Hurricane Matthew Causing Fuel Headaches
By Samantha Oller on Oct. 06, 2016MIAMI -- As Hurricane Matthew barrels toward the Southeast coast, the effect on fuel supply and prices is just beginning.
Many states that just ended states of emergency declared for the recent Colonial Pipeline outage—South Carolina, North Carolina and Georgia—found themselves declaring new ones in preparation for Hurricane Matthew this week. Meanwhile, Florida was bracing for the Category 4 storm's direct hit this Thursday.
NACS has provided a number of resources for fuel retailers in the path of the hurricane here, including information on crisis preparation and disaster recovery.
Following are a few of the key issues fuel retailers are dealing with in advance of the storm ...
Price volatility
Retail gasoline prices could be volatile after Hurricane Matthew roars through the Southeast, as it shakes up supply and demand dynamics.
“Hurricane activity can have a mixed impact on supply and demand,” Matt Smith, director of commodity research for ClipperData, told CNBC. “While supply disruptions can be a bullish influence, the dent to demand caused by inclement weather can serve to offset this.”
In Florida, the state retail average on Thursday was up more than 4 cents per gallon (CPG) compared to a week ago to hit $2.185, according to AAA. It remained below the national average of $2.246 per gallon, however.
In North Carolina, the average rose about 2 CPG from a week ago, and in South Carolina it was up less than 1 CPG.
Demand destruction
Tom Kloza, global head of energy analysis for the Oil Price Information Service (OPIS) told CNBC that Hurricane Matthew will likely cause fuel demand to drop over the next few days.
“This is a demand destroyer. That’s the bottom line,” said Kloza, explaining that many drivers will prefer to stay off of the road in the rain. This decline in demand should counterbalance the local increase in retail pump prices.
Florida will probably feel the greatest impact from a fuel perspective, Kloza said, because it brings oil in by ship and there is limited supply. Fortunately, the Southeast region has access to some extra crude that had originally been bound for the Northeast but became stranded after last month’s Colonial Pipeline shutdown.
Florida fuel outages
According to GasBuddy’s Gasoline Availability Tracker, a crowdsourced tool that shows fuel availability, the vast majority of gas stations in Florida appeared to have supply this Thursday.
In the Orlando market, AAA reported that a few of the highest-volume stations have been dealing with outages, but overall supply is not an issue.
“A few stations have run out of gas here and there, but it’s not a widespread thing,” Karissa Bursch, spokesperson for RaceTrac, told the Orlando Sentinel. “We are getting stations refueled pretty quickly.”
Lori Bruce, spokesperson for Wawa, told the newspaper that the chain had not had any fuel shortages in the area.
One place that is running on empty: Palm Beach, Fla., where the only gas station in town ran out of fuel this week. According to the Palm Beach Daily News, Gray’s Sunoco saw a 400% surge in fuel sales this past Monday and Tuesday. By Wednesday afternoon, its pumps had run dry. The station’s fuel supplier, who trucks in gasoline from the Port of Miami, was only able to deliver a partial load, according to general manager Brett Gray ( above, left, with father Richard).
“We were supposed to get a load last night, but only got a half load, 3,700 gallons, because so many stations are running out and they want to be fair,” Gray said of his fuel distributor. The site will not be able to reopen until the weekend at the earliest.
Lowcountry issues
In the coastal Lowcountry region of South Carolina, gas stations have dealt with a surge of fuel demand and some depleted underground storage tanks, according to The Post and Courier. But thus far, there have not been supply shortages.
“We’re scrambling,” Michael Fields, executive director of the South Carolina Petroleum Marketers Association, told the newspaper. “Supplies are adequate, but they’re tight.”
Gasoline supply in the Lowcountry comes from terminals filled by crude tankers in the Port of Charleston, but more gas stations on the coast are starting to pull supply from the Columbia area. In the meantime, the state is trying to keep routes open from the Midlands region into the Lowcountry to ensure new supply is flowing.
The South Carolina attorney general has also asked consumers to share any reports of potential price gouging with documentation after Gov. Nikki Haley declared a state of emergency this week.