Jared Ainsworth: Hey, welcome to Driving Discussions. I'm Jared Ainsworth, US Gasoline Editor at Argus Media, and joining me today are Delaney Ramirez, who covers Gulf Coast gasoline components, and Hannah Borai, who covers Gulf Coast gasoline.
Today, we're taking a look at two major themes shaping the US Gulf Coast gasoline market. First, the lingering impacts of the US-Iran war on gasoline flows and pricing, and then also the seasonal transition into higher RVP gasoline levels as we move toward the fall. Let's start with the war's effect on trade flows. So Delaney, one of the biggest stories this year was the Jones Act waiver that followed the outbreak of the US-Iran war.
How did that change movements of gasoline blend stocks and components around the country?
Delaney Ramirez: So we've seen a big shift in shipping for Gulf Coast components since the Trump administration issued a temporary waiver to the Jones Act in March. And this waiver opened up the opportunity for shippers to use foreign vessels for movements between U.S. ports. So to give some background,
From late 2024 to March of this year, Gulf Coast shippers were steadily sending components to the Bahamas as a roundabout way to make up for lower California refining capacity. And that was caused by planned refinery closures in California.
So, The shippers would send blending components to Buckeye Partners' Borco Terminal in Freeport in the Bahamas, where it could be blended and then re-exported to California. And by doing this, these shippers could essentially get around the Jones Act and its requirements to use US-flagged ships, which are in limited supply for deliveries between US ports.: For each month from November 2024 to March, the Bahamas were the top destination for Gulf Coast components.: The Bahamas was also the top origin for California component imports in 2025. And when looking at combined Finnish gasoline and blending components deliveries to California, the Bahamas were the second leading origin country just behind the US.
But when the waiver was issued in March, Gulf Coast shippers started moving fuel directly to California ports on foreign flag ships rather than using the Bahamas.
The Gulf Coast did not export any components to the Bahamas from April to July, which was down from 3.9 million barrels during the same period a year ago.
Oh, sorry, let me start it with that sentence.
The Gulf Coast did not export any components to the Bahamas from April to July, down from 3.9 million barrels during the same period a year ago, according to ship tracking data from Vortexa.
At the same time, the Gulf Coast shipped 5.15 million barrels directly to the West Coast, which was up from 0 barrels in the same period a year before.
Jared Ainsworth: Yeah, so California was a major part of that shift. Was there also, were there any other places where the Jones Act waiver really affected movements?
Delaney Ramirez: Definitely. Gulf Coast component shipments to the East Coast from March through August of this year increased by more than fourfold on the year to about 696,500 barrels.
But the rise in East Coast demand has only come in recent months. The Gulf Coast didn't send any waterborne blendstocks along this route at all this year until July, when shipments surged to an all-time high of 395,600 barrels.
This fell to 300,900 barrels in August, but was still almost triple year ago levels. And as Gulf Coast component shipments to the East Coast rose, voyages to the West Coast actually fell.
In August, Gulf Coast component loadings for the West Coast fell by over 50% on the month to 285,200 barrels. It's not exactly clear why West Coast demand has been cooling.
California has also imported less components from other countries, even though its inventories of these components were down by 17% on the year on 4th September, according to the U.S. Energy Information Administration.
Jared Ainsworth: Okay, that's really interesting. So I mean, and also, Hannah, looking at kind of turning the page to finish gasoline, a lot of Gulf Coast gasoline ended up moving east as well. What happened there?
Hannah Borai: Yes, so the biggest story on the gasoline side has really been the Atlantic Coast, especially Florida. Demand for Gulf Coast gasoline shipments increased significantly following the start of the war because gasoline inventories across part of the Atlantic Coast became relatively tight, while colonial pipeline capacity was essentially fully allocated.
The pipeline carries about 2.5 million barrels per day of refined product from Pasadena, Texas, to Linden, New Jersey, Atlantic Coast. And that provides 45% of fuel consumed in the region, in the Atlantic Coast. So to move product from Texas to New Jersey, the pipeline has about a two-week transit period.
So when the pipeline is fully allocated, we mean that demand to ship on the pipeline has surpassed the pipeline's capacity for a shipping cycle. So the war has restricted gasoline imports to the Atlantic Coast, yes, but some unexpected issues affecting some refineries in the Atlantic Coast have also left the region more dependent on Gulf Coast supply.
So it ended up happening in August, with no end of the war in sight and Colonial Pipeline not providing any additional capacity, is a ramp up of waterborne gasoline shipments. Estimates put Gulf Coast gasoline deliveries via barge or tanker to the Atlantic coast at over one year highs for the month of August.
Now, of those shipments for the month, around 82% of those barrels moved into Florida.
Florida is pretty unique as the third largest fuel market in the country. Colonial bypasses Florida, so any fuel deliveries from the pipeline to fuel racks in the state must be trucked. So unlike many southeastern markets that rely heavily on Colonial pipeline deliveries, Florida depends largely on waterborne fuel shipments.
So as inventories tightened, Gulf Coast suppliers stepped in to fill that gap.
Jared Ainsworth: Okay, interesting. And what about exports?
Hannah Borai: Pretty similarly, exports also remained strong. Gulf Coast gasoline exports during the March through August period were nearly 40% higher than a year earlier. Mexico remained the largest export destination, accounting for about 44% of total volumes.
Jared Ainsworth: Okay, so let's talk about pricing a little bit. The war sparked an immediate rally in gasoline markets back in early March. But Hannah, how did that play out on the Gulf Coast?
Hannah Borai: Yes, so gasoline prices rose sharply after the war began, although not nearly as dramatically as diesel. Colonial CBOV values gained about 46.5 cents per gallon in little more than a week after the conflict escalated. Prices continued climbing through the spring period and peaked above $3.57 per gallon in early May.
the highest level since June 2022. At the same time, gasoline crack spreads strengthened significantly, but diesel margins increased faster. So by early September, Gulf Coast diesel cracks were running at more than double gasoline crack values.
Jared Ainsworth: Okay, and earlier, Delaney, she kind of explained how the Jones Act waiver influenced components markets, whether it was going, you know, fewer barrels going to Bahamas, more going to California, more to the East Coast as well. But did that have any influence on pricing behavior in Gulf Coast gasoline markets?
Hannah Borai: Yes, absolutely. So one interesting example involved conventional 87 octane gasoline. To give a quick history, in April 2025, Colonial Pipeline began requiring conventional gasoline to be shipped in segregated batches upstream of its Meridian, Mississippi junction. And this was due to declining irregular shipments, declining and irregular shipments of conventional gasoline on the pipeline.
So segregated shipments require higher volume thresholds to the more commonly shipped fungible batch shipments. And these shipments, segregated, cannot be mingled with other fuel grades. As a result, segregated conventional barrels, usually they trade at a premium because their logistics are more restrictive.
But as waterborne demand increased, buyers increasingly preferred fungible barrels because they offered more flexibility. Those shipments are more easily pulled off the line towards export terminals. So that demand shift temporarily flipped the normal pricing relationship with fungible gasoline trading at a
premium segregated barrels, which is fairly unusual.
Jared Ainsworth: So let's turn the seasonal, let's turn to the seasonal transition where we move from summer gasoline specs. So summer driving season, as we're, you know, recording this right now, it's winding down quite a bit here in September. Hannah, what is the gasoline supply picture look like heading into autumn?
Hannah Borai: Yes, so demand is naturally beginning to ease as we move beyond peak summer driving season, but Atlantic Coast inventories remain a pretty important variable to watch. The market has been supported by much of the year by regional supply concerns, particularly in Florida and other southeastern markets.
If inventories continue rebuilding and demand softened seasonally, we could see some of that pressure that supported Gulf Coast prices begin to fade a little bit. But that said, markets remain sensitive to logistic disruptions because so much fuel is still being moved into deficit regions.
Jared Ainsworth: And speaking of that, I mean, despite the seasonal slowdown as we leave in the summer season, we've actually seen Gulf Coast gasoline prices reach their highest levels in years around, you know, early to mid-September. What's driving that move?
Hannah Borai: Yeah, that's right. So Colonial Pipeline, conventional 87 gasoline climbed to nearly $3.75 per gallon on September 10th. That's the highest level we've seen since mid-2022. Of that increase came, most of that increase came from strength in the futures market, with October RBOB futures posting a sharp gain during that session.
but underlying supply concerns are also playing a major role. The ongoing US-Iran conflict and continued restrictions on vessel movements through the Strait of Hormuz have raised concerns about global oil product availability, helping lift crude and refined product prices worldwide.
Jared Ainsworth: So how much of this is a Gulf Coast issue versus maybe a broader regional problem?
Hannah Borai: A lot of it comes down to regional inventories. So while US gasoline stocks increased slightly in the most recent EIA report as of this reporting, inventories remain below year ago levels nationally. More importantly, stocks on the East Coast and the mid-continent are even tighter than on the Gulf Coast.
East Coast gasoline inventories are nearly 5% below where they were a year ago for that week ended in September 4th, and mid-continent inventories are down by a similar amount. Those shortages are encouraging buyers in those regions to pull additional barrels from the Gulf Coast, which keeps local supplies tighter than they otherwise would be.
Jared Ainsworth: So earlier we talked a little bit about the strong Florida demand. Is that still having a factor on supplies on the Gulf Coast as well?
Hannah Borai: Yes, very much so. Waterborne deliveries from the Gulf Coast to the East Coast reached some of the highest levels we've seen in more than a year during August, driven largely by shipments into Florida. Those movements continue to support Gulf Coast pricing because barrels that might otherwise remain in the region are being drawn into higher value markets.
At the same time, exports remain pretty robust. Weekly Gulf Coast gasoline exports recently climbed to close to a six-month high. So we're seeing strong demand both domestically and internationally. That's creating a fairly supportive backdrop for prices, even as we move into the seasonally weaker part of the year.
Jared Ainsworth: Yeah, I mean, because normally at this time of year, you start to see the band come off a little bit. But it sounds like the market is still being driven by supply concerns, even with specs changing and summer driving season in the rear view at this point.
Hannah Borai: Yes, exactly. Normally at this point in the year, we expect seasonal demand trends to weigh more heavily on prices. But right now, concerns about global supply disruptions, strong export demand, and ongoing inventory shortages in other US regions are pretty much offsetting much of that seasonal pressure. That's why gasoline prices have been able to push to multi-year highs.
even as the summer driving season comes to an end.
Jared Ainsworth: Okay, and Delaney, so we're already seeing in the Gulf Coast market like 11.5 RVP for some grades and even 13.5 RVP for others as we're moving to the winter grades. But what is the component market typically look like as we move through the fall RVP transition?
Delaney Ramirez: Mhm.
So the fall transition period is always interesting for blend stocks because blending economics change as blenders' preferences shift in line with gasoline specifications.
So because fall and winter gasoline have higher RVP specifications, blenders use more blend stocks like butane, which has high octane and also high RVP. It's also a lower cost component compared with some of the Octane boosters that are more popular during the summer, like Alkalit and Reformant.
And the seasonal shift can make some kinds of blending components more attractive than others. So for example, blenders may at times prefer to use kinds of heavy naphtha rather than rafnit as a sub-octane portion in their blends, because the heavy naphtha, they can be blended more easily with additional butane. And this can lead to some lower demand for raffinate compared to certain grades of heavy napa, for example.
Jared Ainsworth: Okay, interesting. So, and like from a supply standpoint, what does everything look like at the moment?
Delaney Ramirez: Inventories are a bit tight at the moment, at least in the Gulf Coast. So regionally, Gulf Coast inventories hit a two-year low of 28 million barrels on 4th September, according to the EIA.
And part of the reason for this could be due to some unit outages at some Gulf Coast refineries, according to market participants, that would lead to tighter supply of Reformit.
Jared Ainsworth: Okay, cool. Well, hey, I really appreciate it. Great insights from both of you to kind of sum up, you know, we've talked about how the US-Iran wars reshaped Gulf Coast gasoline logistics and also affecting, you know, effects from the Jones Act waiver as well. At the same time, we're now in the RVP transition period, so it's definitely an interesting time. Thanks to Delaney and Hannah for joining me today, and thanks everyone for listening.
We'll be back soon with more coverage.
Delaney Ramirez: Thank you.
