Hurricane Milton hampers gasoline supply chain

Hurricane Milton made landfall in Florida late Wednesday night and residents in areas impacted by the life-threatening storm are likely to see disruptions to gasoline supplies until the storm has passed and shipments resume.

Gas shortages were reported at stations in parts of central Florida earlier this week as residents in the area filled up their tanks and hit the road for destinations outside of Milton's path. Others stocked up on gasoline to fuel generators that would be relied upon to keep the lights on in the event of a power outage.

The American Petroleum Institute (API), which represents the U.S. oil and natural gas industry, said that industry members are working with government officials on addressing supply issues and to set the stage for a return to normal operations once it's possible.

"Our industry is closely monitoring Hurricane Milton and will work with state and federal officials to help alleviate supply issues and enable normal operations to resume as quickly and safely as possible after the storm has passed," said API spokesperson Scott Lauermann in a statement to Gxstocks.

HURRICANE MILTON DRIVES GAS SHORTAGE IN FLORIDA AS RESIDENTS FLEE STORM

People line up in their cars for fuel at a gas station ahead of Hurricane Milton's expected landfall in Lakeland, Florida. (Photo by MIGUEL J. RODRIGUEZ CARRILLO/AFP via Getty Images / Getty Images)

A spokesperson for ExxonMobil told Gxstocks, "Our primary focus is the safety and well being of our employees and Florida communities. We recognize that fuel supply is critical, and we're working to supply our Port Everglades fuels terminal with gasoline and diesel to support local emergency responders and community needs." 

"We’re prepared to continue operating our Port Everglades fuels terminal 24 hours a day, and we're ready for increased truck traffic to assist efforts in getting fuel where needed," ExxonMobil's statement continued. "We’re also working with others in the industry, including third-party distributors, to help supply gas stations as efficiently and safely as possible to meet the need for fuel."

Gxstocks also reached out to Chevron, ConocoPhillips and Shell about efforts to mitigate supply chain disruptions and plans to resume operations after the storm.

'WAFFLE HOUSE INDEX' SHOWS FLORIDA CLOSURES AS HURRICANE MILTON APPROACHES

Fuel trucks leave Port Everglades ahead of Hurricane Milton on October 09, 2024, in Fort Lauderdale, Florida.  (Photo by James D. Morgan/Getty Images / Getty Images)

An update from the office of Florida Gov. Ron DeSantis noted that 25 Florida Highway Patrol Troopers were escorting fuel trucks from Port Tampa and SeaPort Manatee to fueling stations around the Tampa area throughout Tuesday night into Wednesday morning. 

"Additional troopers will continue these escorts around the clock as long as it is safe to do so until landfall," the update added.

Inbound and outbound shipping traffic at Port Tampa Bay has been halted, as well as several other Florida seaports in anticipation of the storm. The Department of Energy's Energy Information Administration (EIA) noted that 43% of Florida's petroleum products, including gasoline and diesel, move through Port Tampa Bay.

"The duration of the port closures and impacts from Hurricane Milton on trade movements for petroleum and natural gas remain uncertain," EIA wrote on Wednesday.

HURRICANE MILTON: WHAT SHOULD EV OWNERS DO BEFORE AND AFTER STORM?

Tankers and cargo ships moving goods between U.S. ports are required to comply with the Jones Act. (Photo by DANIEL SLIM/AFP via Getty Images / Getty Images)

An obscure shipping law known as the Jones Act could potentially have an impact on the resumption of regular gasoline supplies to Florida. The law requires goods moved by water between ports in the U.S. be carried on vessels flagged and registered in the U.S., that are also owned by Americans, crewed by Americans and are built domestically.

Colin Grabow, associate director at the Cato Institute's Herbert A. Stiefel Center for Trade Policy Studies, told Gxstocks that the Jones Act is "relevant for Florida because Florida is essentially an energy island – there are no interstate pipelines that connect it to, say, the Colonial Pipeline, or any refineries along the Gulf Coast."

A thunderstorm can be seen moving over Tampa in the distance from St. Petersburg, Florida, ahead of Hurricane Milton's expected landfall in the middle of this week. (BRYAN R. SMITH/AFP via Getty Images / Getty Images)

As a result, Florida relies heavily on seaborne shipments of fuel as well as shipments trucked in from adjacent states. However, there are relatively few Jones Act-compliant tankers – Grabow explained that out of the global fleet of 7,500 tankers there are just 55 that comply with the law's requirements.

"I think in emergency situations you want to have as much flexibility, as many options as possible. And this law means that we'll have a lot fewer vessels to choose from to move supplies and fuel to Florida if that need arises."

Grabow noted that there have been several waivers of the Jones Act in response to hurricanes, including notable examples by President George W. Bush in response to Hurricane Katrina in 2005, President Trump for Hurricane Maria in 2017 and President Biden for Hurricane Fiona in 2022. 

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Those waivers have proven politically controversial, particularly the most recent 2022 waiver which saw a BP-owned tanker that had departed Texas bound for the Netherlands offload fuel in Puerto Rico. Grabow said that supporters of the Jones Act argued that such waivers should only be issued for ships that are empty at the time of the waivers issuance. 

"The upshot being that if this was to repeat itself, a lot of people think, 'well, the government can just waive the Jones Act,' but it's become much more difficult to issue those waivers since Biden did two years ago and since Trump did seven years ago after Hurricane Maria," Grabow said.