As the East Coast and the largest city in the United States 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 US 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 3,20200 barrels per-day.
EIA Gas Consumption in Thousand Barrels per day
They Are Also the Second Largest Consumer of distillates
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 in East Coast have risen only modestly as 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 fell. The fear may come in the aftermath of the storm as heating oil supply is historically tight.
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