Premiums for Florida refined product prices revert to norms as supply competition recedes

Premiums for delivered refined products into Florida returned to their norms April 1 after a winter hovering near historical highs, when the populous state competed against higher demand up north and fewer available Jones Act ships.

Platts, part of S&P Global Commodity Insights, started assessments April 1 for CBOB, premium CBOB, ULSD and jet fuel at 15.75 cents/gal, 15.75 cents, 12.50 cents and 14 cents over their US Gulf Coast Colonial Pipeline counterparts, respectively, into both Tampa and Port Everglades. Outright prices were at $2.594/gal, $2.9025/gal, $2.6776/gal and $2.7496/gal, respectively.

Imports largely come from the Gulf Coast, but regions from the US Atlantic Coast to Europe and Asia help supply the southernmost US state. Sources said Florida overwhelmingly trades as a differential to the USGC pipeline, plus Jones Act freight costs, waterborne premiums and line space value.

Florida premiums over the USGC were estimated as high as 28 cents/gal for gasoline in November and 37 cents for jet fuel and diesel in December. They declined in 2024, reaching as low as 6 cents for gasoline in March.

One Gulf Coast gasoline trader said the highs and lows since late last year mirrored historical levels. "I have seen spreads as high as plus 25 cents and as low as plus 5 cents vs. the Gulf Coast," he said. "Florida has the constraint of being limited by the number of Jones Act ships available to deliver into it, which can either drive shortage or excess."

Other sources said USGC premiums held a 6- to 7-cent premium until the pandemic, but typically trades twice that now as people no longer just dump excess barrels into the heavily populated state.

"It ranges over the last couple of years from 12 to 17 cents/gal, mostly depending on USGC freight and landed Trans-Atlantic values," another source added.

Reliant on Gulf Coast, foreign imports

On April 1, Platts launched gasoline, diesel and jet fuel cargoes delivered into Florida, reflecting minimum 125,000-barrel cargoes delivered three to 15 days forward on a DDP (inside duty) basis in Port Everglades and Tampa. Platts also launched dead prompt New York barge assessments and Laurel Pipeline ULSD assessments April 1, capturing a broader scope of markets with increasing spot trading.

The Florida market is isolated from the rest of the country as there are no major pipelines into the peninsula. Florida also has no refineries. The state relies on imports to satiate its growing population.

Florida can be supplied from the US Gulf Coast using only Jones Act vessels, and from the wider export market using international-flagged ships.

On Nov. 1, Platts launched daily clean tanker Jones Act freight assessments on the US Gulf Coast-to-Tampa/Port Everglades routes, to provide transparency into domestic maritime shipping markets. Rates have been slowly rising, but sources said supply had been the problem. They said some ships repositioned to California for renewables delivery in early winter, although that appears to have reverted back.

Perhaps more importantly, refinery turnarounds in the Atlantic basin led to tight markets, pulling more USGC material to New York Harbor on Colonial. Shippers paid up for access to the oversubscribed line space, leading to higher Florida prices. By March, Colonial allocations had disappeared, and Europe material was seeking a home.

"Some cargoes arriving from East of Suez are going across to the US, and I think that that's how Europe will get rid of some oversupply, by sending it across the Atlantic," one jet trader said.

New York RBOB barge differentials to the underlying NYMEX RBOB futures, meanwhile, hit their lowest mark in at least 14 years April 1, signifying less competitive demand up north.

Foreign imports focus on gasoline, jet fuel

US Customs data showed foreign gasoline imports to Florida reached 74,800 b/d last year, roughly double the year earlier. It rose again through mid-March 2024, to about 84,400 b/d. Foreign imports almost exclusively enter into Port Everglades, Port Canaveral and Jacksonville, with Tampa pulling mainly from the USGC.

Jet fuel in Florida also imports a hefty volume and functions as the marginal European barrel. Imports to Florida rose 3,000 b/d to 24,900 b/d last year, according to US Customs Data. Port Everglades took nearly 62% and Tampa less than 1%.

Customs data showed Florida diesel imports rose 1,400 b/d to nearly 6,700 b/d in 2023.