Middle East war spotlights Florida’s fuel supply vulnerability

By Shariq Khan

NEW YORK, April 10 (Reuters) – Florida residents have paid significantly more than the nationwide average for gasoline and diesel in recent weeks as the U.S.-Israeli war with Iran forces the Sunshine State to compete with Europe and Asia for fuel produced in Texas and other U.S. states, analysts said.

The rare, lofty premiums highlight how Iran’s blockade of the Strait of Hormuz has exposed vulnerabilities in oil and fuel supply chains around the world by upending historical trade routes.

There are no refineries in Florida, as the third-most populous U.S. state is prone to severe hurricanes, and no pipelines delivering fuel produced by U.S. Gulf Coast refineries either.

Some fuel delivered to Georgia on the Colonial Pipeline is hauled into Florida via trucks, but the majority of the state’s fuel needs are met by barges sent from the U.S. Gulf Coast.

Fuel producers have prioritized exports to Europe and Asia over barge shipments within the U.S., as international markets have been hit hardest by the Strait of Hormuz closure, improving export margins.

“Ships that would normally move product from the lower Mississippi or Houston to Florida ports are largely headed elsewhere,” said Tom Kloza, chief energy advisor to Gulf Oil.

Florida residents this month paid as much as 15 cents a gallon, or nearly 4% more than the national average for gasoline, and as much as 35 cents, or over 6% more for diesel, data from GasBuddy showed. Typically, prices in the state are below the average nationwide.

Those are the highest premiums Floridians have paid for gasoline over the national average since 2013, and the highest ever for diesel, the data showed. California and Hawaii remain the states paying the biggest premiums for their fuel.

Gasoline prices in Florida were back under the national average as of Friday at $4.06 a gallon as a ceasefire deal with Iran has helped ease supply concerns, but diesel prices still averaged about 6 cents over the national average at $5.77 a gallon, GasBuddy data showed.

High gasoline and diesel prices have become a major concern for President Donald Trump and his Republican Party as they prepare for November’s midterm elections. The president and top Republicans, including outgoing Florida Governor Ron DeSantis, have regularly attacked Democrats for high fuel costs in states like California.

“Florida is uniquely susceptible to this situation because the majority of its fuel, except in the panhandle, is brought in via barges,” said Patrick De Haan, head of petroleum analysis at GasBuddy.

High freight rates have added another layer of complications for Florida, as the barges still bringing fuel to the state were doing so “at almost nonsensical freight rates,” Gulf Oil’s Kloza said.

Freight rates have surged globally, including in the U.S. Gulf Coast region, due to the Strait of Hormuz blockade.

Florida’s reliance on barge supplies from the U.S. Gulf Coast has become a bigger concern for the state because of rapid population growth resulting in higher demand, GasBuddy’s De Haan said.

Total gasoline consumption in Florida rose to about 224 million barrels in 2023, a 32-million-barrel rise compared to 2011 and the biggest jump over that period anywhere in the U.S. except Texas, data from the U.S. Energy Information Administration showed.

(Reporting by Shariq Khan in New York; Editing by Nia Williams)