Blog September 05, 2019

The impending arrival of Hurricane Dorian stoked gasoline demand in Florida at the end of August, pushing gasoline rack activity to levels not seen since Hurricane Irma in September 2017. As Dorian’s forecast track shifted away from a direct hit to Florida, gasoline demand grew into the coastal southeastern U.S. on August 30 through September 2. Dorian’s forecast track shifted over the weekend from landfall in Florida to a parallel track to the coastline, with possible landfall in the Carolinas September 4 or 5. The shift in the forecast prompted mandatory evacuations in coastal counties for Florida, Georgia, North Carolina, and South Carolina, resulting in higher gasoline demand rack activity, according to our Supply Side data.

Meteorologists originally anticipated Hurricane Dorian to make landfall on Florida’s east coast September 3, but a lack of steering currents slowed the forward motion of the storm on August 31. That same day, Dorian made landfall in the northwestern Bahamas as a record-setting Category 5 hurricane for the Atlantic with 185 mph winds, less than 100 miles off Florida’s east coast. Dorian remained stationary over the island of Grand Bahama until September 3, weakening to a Category 2 hurricane, before making its slow turn northwest.

As of 2:00 p.m. ET September 5, Dorian hovered around 60 miles south of Myrtle Beach, South Carolina, according to the National Hurricane Center (NHC). Dorian is expected to turn towards the northeast later on September 5, moving close to the South Carolina coast and possibly making landfall in North Carolina. While the storm weakened in intensity from its peak on August 31, Dorian’s size grew, according to the NHC, increasing the likelihood of coastal impacts even without the eye making landfall until later in the week.

Hurricane Dorian
Figure 1: Satellite imagery of Hurricane Dorian. Source: NOAA

Dorian’s widened regional impact lifted PADD 1C gasoline demand over the Labor Day weekend. PADD 1C gasoline rack activity jumped to 1.61mn bpd and 1.66mn bpd on August 29 and August 30, respectively, according to our Supply Side PADD data. On a rack activity basis, August 30 set the highest daily level in Supply Side history back to January 2014.

On a normalized basis to the U.S. Energy Information Administration’s (EIA) Prime Suppliers, PADD 1C demand on August 29 and August 30, as high as 1.933mn bpd, was above the levels seen ahead of Hurricane Florence on September 11 to September 13, 2018. However, this was still below the coverage-adjusted estimated 2mn bpd peak of PADD 1C daily gasoline demand seen on September 7, 2017, three days ahead of Hurricane Irma’s arrival. Currently, Genscape covers 85 percent of PADD 1C gasoline demand when compared to U.S. EIA’s Prime Suppliers data, and this relationship can be used to normalize Supply Side rack activity to estimate total gasoline demand.

Supply Side rack activity
Figure 2: Supply Side rack activity, PADD 1C. Source: Genscape

Gasoline demand in Florida remained strong August 30-31 as the forecast track for Dorian remained uncertain. While rack activity in Florida on August 30 reached the highest levels recorded in Supply Side history back to January 2014, the run-up in gasoline demand ahead of Dorian lagged behind levels seen ahead of Hurricane Irma in September 2017, according to our Supply Side data normalized for coverage increases. This is likely due to the change in Dorian’s forecast track to primarily affecting Florida’s east coast.

In Florida, gasoline rack activity surged to nearly 600,000 bpd on August 29 and 625,000 bpd August 30, as our data shows, the highest daily totals seen in Supply Side history for Florida and over 36 percent above prior week levels. Genscape covers 91 percent of Florida gasoline demand when comparing Supply Side data to EIA Prime Suppliers and used this relationship to estimate gasoline demand August 29 to 655,000 bpd and August 30 to 685,000 bpd. From August 28 -31, we calculated that gasoline demand averaged 629,000 bpd, 28 percent above year-ago levels for the state on a normalized basis. As Dorian’s outer bands began to impact the state on September 1, gasoline rack activity fell to just 282,000 bpd on September 2, 31 percent below the previous week.

Gasoline rack liftings in Florida
Figure 3: Supply Side gasoline rack liftings in Florida. Source: Genscape

Gasoline rack activity in North Carolina and South Carolina jumped higher over Labor Day weekend as the forecast track for Dorian shifted. Rack activity for gasoline in North Carolina on September 1 rose 14 percent from the previous week to 215,000 bpd, according to Supply Side data, an abnormally high level of rack activity for a Sunday. In South Carolina, gasoline rack liftings rose to 168,000 bpd on September 2, 23 percent above the previous week. On a normalized basis, gasoline demand in the Carolina's neared 500,000 bpd from August 31 to September 2, still below the 622,000 bpd average levels seen in the four days ahead of Florence’s arrival.

North and South Carolina rack activity
Figure 4: Supply Side gasoline rack activity, North and South Carolina. Source: Genscape

As Dorian begins to impact the coastal areas of PADD 1C, the effect on overall demand could be muted compared to previous hurricanes due to the lack of impacts further inland. This could result in short-term supply disruptions for PADD 1C, as the slow crawl of Dorian along the southeastern U.S. coast will delay any inbound waterborne movements of refined products.

While North Carolina and South Carolina receive product via 2.6 mn bpd Colonial system from Pasadena, TX to Linden, NJ and the 700,000 bpd Plantation system from Pasadena, TX to VA, gasoline supply/demand balances for PADD 1C, particularly Florida, depend on waterborne deliveries into Florida ports, Savannah, GA, Charleston, SC, and Wilmington, NC. In terms of intra-U.S. waterborne movements, PADD 1C received approximately 371,000 bpd of motor gasoline blending components in May 2019, the most recent monthly EIA data point. On imports, PADD 1 in total received 1.1mn bpd of gasoline imports in May, with destinations split between PADD 1A, PADD 1B, and PADD 1C, according to the EIA.

Due to the slow approach of Dorian to the U.S. east coast and the potential for damage to docks and supply receipt infrastructure, waterborne gasoline resupply will likely be interrupted into PADD 1C over the next week.

Genscape’s Supply Side Monitor and Analyst data provides insight into PADD and rack-city refined product volumes and average prices into PADD from actual transactions at the rack level, where gasoline and diesel are distributed from secondary storage terminals to retail stations. Currently, Genscape covers 82% of total U.S. gasoline demand and 72% of total U.S. diesel demand as compared to monthly EIA Prime Suppliers data. To learn more about our Supply Side Data or to request a demo, please click here.