Oil Disruptions Possible
Oil Disruptions Possible
Douglas Quattrochi - Doug
Our business update for today is about the possibility of oil disruptions this winter.
You may not be aware, but oil production actually has not returned to what it was pre-pandemic. You might imagine it would have been impacted so much because it’s an outside activity, but it actually was and the US Energy Information Administration has this graph that shows. You can follow the QR code there. It shows we haven’t returned to pre-pandemic levels of production.
On top of that, we have a war in Ukraine, and in particular, this has resulted in Russia turning off gas supply to Europe. You might think, “Well, what does gas in Europe have to do with oil in Massachusetts?” Well, the simple answer is the United States is shipping as much fuel oil from which you can make derivative gas and other products to Europe as possible.
As a matter of fact, the United States Secretary of Energy Jennifer Granholm brought a letter to the six governors of the six New England states, basically asking the governors to plan ahead for oil in particular, not natural gas, not other forms of heating, but for oil in particular. If there’s a bad winter storm this season, there are going to be disruptions to supply. To back it up, the United States Secretary of Energy said that “East Coast gasoline inventories are at their lowest point in nearly a decade, and diesel is 63 percent below the 5-year average, not 63 percent of. It’s 63 percent below.
You imagine how hard it is to get oil delivered during a storm. Well, I mean if there are just shortages in general, it could mean that the general place where you used to get your oil isn’t actually in stock anymore, so you have to get it from even farther away.
The suggestions for landlords, who are on oil this winter, is to look at contracts or price locks. It might protect you a little bit from gauging if it does develop. You might want to be more proactive than you have been in the past with monitoring and usage. You can order more frequently. I know that’s more expensive, but you can do that. You could point an Arlo camera at the float gage if your renters not good at checking it, if you’re unable to get there. That might give you some idea if you’re low. You obviously want to have all your buildings insulated. I’ll talk about that in a second, and then you can switch oil for something else.
On the subject of insulation, Mass Save has tremendous incentives available for multifamily owners. You can get the cost of insulation paid for substantially, if not entirely. This can really give you margin not just in terms of how much fuel you use, but if you were to run out, how long you can wait until you get that fuel restored. Of course, if you can get off fossil fuels entirely, that’s a very good idea. The law in Massachusetts says that by 2050, we have to be net zero emissions. It’s not going to be possible to do that with oil and gas, and there are tremendous incentives at Mass Save for heat pumps as well.
If you follow either of the QR codes, you’ll find real options for reducing your oil consumption this winter and hopefully setting yourself on the path to be net zero by 2050, so none of this kind of thing matters anymore.