Markets

Oil firms work round Jones Act to provide U.S. gas markets

Oil tankers are docked on the port of Tuxpan, in Veracruz state, Mexico April 22, 2020. REUTERS/Oscar Martinez/File Photograph

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Aug 18 (Reuters) – U.S. oil firms are working round a century-old transport regulation to provide gas to the U.S. East Coast, in keeping with information from Refinitiv and oil buying and selling sources, as excessive demand for gasoline and international disruptions in gas markets despatched costs increased.

Merchants are more and more sending unfinished gasoline parts from the Gulf Coast to Buckeye Companions LP’s terminal within the Bahamas, also called Borco, the place they’re blended into completed gasoline to be despatched to the U.S. East Coast. The unusual commerce is an indication of heavy demand for merchandise up and down the coast, residence of a few of the nation’s largest shopper markets.

The commerce represents a authorized workaround to the Jones Act, which requires items moved between U.S. ports to be carried by ships constructed domestically and staffed by U.S. crew.

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There’s a restricted amount of these vessels, which raises the price of these shipments.

Since March, at the least eight vessels have transported gasoline parts from the Gulf Coast to the Borco terminal within the Bahamas, after which delivered completed gasoline from there to ports alongside the Atlantic, in keeping with transport information.

The vast majority of the vessels have been chartered by BP Plc . BP declined to remark.

Usually, Gulf Coast sellers extend earnings both by exporting merchandise, or by sending gasoline or diesel to the East Coast by means of the Houston-to-New Jersey Colonial Pipeline, which carries roughly 2.5 million barrels per day of gasoline and different fuels.

That line is jammed proper now as U.S. East Coast refineries wrestle to fulfill demand. These refiners are working at greater than 98% capability, in keeping with the U.S. Vitality Data Administration.

Shippers submit requests to Colonial (COLPI.UL) to maneuver refined merchandise on Colonial, however proper now these requests exceed the road’s general capability. Area on the road is dearer than in years, merchants mentioned, making it immediately worthwhile to move items with the Bahamas cease.

This commerce doesn’t run afoul of the Jones Act, however it was unusual earlier than Russia’s invasion of Ukraine, and didn’t happen in 2021, in keeping with obtainable transport information.

In 2021, the USA exported 146,000 barrels of gasoline parts in whole to the Bahamas, in keeping with the EIA. In Could 2022 alone, the latest information obtainable, that determine was 498,000 barrels.

Final yr, the USA imported 699,000 barrels of completed gasoline from the Bahamas, or 1.8% of all imports of that product for the yr. Up to now in 2022, the USA has already imported 1.2 million barrels of gasoline from the Bahamas.

In March, the Agean Star and Gulf Rastaq loaded gas parts in Houston, discharged at Borco and later equipped completed gasoline to Savannah, Georgia, and Jacksonville, Florida, in keeping with transport information.

The Nave Luminocity and Navig8 Success vessels loaded gasoline parts within the Gulf, discharged at Borco after which transported completed gasoline to New Jersey and New York, transport information confirmed. A number of extra ships made comparable voyages via the summer time.

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Reporting by Laura Sanicola in New York
Modifying by Matthew Lewis

Our Requirements: The Thomson Reuters Belief Ideas.

Laura Sanicola

Thomson Reuters

Studies on oil and power, together with refineries, markets and renewable fuels. Beforehand labored at Euromoney Institutional Investor and CNN.

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