuel to accelerate a heavier car, and the reduction in fuel economy is greater for small cars than larger models. Don’t travel with a container carrying extra fuel in your car. If you’re already on the road and will be traveling throughout the south/southeast coast: Use the AAA Mobile app to locate gas stations and call ahead to see if they have fuel. Have a Plan B in case you need to stay longer or can only make it part of the way home (find a stopping point). Use the AAA Mobile app to find hotels along your route and call ahead to check availability. Minimize your use of air conditioning. Even at highway speeds, open windows have less effect on fuel economy than the engine power required to operate the air conditioning compressor. In hot weather, park in the shade or use a windshield sunscreen to lessen heat buildup inside the car. This reduces the need for air conditioning (and thus fuel) to cool down the car.

Thanks,
Phil Flynn

 

The break in the crude oil market is merely a correction in a secular bull market. Use the break to get hedged if you are not all ready. Natural gas also look very bullish. Make sure you invest in yourself today! Tune to the Fox Business Network. They are invested in you. Call or email me – Phil Flynn – to start receiving my Daily Trade Levels for entry and exit points on all the major futures markets at 888-264-5665 or email me at [email protected].