In April 2020, the COVID-19 pandemic quelled road travel enough to send gas prices to record lows. The producer price index for crude petroleum was down 48.8 points—much more intense than the 2.5 decrease the previous January. Now, about a year after that low point, prices are on the rise and a gas shortage might be around the bend.
Actually, it's a shortage in transportation for getting gas to the pump. Here's what to know about the potential shortage coming this summer and what you can do to prepare as an investor and a driver alike.
A shortage of qualified tanker truck drivers could impact the pump.
The National Tank Truck Carriers is the industry's trade group. Recently, the group released a report that about a quarter of all tanker trucks will be out of use this summer due to a lack of qualified drivers. In 2019, 10 percent of trucks were parked during the summer months, which was still considered a driver shortage.
Gas companies have had even more difficulty hiring enough qualified drivers since the start of the COVID-19 pandemic. It's a job that requires travel and being away from home for extended periods of time, which doesn't sit well with a lot of people amid a pandemic.
The pandemic also impacted the gas industry in other ways. A major reduction in road travel over the course of 2020 caused reduced demand and many existing drivers left during that time. Reportedly, the tanker truck driver industry is an "aging workforce" as Holly McCormick of Groendyke Transport put it. For many drivers, the COVID-19 pandemic was a suitable time to take the leap toward retirement.
How gas prices will respond to the driver shortage
Historically, gas prices increase at the beginning of the summer season. This year won't be any different, and the impact might even be multiplied. If people respond to a shortage in gas the way they responded to a shortage in flour and toilet paper, we might see more of a shortage than we otherwise would have. In that case, gas prices would increase even more, despite the fact that road travel is still slightly down from normal levels.
Tom Kloza, who is the chief oil analyst for the Oil Price Information Service, thinks that the national average for gas could hit $3 per gallon. Right now, it's at $2.89 and inching its way up.
Investors might want to react
Meanwhile, high gas prices don't necessarily mean higher stock prices in the fuel sector. There comes a point when demand drops off because costs are so high. Also, a lot of the reasons for higher prices aren't necessarily tied to demand. Air travel is still down 22 percent from its 2019 levels. The tanker truck driver shortage is a key example of this. Whether you buy, hold, or sell, be diligent and make decisions based on the long term for this category.