Is There a Gas Shortage in Florida and Georgia? Russia Keeps Advancing

Mohit Oberoi, CFA - Author
By

Feb. 23 2022, Published 12:11 p.m. ET

Tensions have been escalating between Russia and Ukraine after the latter recognized Donetsk and Luhansk, which form part of Eastern Ukraine, as separate republics. Along with the stock markets, gas prices have been a casualty of Russia-Ukraine tensions with prices climbing to multi-year highs. Is there a gas shortage?

Article continues below advertisement

While gas prices have been rising, some people wonder if there's an accompanying gas shortage as well, especially in Florida and Georgia.

There was a gas shortage after the Colonial Pipeline attack.

The fears of a gas shortage aren't unfounded since it hasn't even been a year since the Colonial Pipeline attack led to a shortage of gas in the U.S. Georgia, Virginia, and North Carolina were hit hard and gas stations went out of fuel. The long queues at gas stations during those days are still fresh in everyone's memories.

Article continues below advertisement

Is there a nationwide shortage of gas?

Currently, there isn't a widespread shortage of gas in the U.S. including in Florida and Georgia. According to GasBuddy, which uses crowdsourced data, most gas stations in the region have fuel. Fears of a massive gas shortage in the U.S. look unfounded as of now. Thanks to the shale revolution, the country now produces a lot of oil and gas.

Article continues below advertisement

The U.S. was a net energy exporter in 2019 and 2020. Given the current strength in energy prices, U.S. oil producers would be inclined to produce more oil from the wells to make the most of the uptrend in crude oil prices.

Article continues below advertisement

People should brace for high gas prices.

While we might not see a gas shortage, we should brace for higher gas prices. As if gas prices weren't high enough, Russia-Ukraine tensions could lead to another increase in prices. U.S. President Joe Biden has imposed sanctions against Russia and said that Russia has started to invade Ukraine.

Other western countries have also imposed some sanctions, with Germany even stopping the certification of the Nord Stream 2 pipeline. The pipeline has been controversial since it would only increase Europe’s dependence on Russia for its energy needs. Many people have been critical of Biden for waiving sanctions for the pipeline in the past while blocking the Keystone pipeline between Canada and the U.S.

Article continues below advertisement

The Biden administration is taking measures to ensure stability in energy markets.

Biden has warned of repercussions from the sanctions against Russia, alluding to the rise in oil prices. However, he said that there's a cost for defending freedom. The administration is working with major energy producers and consumers to maintain stability in energy markets.

Article continues below advertisement

Unlike Trump, whose administration was close to major oil producers in the Middle East, including Saudi Arabia, Biden doesn't have the same rapport with countries in the region. In the past, OPEC didn't heed Biden’s call to increase production.

Article continues below advertisement

During his presidency, Trump influenced OPEC at least twice. In 2019, Trump said that he called OPEC to take measures to bring down crude oil prices. As crude oil plummeted in 2020 amid the COVID-19 pandemic, Trump cajoled the OPEC+ block to agree to record production cuts, which helped bring stability in oil prices.

Coming back to the Russia-Ukraine crisis, the situation remains fluid. However, given the current sentiments, crude oil at $100 looks like a fairly reasonable possibility now.

Advertisement

Latest Energy & Utilities News and Updates

    Market Realist Logo

    © Copyright 2022 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.