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US market faces fuel shortages that are worsened by mothballed oil tankers

May 17/2021

MOSCOW (MRC) -- Efforts to get fuel supplies to areas in the United States facing shortages have been slowed because shipowners have mothballed US-flagged oil tankers that can make coastal voyages, reported Reuters with reference to shipping sources.

The shutdown of the Colonial Pipeline network to thwart a cyber attack has disrupted nearly half the East Coast's fuel supply and left parts of the southeast facing a severe shortage of gasoline and diesel. Colonial said it began to restart on Wednesday but warned it would take several days for fuel supply chain to return to normal. 

One way to alleviate the shortage would be to transport fuel via ship from the refineries on the Gulf coast that make the fuel that typically goes through the pipeline. The ships could carry the fuel to the cities and states on the East Coast that need it.

Only US-flagged tankers are permitted to make voyages carrying US goods along the coastline of the United States, under legislation known as the Jones Act.

Several of the roughly 60 vessels in the US-flagged tanker fleet, which mostly include tankers and barges, have been taken out of service because of slow demand before the Colonial Pipeline shutdown, according to company executives and market sources. Idled tankers would take a minimum of 10 days to be restarted, said a spokesperson for Jones Act shipping company Overseas Shipholding Group Inc.

The US government is considering waiving the Jones Act restrictions under emergency measures so that more ships can make the journey.

Refiners and wholesalers have provisionally secured at least three foreign flagged vessels in the event a Jones Act waiver is issued by the US government, according to three sources familiar with the matter. "Nothing is moving yet it's all just in case," said one shipbroker.

Even with a Jones Act waiver and finding international ships to charter, only a few ports in the worst affected regions in the US Southeast, such as in Florida and Savannah, Georgia, are able to receive large tankers, experts said.

As MRC wrote previously, Valero Energy chartered an oil products' tanker for storage in the US Gulf Coast on 7 May amid a cyber attack that shut the Colonial pipeline, the biggest US fuel pipeline. The tanker, called the Nave Titan, is currently in the Mississippi River in southern Louisiana, according to Refinitiv Eikon shipping data. Nave Titan can hold up to 330,000 barrels of oil, according to the tanker data.

We remind that Marathon Petroleum, the largest US refiner, can meet its supply commitments for now but is working to find alternative ways to ship motor fuels to the eastern United States if the Colonial Pipeline shutdown is extended.

Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 576,270 tonnes in the first three month of 2021, up by 4% year on year. Low density polyethylene (LDPE) and high density polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market totalled 410,890 tonnes in January-March 2021, up by 56% year on year. Supply of homopolymer PP and PP block copolymers increased.
Author:Margaret Volkova
Tags:PP, PE, crude and gaz condensate, PP block copolymer, homopolymer PP, propylene, LDPE, HDPE, ethylene, petrochemistry, Marathon, Valero, Russia, USA.
Category:General News
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