The U.K. Energy Crisis: A Warning For U.S. Fuel Supply Chain Security

For a glimpse into our possible future, look to the United Kingdom, Ireland, and Europe, which are facing an overwhelming disruption of their fuel supply chain that makes the looming shortage in the U.S. seem like a scheduled brownout in California we can just grin and bear.

There are myriad issues “across the pond.” For starters, the wind stopped blowing in the North Seas. Heavily-subsidized windmills stopped turning and stopped generating electricity. In addition, due to pressure from activists, many natural gas wells, storage facilities, and power plants had been shut down. Facing a dire shortage of electricity, these countries are powering up the remaining gas- and coal-fired plants to generate electricity this winter.

The U.S. is becoming increasingly reliant on gasoline, diesel, and jet fuel imported from overseas refineries, particularly along the East Coast. In fact, one American company sold two East Coast refineries to purchase one in Wales, from which they ship gasoline directly to the U.S. East Coast.

What does this all mean for the average American, who just went through the chaos that followed the supply chain disruption when the Colonial Pipeline was shut down due to a cyberattack earlier this year, when the regional fuel supply was unable to meet immediate consumer demand? Or following Hurricane Ida, when many Louisianans had to wait in long lines for hours in a state with many refineries?

Although relatively unknown to most Americans, the RFS levies unsustainable compliance costs in the form of credits called Renewable Identification Numbers (RINs) on independent refiners.

RINs originally cost between a penny and a nickel per credit for the first five years of the program, then ballooned to $2.00 earlier this year. This price increase fueled by speculators and others, coupled with demand destruction for gasoline and jet fuel due to government lockdowns related to COVID-19, have left merchant refiners teetering between survival and bankruptcy.

The crisis unfolding in the U.K. now could very well play out in the U.S. for consumers, businesses, and governments if other countries outbid us for overseas gasoline, as we are seeing with the shortage of LNG in Europe — but on an even larger scale, with overwhelmed and undersupplied gasoline stations, and consumer fuel costs skyrocketing even further.

Imagine a future where the U.S. Army Corps of Engineers must deliver fuel, one truck at a time, to barely satisfy the needs of millions of American consumers as they wait in endless lines to fill up at the pump. If more independent refineries close amid the already dwindling refining capacity in the Northeast, it’s not a stretch of the imagination to suggest that this scary scenario could play out across the country’s most populated region.

President Biden and his administration must take swift and immediate action to reform the RFS once and for all, for the sake of America’s economy, fuel supply chain and energy security.

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Fueling American Jobs Coalition

Fueling American Jobs Coalition

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A coalition of union workers, local gas station owners, small retailers, and independent American refiners fighting to fix EPA’s flawed Renewable Fuel Standard.