It will come as no surprise that the volatility of oil prices has reached the aviation fuel market and costs are going up. Although media coverage of the increases is as volatile as the market itself, the price of Jet A appears to have briefly shot up more than 80% late last week before settling around 50% higher than on Feb. 27, the day before Israel and the U.S. attacked Iran. The jet fuel prices have roughly followed crude oil prices, which are now about 40% higher than before the attacks began. Jet fuel is more susceptible to shortages because it must be kept separate from other forms of kerosene, so supply issues in coming weeks are anticipated. Airfares have already started increasing.
As for 100LL, the price has been less volatile and is ranging between about $4 to $6 a gallon in most areas, with an average of $5.98 according to AirNav.com. It says the average price of Jet A is $6.07 and mogas is at $4.91 a gallon. Global Air says prices are higher than that. Its map says the national average for 100LL is $6.50 a gallon and Jet A is at $6.85. Sustainable aviation fuel is a whopping $9.31 on average.
President Trump: “The United States is the largest Oil Producer in the World, so when oil prices go up, we make a lot of money.”
BTW, the US government doesn’t get any of that money. There is no “we.” There is no United States. There are only oil companies and everybody else.
Considering this military invasion of Iran was over within minutes from the start – “Let me say we won. We won! You know, you never like to say too early you won. But we won. In the first hour it was over, but we won!”
If the oil producers would have been officially notified by the Department of Defense of this accomplishment, who knows where oil prices would be. Probably much lower!
Winning works in mysterious ways, people.
“This must be some new definition of the word ‘winning” that I had not previously encountered”
Famous last words: “Mission Accomplished”. George W. Bush, ca. 2001. “We need to get out of these endless foreign wars and stop this stupid nation building in the Middle East”. Donald Trump, campaigning for President, 2016. “We won, we won!!” Donald Trump, commenting on his current attacks on Iran in an attempt to force regime change (AKA nation building) in the Middle East.
Apparently, Iran has not gotten the message yet, as yesterday they sent a barrage of suicide drones across the Persian Gulf, setting multiple oil tankers ablaze as they lay docked in Saudi Arabia and Kuwait. The Strait of Hormuz remains closed to oil traffic and Iran is fortifying emplacements along their shore of the straits to fire on any ship attempting to enter.
Here’s what I don’t understand. For most of my adult life the Strait of Hormuz has been a major trouble spot and bottleneck for oil exports out of the Persian Gulf nations. Why hasn’t some country dug a canal across the desert through the United Arab Emirates from the Persian Gulf to the Gulf of Oman to bypass the Strait? Or at least build several large pipelines across Saudi Arabia over to the Red Sea? Continuing to fight over the Strait of Hormuz strikes me as the definition of insanity.
Transitioning to renewables would have made the Straits of Hormuz a moot point among other benefits.
Adam, I agree with you in principle, but realty is a hard thing to overcome. If you look at how we use energy, there are four main consumers of oil and gas (plus a whole host of lesser uses). They are transportation, electrical power generation, cement manufacturing and metals mining/production. They are all relatively equal in consumption, but only transportation and power generation have the potential for significant renewable substitutes. Even then, much of the transportation sector is not able to rely on alternates. There are roughly 130 million cars and light trucks in the US alone, most of which still rely on gasoline and diesel. Yes, electrics are gaining ground (I own one EV), but to replace a significant number of older vehicles will take a generation. Besides, the more EVs we buy, the greater load we put on the electrical power grid. Large transport aircraft will be chained to Jet A for a long time to come, even with sustainable Jet. Power generation in the US is making huge strides to switch to wind and solar (at least until the current administration came along), but our rate of growth in demand is running even faster. The only rational solution there is to get back into nuclear power in a big way. Good luck getting that past Congress! As for cement and metals, if you want to become rich beyond your wildest dreams, invent a way to make cement (or steel, aluminum or copper) without huge amounts of gas and electricity.
The Europeans are far ahead of the US in terms of energy efficiency and alternate energy sources. Even there, oil consumption has not dropped significantly over the past 20 years. They have just switched to receiving oil and gas from Russia instead of the Middle East. How’s that working out right now? I’m afraid that the Strait of Hormuz will be a thorn in the world’s side for years to come.
There are already several pipelines that bypass the Strait. But together they only account for about half of the tanker traffic. And they’ve been running at capacity anyway. So you’d have to build twice as many more just to reach existing regional capacity without tankers transiting the strait.
As I understand it, it’s cheaper to ship oil by tanker. And tankers have the flexibility of going to different ports if local production or politics changes.
Kirk, your numbers are a little off, but you are correct. The pipeline across Saudi Arabia is mainly for their production, and it is running at around 5 million BPD. There is another pipeline across the UAE which allows loading outside of the Strait of Hormuz, even if it is still within range of Iranian drones. It runs at about 1.5 million BPD. Together, that accounts for less than half of the 20 million per day that normally passes out of the Persian Gulf. Interestingly, a significant part of those 20 million barrels is Iranian oil, which they are willing to allow to pass the Strait unharmed, assuming the US Navy will not stop the ships. Most of Iran’s oil is loaded out from Kargh island in the northeastern part of the Persian Gulf. So far, Trump has avoided any attack damage to the island’s oil equipment. He has attacked military installations on the island, but avoided the tanks and pipelines. The speculation is that if Trump puts American “boots on the ground”, it will be to seize the island and take control of its facilities. That would choke off Iran’s oil exports and possibly force them to at least negotiate some settlement in the conflict. If that happens, it would be a major victory for us and a huge boost to his standing both at home and abroad. Pop the popcorn and stay tuned…
My apologies to Russ for getting way off topic on an aviation related blog.
The increase in AvGas (JetA, diesel, motor gas…) prices has only started.
In “The Gulf War” we laughed at the black rain that fell on us, freckled our faces, and stuck to every surface of our tanks and trucks. The smoke from oil, and vehicle, and building fires surrounded us and filled every lung.
We did not realize the oil we breathed and wore not only hurt our health, but because that oil was not refined or transported… hurt our families at home as well.
Burning, beached, and sunken ships make the already-narrow Strait of Hormuz slower and more difficult to transit; ship insurance costs already rose dramatically; replacing ships and restoring capacity will take years: prices are likely to plateau for a long time.
Wars are like that.