Sandy destroys East Coast oil demand

October 29, 2012 04:38 AM
Storm Surge

As the East Coast and the largest city in the United States, New York, gets ready for Franken-storm, the energy markets will price in the risk and the balance between lost supply and the destruction of demand. While the storm will shut down 6.5% of U.S. refining capacity and motorists will top off their tank, the shutdown of major cities and the expected power outages may take a toll on demand unlike anything we have seen before. The impact on demand may not last for hours but more than likely, for days. This could be the biggest demand destruction event in history. The East Coast is by far the largest consumer of gasoline as they consumed 8,819,000 barrels per-day.

 

EIA Gas Consumption in Thousand Barrels per day

 

Feb-12

Mar-12

Apr-12

May-12

Jun-12

Jul-12

View History

   
 

U.S.

 

8,622

8,633

8,817

8,996

9,035

8,819

1945-2012

   
 

East Coast (PADD 1)

 

3,059

3,122

3,164

3,193

3,202

3,100

1981-2012

   
 

Midwest (PADD 2)

 

2,389

2,356

2,444

2,545

2,600

2,518

1981-2012

   
 

Gulf Coast (PADD 3)

 

1,419

1,392

1,399

1,439

1,363

1,347

1981-2012

   
 

Rocky Mountain (PADD 4)

 

324

312

300

300

314

331

1981-2012

   
 

West Coast (PADD 5)

 

1,431

1,452

1,511

1,519

1,555

1,522

1981-2012

   

They are also the largest consumer of distillates

 

 

GraphClear

Feb-12

Mar-12

Apr-12

May-12

Jun-12

Jul-12

View History

 

U.S.

 

3,980

3,706

3,704

3,745

3,729

3,552

1945-2012

 

East Coast (PADD 1)

 

1,313

1,130

1,039

1,024

964

986

1981-2012

 

Midwest (PADD 2)

 

1,089

1,077

1,126

1,171

1,205

1,116

1981-2012

 

Gulf Coast (PADD 3)

 

916

849

855

860

831

720

1981-2012

 

Rocky Mountain (PADD 4)

 

191

187

184

188

197

215

1981-2012

 

West Coast (PADD 5)

 

472

463

499

503

532

515

1981-2012

Bloomberg News reported, “West Texas Intermediate futures slid as much as 1 percent, while prices of the motor fuel advanced as much as 1.9 percent. Sandy will probably make landfall tomorrow, according to a National Hurricane Center advisory. Phillips 66, NuStar (NS) Energy LP and Hess Corp. (HES) said they are shutting or reducing output at New Jersey refineries as a precaution against the storm that may become the worst to hit the region in 100 years.”

Gas prices on the East Coast have risen only modestly, as with the rest of the country they continue their retreat. In New York City we have only seen prices go up about a nickel and in other states on the East coast they have actually fallen. The fear may come in the aftermath of the storm as heating oil supply is historically tight. 

About the Author

Phil Flynn is a senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. Phil is one of the world's leading market analysts, providing individual investors, professional traders, and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline, and energy markets.