After wreaking havoc on the Caribbean islands on September 7, Hurricane Irma is barreling toward Florida and is expected to make landfall over the weekend, leading to a jump in gasoline demand, Genscape data shows. Many residents are relocating to avoid the brunt of the storm after mandatory evacuations were instituted for several cities in southern Florida. The sudden surge of drivers has led to heightened gasoline demand in the state, even with gasoline prices that remained relatively high following Hurricane Harvey. Reported fuel shortages have raised concerns in an already troubling time for residents.
Pre-storm gasoline demand leads to shortages
Total motor gasoline demand in Florida rose 62 percent between September 4-7 in preparation for Irma, according to Genscape’s Supply Side Analyst data. Truck rack loadings on September 7 increased by 64 percent from one week prior, and week-to-date (September 2-7) gasoline rack demand in the state was up 32 percent compared to the previous week (August 26-31).
Total PADD1C gasoline loadings, including other states that could be hit by Irma, increased 43 percent between September 4-7.
Heightened gasoline demand in Florida has led to shortages, making it difficult for many consumers to obtain fuel, according to multiple reports. However, Genscape reported that two waterborne cargoes diverted their course to Florida, delivering 570,000 bbls of gasoline and helping alleviate shortage concerns.
Spot rack prices for total motor gasoline in Florida climbed substantially for the week ending September 1, as supply disruptions caused by Hurricane Harvey lifted prices across the country. Despite the drastic uptick in demand, prices in Florida decreased approximately $0.10/gal between September 4-7, however they remained relatively high after the impact of Harvey compared to previous months. Average rack prices on September 7 were higher than the monthly averages in August and July by $0.30/gal and $0.41/gal, respectively.
A familiar phenomenon: Comparing Harvey and Irma
A similar trend was observed recently in Texas, as gasoline demand spiked in preparation for Hurricane Harvey. Genscape saw that gasoline rack demand increased beyond usual levels in the days preceding Hurricane Harvey’s landfall, up 15 percent between August 23-25. However, the storm caused severe flooding and infrastructure damage that obstructed roads, causing loadings in the state to drop 53 percent between August 25-27. Gasoline demand in Texas has begun to rebound, but remained below pre-storm levels as of September 7.
Unfortunately, Hurricane Irma is also forecast to cause significant flooding and destruction in Florida, which will likely cause a similar drop in gasoline demand. The silver lining is that Hurricane Irma will not likely have as far-reaching or long-lasting impacts as Harvey, at least in terms of the oil industry.
Florida is relatively isolated from other petroleum markets, which can make shortages, such as the current one, especially difficult to deal with. But petroleum consumers across the country are not dependent on Florida as they are on Texas. Florida has no refineries or major marine crude terminals, while Texas has more than five million barrels per day (bpd) of refining capacity. Therefore, the impact of Irma on petroleum markets should be mostly confined to the current gasoline shortages. Genscape will continue to monitor and report on the supply chain impacts of Hurricanes Irma and Harvey.
Genscape's Weekly Gasoline Demand Report is the industry's only weekly gasoline demand data based on actual rack activity. The report shares actual transactional data to help better evaluate U.S. retail gasoline demand two days before EIA estimates. To learn more, or to request a free trial of Genscape's Weekly Gasoline Demand Report, please click here.
Genscape’s Supply Side Analyst and Supply Side Monitor data is derived from actual transactions at the rack level, where gasoline and diesel are distributed from secondary storage terminals to retail stations. On average Genscape covers 74 percent of total gasoline rack activity and 68 percent of total diesel rack activity. This rack activity can be used as an indicator of retail (or tertiary) refined products demand. To learn more, or to request a trial of Genscape’s Supply Side Analyst and Supply Side Monitor, please click here.