Jet Operators Feel Pain at the Pump

 - April 12, 2022, 1:04 PM
Jet fuel prices continue to spike as a result of crude oil supply chain disruptions brought on by the Russia-Ukraine conflict.

Jet fuel prices continue to spike as a result of crude oil supply disruptions brought on by the Russia-Ukraine war. In fact, jet-A reached what is believed to be a record U.S. high of $12.16 per gallon today at New Jersey's Teterboro Airport, according to current retail pricing data from AirNav.

“The New York-New England jet [fuel] market has jumped up dramatically to the tune of over $2 a gallon today,” noted Avfuel v-p of sales Joel Hirst. “You’re well over $7 just on the traded cost of fuel in the New York market. There’s no transportation, no into-plane fees, that’s just the raw cost.”

The prices have risen faster in some states which calculate fuel taxes as a percentage of the per-gallon price instead of a fixed amount per gallon. Those costs must in turn be passed along by the FBOs to their customers. "They have no choice," said Hirst, "they're in the stream of it right now."

Jet-A in the Northeastern U.S. is supplied by three pathways: the Colonial Pipeline, which Hirst said is running at full capacity for jet-A; refineries in the Philadelphia area; and distillate imports from Europe. According to Hirst, it is the latter that is causing the problems as Western nations shun the one million barrels a day of crude oil output from Russia.

“That shortage is what drove up the price in Europe in trading there, and so the imports that we typically get into the New York market have been diverted and went into Europe to assure their jet fuel and diesel supplies,” he said. “Imports are a very big piece of what is needed to keep that whole region in balance. You take one of the three out of here, you start lagging.”

Hirst noted that another pinch point in the supply chain is the number of tankers that can transport bulk fuel. He predicts that the extreme pricing will last for approximately another two weeks as vessels once again begin arriving in Northeastern ports laden with fuel.

“It will come back down as fast as it went up,” Hirst told AIN. “Typically as soon as we start getting the imports to start creating the fuel rebalancing, those traded numbers will start pulling off in big chunks, but we’re probably looking at a 10- to 12-day period before we see any of that take effect.”

The Airnav report noted the national average price for jet-A on Monday was $6.09 per gallon, up from the $4.35 average seen a year ago as aviation continued to emerge from the Covid downturn. While the New York market is currently experiencing record pricing, other regions in the U.S. are also noting surges. New England recorded a peak today of $11.29 a gallon, followed by Alaska ($10.69), the Western-Pacific region ($10.56), the Southern U.S. ($10.51), and the Great Lakes region ($10.38). Those prices are the high watermarks in each area, typically found in high-traffic locations, with Alaska seeing the highest average price at $7.34 per gallon. Depending on how far afield from their intended destination one might choose to look, bargains may still be found in most regions, with Airnav listing the minimum price found in the Eastern U.S. as $3.45 a gallon.

"This is a very specific situation but I think you are going to see regional disruptions and volatility for a while yet," said Hirst.