Fuel supply drops low and prices jump high

The jet fuel shortage is expected to worsen and everyone is feeling the pain from it. Fuel prices have been rising as operators from all aviation sectors try to keep their aircraft flying. With this increase in price, the business aviation sector and aircraft brokers should prepare for everyone to look toward other options for travel. Background World Fuel sales director Wesley Earl claimed at the Florida Aviation Business Association (FABA) on May 13 that the jet fuel supply in the U.S. had dropped to 45 days. He said that even though the U.S. is a net oil exporter, the country's refineries are meant to process heavy crude oil that is imported from the Middle East. The U.S. produces a light, sweet crude oil through fracking, which would take three to five years to convert its oil refineries to accept, according to oil production industry experts. "If this continues, it will have an impact on aircraft operators," said Earl. "Most FBOs only have enough fuel farm storage to keep three to five days of jet-A supply on hand." Everyone feels the strain The Strait of Hormuz has been closed since February 28 and no further oil deliveries are expected to happen. As such, fuel prices have soared for every sector. The Department of Defense (DOD) records show that the average price it paid for fuel increased by 27% in just six months, jumping from $154.14 per barrel to 195.27 in April, according to CBS News. Commercial aviation has also been hit, with American Airlines announcing that it would be temporarily be suspending flights as it expects to spend $4 to $5 billion on fuel in 2026. Prices for JetA at FBOs across the U.S. averaged at $7.93 per gallon, up 20 cents from April, and 100LL prices jumped by $0.31 to an average of $7.27. Sustained highs in wholesale fuel rates have put pressure on aviation businesses across the board, and whether a true peak has been reached remains to be seen. Emergency fuel The Trump Administration has suspended parts of the Jones Act, which previously restricted domestic energy-related cargoes to American vessels. Since those suspensions, 61 waivers have been signed to allow foreign vessels to carry energy cargoes, like oil, between U.S. ports. Shipments of oil, gasoline, diesel, and other liquid fuels went from U.S. refineries to Florida, California, New York and Puerto Rico for the first time in many years with the goal of producing fuel and dropping prices. What this means for Business Aviation As the inventory for fuel decreases and the price increases, charter companies and fractional ownership companies will increase their prices to make up for this cost. Jet owners and operators should adjust their operational budgets to account for fuel prices to continue to increase. Aircraft sellers and brokers should expect their buyers to hold off on purchasing, as the high operating costs turn them away from buying an aircraft. RELATED STORIES:High aviation fuel prices suggest a plateau, operators prepare for a long summerAbby's Ramp Ramble - Fuel Price Crisis