After yesterday’s RBOB gasoline futures expiration blow out, the Trump Administration is pulling out all the stops to try to reduce shortages of gasoline and try to calm down soaring prices. Driven by massive refinery outages and fears of deliverable supply, gas was on high octane. The September RBOB gasoline futures surged at one point higher by more than 28 cents a gallon, driving the wholesale price of gasoline to the highest level in over two years. Retail prices also hit a new high for the year according to triple A and you can expect more price increases, if not spikes, coming at the pump. A release from the Strategic Petroleum Reserve and a temporary waiver of gasoline specifications should take away some gasoline upward price pressure.
The U.S. Environmental Protection Agency on Wednesday granted a waiver on low-volatility conventional gasoline requirements to 12 more states in response to fuel-shortage concerns. The decision opens the door for expanded E15 sales through Sept. 15 in some areas. Still, despite the waiver from the government, deliveries against the expiring RBOB futures contract will get no such waiver. Worries by traders about the amount of deliverable gasoline added to yesterday’s massive RBOB run. In a press release, the CME Group said, “the Exchange has determined that the EPA waiver will NOT apply to September 2017 gasoline deliveries against the RBOB Gasoline Futures contract, based upon the timing of the EPA waiver, which was issued late in the trading day during the expiration of the September RBOB Gasoline Futures contract, as well as our assessment of the current state of the marketplace in Exchange-approved terminals in New York Harbor.” The exchange did say that in its sole discretion, it will review the provisions of the waiver on a case-by-case basis to determine whether to modify the existing delivery requirements for RBOB-designated gasoline to comply with such waiver.
The Colonial Pipeline, America’s major pipeline that feeds products all up and down the East Coast at the rate of 2.5 million barrels a day, will be allowed to mix specifications of gasoline to assure that there can be the most product available. This may allow for the restart of the gasoline pipeline early next week and by comingling product should make enough product available to push it through the lines.
