Winter is coming! We all remember what happened last year when some very cold weather descended on the States and we were still feeling the effects of it play out in the data well into May. While another big cold snap may have the same effect this winter, the US looks to be facing some fuel shortage problems before a single snowflake has fallen in the lowlands.
A backlog in fuel transportation is leaving utility companies short of supplies and behind in efforts to stockpile for the winter.
Coal supplies at utility firms were down at 39 days as of July, which is down from 57 days in July 2013. One of the reasons being blamed is the oil boom that has taken up a lot of rolling stock causing the backups. Another is the record grain harvest this year meaning there is a lot of competition for limited rail transport capacity. It does you no good if you’re swimming in commodities but can’t move them anywhere.
Utility companies can switch to other energy sources to fuel power stations but that still comes with its own set of problems. Nat gas is one source but inventories are still significantly lower due to the big freeze early in the year.
Another “polar vortex” event in the US this winter and we could have bigger problems than last winter if the power companies struggle to keep up with useage. Any sustained periods of blackouts across large parts of the country will really bite into the economy.
While we joked about it getting cold in Ukraine as they argued with Russia over supplies, it might be the other side of the Atlantic that faces the bigger chill.
Oilprice.com has the story in full here
Coming soon: Polar vortex II
