Hurricane Florence is now approaching the Carolinas shores, where 1 million people are under evacuation. An additional 10 million will be directly affected by the storm in the week after landfall. We estimate that over the past 4 days oil demand has increased by approximately 170 MB/D, 3/4 of which will be in gasoline, as people prepare for the storm. Once the storm has made landfall, demand will fall significantly.
To get an idea of the likely demand loss Florence will cause, we analyzed the major storms that have hit PADD 3 and PADD 1 over the past 15 years. Sandy (which hit NYC) and Irene (Mid-Atlantic including D.C.) affected areas with very high density of population. As a result,
oil demand losses were particularly significant in the 4 weeks following the storm. Ike (Houston), Katrina (New Orleans) and Harvey (Houston and Louisiana) were significantly more powerful storms, but ended up striking areas with considerably lower population density. As a result, oil demand losses were more limited. Hermine, which was a powerful hurricane that passed through both the Gulf Coast and Atlantic regions, hit sparsely populated areas in Florida and Georgia, causing almost negligible demand losses.
Florence is a very powerful storm and is about to hit an area with population density comparable to Louisiana and Houston. The states that are likely to experience significant impacts from Florence consume 2,100 MB/D of gasoline, 660 MB/D of diesel/distillate, and 175 MB/D of kero-jet. In the 4 weeks after the storm, we estimate demand to drop 145 MB/D for gasoline and 55 MB/D for distillate, relative to baseline consumption. Jet fuel declines are proportional due to canceled flights out of hubs like Charlotte and Atlanta. In ensuing weeks, demand will recover and potentially move above the baseline, as rebuilding takes root. Still, Florence's likely aggregate losses, including the demand spike in the days preceding landfall, should be between 180 and 220 MB/D.