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Traders are increasingly sending unfinished gasoline components
from the Gulf Coast to Buckeye Partners LP’s terminal in the
Bahamas, also known as Borco, where they are blended into
finished gasoline to be sent to the U.S. East Coast. The
uncommon trade is a sign of heavy demand for products up and
down the coast, home of some of the nation's largest consumer
markets.
The trade represents a legal workaround to the Jones Act, which
requires goods moved between U.S. ports to be carried by ships
built domestically and staffed by U.S. crew.
There is a limited quantity of those vessels, which raises the
cost of those shipments.
Since March, at least eight vessels have transported gasoline
components from the Gulf Coast to the Borco terminal in the
Bahamas, and then delivered finished gasoline from there to
ports along the Atlantic, according to shipping data.
The majority of the vessels were chartered by BP Plc. BP
declined to comment.
Normally, Gulf Coast sellers make bigger profits either by
exporting products, or by sending gasoline or diesel to the East
Coast by way of the Houston-to-New Jersey Colonial Pipeline,
which carries roughly 2.5 million barrels per day of gasoline
and other fuels.
That line is jammed right now as U.S. East Coast refineries
struggle to meet demand. Those refiners are running at more than
98% capacity, according to the U.S. Energy Information
Administration.
Shippers submit requests to Colonial to move refined products on
Colonial, but right now those requests exceed the line's overall
capacity. Space on the line is more expensive than in years,
traders said, making it suddenly profitable to transport goods
with the Bahamas stop.
This trade does not run afoul of the Jones Act, but it was
uncommon before Russia's invasion of Ukraine, and did not occur
in 2021, according to available shipping data.
In 2021, the United States exported 146,000 barrels of gasoline
components in total to the Bahamas, according to the EIA. In May
2022 alone, the most recent data available, that figure was
498,000 barrels.
Last year, the United States imported 699,000 barrels of
finished gasoline from the Bahamas, or 1.8% of all imports of
that product for the year. So far in 2022, the United States has
already imported 1.2 million barrels of gasoline from the
Bahamas.
In March, the Agean Star and Gulf Rastaq loaded fuel components
in Houston, discharged at Borco and later supplied finished
gasoline to Savannah, Georgia, and Jacksonville, Florida,
according to shipping data.
The Nave Luminocity and Navig8 Success vessels loaded gasoline
components in the Gulf, discharged at Borco and then transported
finished gasoline to New Jersey and New York, shipping data
showed. Several more ships made similar voyages through the
summer.
(Reporting by Laura Sanicola in New York; Editing by Matthew
Lewis)
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