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Oil Fundamentals Overturn Geopolitical Risk

Oil Fundamentals Overturn Geopolitical Risk

Geopolitical risk from Iraq and…

Fuel Crunch In Florida As Hurricane Season Approaches

Fuel Crunch In Florida As Hurricane Season Approaches

Florida, the third largest consumer of gasoline behind California and Texas and the largest consumer on the U.S. East Coast, is experiencing tight supplies of gasoline due to high demand and weak fuel infrastructure, according to a report by Bloomberg.

Demand for gasoline in Florida is the third highest it’s ever been at this time of year. Making matters worse, stockpiles of gasoline are 7 percent lower than a year ago, and at their lowest levels in the U.S. southeast since November, 2012.

Florida receives most of its gasoline via ship from refiners on the Gulf Coast. The Sunshine State has no refining capacity of its own, making it dependent on out-of-state shipments for 97 percent of its supplies. The March oil spill in Galveston Bay that shut down shipping traffic in Houston for several days also cut into Florida’s supplies.

Related Article: AAA: Drivers Should Soon See Relief At The Pump

There are only a limited number of authorized ships that can carry fuel between U.S. ports, 42 to be exact. Florida has to compete with other regions, such as the Mid-Atlantic and Northeast, for available shipments.

Higher demand and lower supply is raising concerns about fuel shortages just as hurricane season is approaching. “Any hiccup is going to be reflected big time,” Danny Alonso, a fuel distributor in Hialeah, Florida told Bloomberg. “So what happens when a hurricane shuts down the Gulf for a week or 10 days?”

The possibility of an El Nino  this year is growing, however, as temperatures in the Pacific Ocean have spiked. El Ninos occur every two to seven years when ocean temperatures rise and contribute to hotter weather. This can result in more extreme events – such as droughts and floods – but El Ninos may also contribute to a lower occurrence of hurricanes in the Atlantic Ocean.  

By Joao Peixe of Oilprice.com



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