Rhine Drought Means Gas Shortages Amid Oil Glut

November 2nd, 2015 by

Low levels on the Rhine River are stranding oil barges

Low levels on the Rhine River are stranding oil barges

As difficult as it is to believe, Switzerland and part of Germany are experiencing fuel shortages, while European ports are filled to bursting with crude oil. The culprit in this case is a severe drought in the Rhine Valley, which started in August. With river levels at a four-year low, the oil barges cannot get upstream to deliver oil to refineries.

The situation has gotten so bad, the Swiss government had to release oil from its strategic petroleum reserve. This contrasts with the situation at the Amsterdam-Rotterdam-Antwerp shipping nexus, which has virtually run out of places to store the crude oil that’s coming in. Oil tankers are backed up in the harbors, waiting for a chance to unload.

The rail system doesn't have the capacity to meet sudden surge in petroleum shipments

The rail system doesn’t have the capacity to meet sudden surge in petroleum shipments

The majority of transport of bulk goods in the Rhine Valley has been done by river barges for hundreds of years. As the drought strands oil barges, companies are turning to the rail system, but there’s not enough tank cars to meet the sudden surge in demand.

If the drought continues to strand oil barges, Germans and Swiss may see a spike in fuel costs, at the same time that oil prices are bottoming out.

 

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