Will the US port strike increase gas prices? What you need to know

LOS ANGELES – A union longshoremen’s strike that began Tuesday at dozens of U.S. ports has raised concerns about possible disruption in several industries, including the oil and gas industry.

However, the Department of Energy (DOE) has assured the public that exports and imports of crude oil, gasoline and other liquid fuels will not be immediately affected. This work is carried out by other employees, so there is no immediate threat to fuel supplies or prices.

However, experts warn that there may not be immediate disruption in the oil and gas industry, but this could change if the strike continues for a long period of time.

RELATED: Port strike update: 45,000 stop work along East Coast and Gulf docks

The longer the strike lasts, the more likely it is to disrupt the supply chain essential to transporting oil and gas products. As Adam Ferrari, CEO of Phoenix Capital Group, recently explained in a FOX Business InterviewDisruptions could eventually lead to shortages, which could lead to price increases at the consumer level.

“It’s a domino effect,” Ferrari said. “Increased gas prices could also lead to fluctuations in stock prices and uncertainty among investors and markets. This, in turn, could also impact government regulations and policies that are already causing tensions in this sector.”

What impact does the strike have on oil and gas transportation?

While oil tankers and natural gas products are not directly affected by the current strike, the broader impact on the shipping industry could have a knock-on effect.

East and Gulf Coast ports account for about half of all U.S. container imports, meaning the ongoing disruption could affect the entire supply chain.

As Phil Flynn, an energy market analyst, pointed out, the strike could reduce oil demand because if the strike extends, factories could close, which would further dampen overall oil demand.

“Oil tankers and LNG will not be affected as the dock workers’ strike impacts container ships, but if these ships are not moving, they will not burn oil,” Flynn wrote. “The possibility of factories closing due to the strike will also reduce demand for oil and could lead to a larger recession in the U.S., further depressing demand.”

What happens if the strike continues?

If the strike continues, the impact will be felt throughout the industry. The oil and gas industry could face rising prices as supply chains become increasingly strained, particularly for natural gas products that rely on labor to load and unload.

Ferrari noted that this would not only impact gasoline prices, but could also lead to fluctuations in stock prices and market uncertainty that would impact government regulations.

President Biden has not yet intervened despite calls from trade groups such as the National Retail Federation and the U.S. Chamber of Commerce to use his authority under the Taft-Hartley Act to force ports to resume operations. As the strike progresses, experts like Patrick Anderson of the Anderson Economic Group expect economic damage to mount, potentially costing the U.S. economy billions of dollars each day.

The source:

This article is based on information from a Fox Business report on the ongoing U.S. port strikes and their potential impact on the oil and gas industry, as well as expert opinions on the long-term consequences. Other references include analyzes from JPMorgan and the Anderson Economic Group on the economic costs of prolonged strikes.