Giant Cargo Ship Stuck In Suez Canal May Lead To Higher Gas Prices
It’s been two days and shipments are backing up.
What does a ship in the Suez Canal have to do with the motoring world? On a typical day, not much. However, when a ship blocks the entire north-south passageway of a critically important global shipping route, issues can arise. Long-term problems will be delays in everything from parts to fully-assembled vehicles, but some motorists might already see short-term consequences in the form of higher fuel prices.
That’s the assessment according to Business Insider, which took a deeper dive into this ongoing problem. The massive container ship Ever Given reportedly lost power while traversing the southern end of the canal, causing its bow to run aground. The ship is nearly a quarter of a mile long, and without power to correct its course, it drifted sideways to effectively shut the canal down. This happened Tuesday morning, and as of late Wednesday, there was no sign it would be freed anytime soon.
Here’s why this is a bigger problem than many people might realize. According to the report, upwards of 50 ships pass through the canal each day, including approximately 600,000 barrels of Middle East crude oil bound for the U.S. and Europe. Delays can certainly affect commodities markets, and a quick check of current oil prices shows Brent crude up 5.6 percent. Like it or not, that will almost certainly be reflected in prices we pay at the pump, be it gasoline or diesel. Combined with already stressed U.S. fuel markets from the winter storm that hit Texas, it seems drivers in the States will see things get worse before it gets better.
Ironically, it was just under a year ago that U.S. oil prices dropped to less than $0 a barrel. In April 2020, WTI crude was trading at -$13.10 as a result of COVID-19 lockdowns that turned cities and highways into empty ribbons of concrete and asphalt. Americans are considerably more mobile a year later, and at the time of press, WTI crude was up nearly 6 percent at $61.18.
Business Insider, BBC News via YouTube
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