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September 15, 2017

Hurricanes Harvey and Irma lead to higher gasoline prices in Florida

graph of regular retail gasoline prices, as explained in the article text
Source: U.S. Energy Information Administration, Gasoline and Diesel Fuel Update
Note: Prices for Miami, Florida, are unavailable for September 11, 2017 because of insufficient survey responses.

Hurricane Irma significantly disrupted gasoline markets in Florida, first by prompting increased demand and then by disrupting the supply chain needed to deliver the fuel. The evacuation of people in anticipation of Hurricane Irma led to higher demand for transportation fuels and logistical challenges in supplying fuel to Florida that began before the hurricane made landfall on September 10, 2017.

There are no petroleum refineries in Florida or major pipelines connecting Florida to supply centers along the U.S. Gulf Coast or from neighboring states, so Florida is almost entirely supplied by marine movements of petroleum products from domestic and international sources.

Because Florida is largely dependent on marine movements of gasoline from the U.S. Gulf Coast, any threat of or actual disruption to supply sources and shipping routes, such as Hurricane Harvey, can affect gasoline markets. Between August 21 and August 28, 2017, when Hurricane Harvey made landfall in Texas, retail gasoline prices in Florida and Miami increased $0.10 per gallon (gal) and $0.05/gal, respectively, based on EIA’s weekly survey of gasoline prices.

In the 10 weeks prior to Hurricane Harvey’s landfall, Florida’s average gasoline prices were about 15 cents per gallon lower than the U.S. average. In the weeks since Harvey’s landfall, Florida's average gasoline prices rose faster than the U.S. average and now (as of September 11) are slightly higher than the U.S. average.

As Hurricane Irma approached, shipping traffic was diverted and ports closed, stopping the flow of petroleum products into Florida. Evacuations of large population centers preceding the hurricane increased passenger car travel and pre-storm fuel purchases. Because several supply options were partially disrupted, this demand increase resulted in a large draw on petroleum product inventories at product distribution terminals within the state.

Increased demand and falling inventories caused Florida and Miami gasoline prices to rise by $0.40/gal and $0.39/gal to $2.70/gal and $2.87/gal, respectively, between August 28 and September 4, 2017. Markets appeared to be anticipating a return to more normal conditions, and by September 11 state-wide average retail gasoline prices in Florida decreased one cent/gal from the prior week to $2.69/gal. In the wake of Hurricane Irma, EIA was unable to collect sufficient survey responses to publish retail gasoline prices for Miami for September 11, 2017.

Additional gasoline is expected to arrive in Florida through several large coastal ports. From there, fuel is transported to nearby markets by truck and by short-distance pipeline, which can lead to supply constraints at gas stations during periods of high demand.

South Florida is supplied by terminals in Port Everglades, just north of Fort Lauderdale. Terminals within the Port of Tampa supply much of the state’s west coast, as well as parts of central Florida such as Orlando. Other portions of central Florida are supplied by shipments from Port Canaveral on the Atlantic Coast. Northeastern Florida is supplied by terminals in the Port of Jacksonville.

As of September 13, 2017, the ports near Tampa, Jacksonville, and the Everglades have reopened, with others to follow. Soon after, shipments of petroleum products are expected to arrive from refineries in the Gulf Coast and Europe, as well as from product storage terminals in the Caribbean, Canada, and elsewhere in the United States.

The only gasoline supplied to Florida through a pipeline is sourced from a terminal in Bainbridge, Georgia, which is connected to the Colonial Pipeline system and supplies western Florida by long-distance tanker truck. The rest of western Florida is supplied by truck and barge movements on the Intracoastal Waterway from nearby refineries in Alabama and Mississippi.

map of Florida product supply, as explained in the article text
Source: U.S. Energy Information Administration, East Coast and Gulf Coast Transportation Fuels Markets
Note: Click to enlarge.

Principal contributor: Mason Hamilton