By Shariq Khan
The Shocking Impact of Last Month’s CrowdStrike IT Outage on California’s Fuel Market
Last month’s CrowdStrike IT outage caused major disruptions in California’s fuel market, leading U.S. traders to resort to storing jet fuel on waterborne tankers, storage broker The Tank Tiger revealed this week to Reuters.
This outage worsened existing constraints on petroleum storage in California, where strict policies against fossil fuels have hindered the development of new oil and gas infrastructure.
“The lack of petroleum products storage space in California has been a long-standing issue,” said Ernie Barsamian, founder of The Tank Tiger.
Despite these challenges, California remains a crucial petroleum trading hub on the U.S. West Coast, making it susceptible to fuel price shocks during periods of disruptions like the recent IT outage.
“The permitting process for new storage tanks in California is complex, resulting in storage costs that are double those of other trading hubs,” Barsamian explained.
Following the flight groundings in July, excess jet fuel had to be redirected to waterborne locations off the coasts of Houston and New Orleans due to limited storage capacity in California.
Using ships for storage is only considered as a last-resort option, as it leads to delays in journeys and higher costs.
Jet fuel inventories on the U.S. West Coast reached a record high of over 12 million barrels in the week ended July 26, with strong demand and increased imports contributing to the surplus.
Analysts at ship-tracking service Kpler noted that West Coast imports of jet fuel have risen significantly this year, keeping inventories higher than usual.
West Coast jet fuel stocks are currently almost 28% higher than last year, standing at 11.8 million barrels as of the latest data.