Recent price volatility at self-service pumps – at GA airports across the US – has led to uncertainty and some attitude adjustment among pilots looking to continue flying, whether whether for a weekend getaway or in pursuit of business.
And while the price of 100LL has trended upward with local automotive gasoline prices, a more noticeable shift has been in the cost of jet-A (along with its on-road component, truck diesel). It is now more expensive per gallon than avgas, meaning a blow to operators whose turboprop and jet planes use the most fuel per hour.
The war in Ukraine and accompanying sanctions against Russia, coupled with the start of the busy summer travel season and other economic drivers, weighed on the supply chain. And he hit the A-throw particularly hard.
What is happening?
FLYING spoke with Muneed Ahmed, Director of Trade and Logistics for Avfuel, a global provider of aviation fuel and services to the general and business aviation markets, to understand the specific dynamics of the offer and the consequent pricing of the jet-A at the moment.
“The main driver of price volatility has been supply disruption,” Ahmed said. “This volatility is felt throughout the oil complex and has trickled down to jet-A. However, [fuel] prices are still impacted because [they] are very closely linked to diesel prices. Diesel is probably the least elastic product, and since refineries have all moved to maximize diesel production, jet-A production has suffered.
“Currently, jet-A stocks in the United States are at one of the lowest levels since 2000.”
Shares of Jet-A suffered relative to those of avgas, hence the widespread price disparity. Ahmed elaborated on this: “As to why the increases are so much more dramatic compared to 100LL, the reason is that the gasoline supply was much less disrupted compared to the distillate supply.
“Russia is a major exporter of distillates, and the war has resulted in a significant loss of exports out of Ukraine,” he continued. “Furthermore, gasoline is much more elastic than distillates. If prices rise to $7 at the pump, consumers will immediately respond by cutting back. While the US jet [fuel] and diesel inventories are at some of the lowest levels since 2000, gasoline inventories are well above 5-year lows.
Zooming in on New York Harbor
One region in particular, the Northeast, took it to task because of specific war-related issues. The supply chain has been severely disrupted due to jet-A’s reallocation to Europe. “One of the most dramatic examples of this was seen in the jet fuel shortage in New York Harbor,” Ahmed said. “Although he has improved a little [as of Friday], prices are well above the rest of the US markets. This is because Europe absorbed all the imports as prices soared to unprecedented levels.
Avfuel has been working within its distribution networks to help alleviate the issue, working with all of its suppliers and bringing in jet fuel from other markets to help alleviate supply issues in New York Harbor.
What about FAS?
Sustainable Aviation Fuel (SAF) has entered the picture significantly, if not in overall volume for now, but in perceived importance to an industry seeking to clean up its emissions. A small ray of light: the SAF supply chain should not be affected in the same way as that of regular jet-As.
“Most SAF is produced on the West Coast and the Gulf Coast,” Ahmed said. “While these areas are also feeling the lack of distillate and jet fuel supply, it is not as bad as the East Coast and Europe.”
More on the Horizon?
The National Air Transportation Association, which represents the interests of general and business aviation service providers, keeps a close eye on fuel for an obvious reason. It’s the juice that powers our planes and that operators like FBOs and airports supply. The association sees price volatility rather than outright shortages on the horizon for most of the country, for now.
This gives us reason to hope that the problems felt in the Northeast will ease a bit and not be felt in other parts of the country as the system adjusts to reallocate products across the global supply chain.