A recent IT outage and California's strict environmental policies have exacerbated fuel storage issues in the state. Traders have been forced to store jet fuel on waterborne tankers due to limited onshore capacity.
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| California's fuel market is facing challenges due to an IT outage and limited storage infrastructure. The state's environmental policies have made it difficult to build new oil and gas facilities. Symbolic image |
California, USA – August 30, 2024:
A widespread IT outage in July caused by CrowdStrike significantly exacerbated existing fuel storage constraints in California, according to The Tank Tiger, a leading storage broker. The outage, which grounded numerous flights, forced U.S. traders to store jet fuel destined for the state on waterborne tankers.
California's unique location on the U.S. West Coast makes it a major petroleum trading hub, but its strict environmental policies have hindered the development of new oil and gas infrastructure. This has resulted in limited storage capacity for petroleum products, particularly during periods of disruption.
Ernie Barsamian, founder of The Tank Tiger, highlighted the challenges of securing storage space in California. "There has been no room at the inn for several years," he stated, emphasizing the scarcity of available storage capacity.
The IT outage compounded the existing storage constraints, forcing traders to resort to using ships as temporary storage solutions. This practice is typically avoided due to the added costs and delays associated with keeping vessels in use for extended periods.
As a result of the outage and other factors, jet fuel inventories on the U.S. West Coast reached a record high of over 12 million barrels in the week ending July 26. The increased demand for jet fuel has also led to a significant rise in imports to the region, further contributing to higher inventory levels.
While the CrowdStrike outage has been resolved, the underlying issue of limited storage capacity in California remains a concern. The state's policies aimed at reducing fossil fuel usage have made it difficult to expand storage infrastructure, leaving the region vulnerable to future disruptions and potential fuel shortages.