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Spring break travel and gasoline in Florida

Hydrocarbon Engineering,

Florida gasoline consumption typically peaks in March as seasonal population is high due to spring break travellers. Through the rest of the spring into the summer, gasoline consumption typically declines as tourism slows and seasonal residents head north to escape the summer heat. This consumption pattern obviously differs from that of other states, where gasoline consumptions typically peak in July and August and is low during winter months.

Changing face of Florida’s gasoline

Supply of gasoline in Florida is also changing. Historically, Florida’s gasoline was supplied from the US Gulf Coast (USGC) and augmented with imports. However, since 2007, Florida gasoline consumption has fallen 90 000 bpd to average 465 000 bpd last year. In 2007, Florida imported an average of 170 000 bpd of gasoline. By 2013 average imports were 31 000 bpd. That imports have declined more than consumption is partially attributable to Caribbean refinery closures. The 500 000 bpd HOVENSA refinery in the US Virgin Islands and Valero’s 235 000 bpd refinery in Aruba used to supply Florida with substantial volumes of gasoline. However, both are now idle and as a result USGC refineries have increased their share of supply to Florida.

The way that USGC supplies Florida has resulted in a tighter market in the state, despite consumption declines because Florida is not connected to the USGC by pipeline, almost all gasoline supplied to Florida is from waterborne cargoes. Ships and barges arrive at ports including Tampa, Port Everglades, Port Canaveral and Jacksonville. From the storage terminals at these ports, gasoline and other petroleum products are distributed to local markets via tanker truck. The only product supplied to Florida via pipeline is sourced from Bainbridge, Georgia.

Gasoline received

The gasoline shipped to Florida from USGC arrives via tankers and smaller barges. However, this fleet is relatively small, and increasing demand for vessels to move US crude oil production along the Texas and Louisiana coasts has diverted many vessels that had been moving products to Florida. The reduced vessel availability has resulted in fewer spot cargoes of gasoline being available in the state. Thus, an increasing share of Florida’s gasoline comes from shipments that are contractually obligated on a long term basis, which have already chartered coastwise compliant vessels. This has limited the availability of wholesale gasoline without contractual agreements which can respond to variations in demand.

As a result of the above, gasoline supplies in Florida have been tight and prices have increased compared with other locations. The increase in prices reflects the need to compete for spot cargoes in the Atlantic Basin. Given the limited vessel capacity to supply more gasoline to Florida from the USGC and the closure of Caribbean refineries, Florida must now compete with New York Harbor for the available cargoes from Europe and other Atlantic Basin sources.

Adapted from press release by Claira Lloyd

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