Refined petroleum is South Florida’s second-most valuable import this year, as it has been since 2010, and the value of those imports is taking a beating the likes of which hasn’t occurred since the first six months of 2009.
You remember 2009, right? The world seemed to be teetering on the brink of collapse. So what’s the story in 2015, when the world appears to be relatively more stable, economically, at least. Is the sky falling again?
This is the second of 10 columns that will put a magnifying glass to the top 10 imports into South Florida. Last week, I looked at gold, which is also taking a beating. In the coming weeks, we will look at exports returned for repair, aircraft, cellphones, exports returned for repair, fish fillets, T-shirts, yachts and medical instruments.
The sky is not falling, and certainly not here in South Florida, where the August humidity might lend credence to that illusion. But several factors are aligning to affect both the price of refined petroleum and the demand for it.
First, the United States is producing record amounts of its own energy, tamping down the demand — and consequently the price — for imported oil and gasoline. Second, China’s economy is softening, so its thirst for a wide range of commodities, including gasoline, is diminished. Third, a pending agreement with Iran would open another spigot.
Through the first six months of 2014, according to the most recent U.S. Census Bureau data available, the value of refined gasoline-product imports into South Florida is down 21.09 percent, or almost $435 million. But that’s not the whole story, as you will see.
U.S. rank: While refined petroleum is South Florida’s second-most valuable import, it is the nation’s eighth-most important. Just four years ago, however, it ranked No. 3 behind only oil and motor vehicles. This year, U.S. imports of refined petroleum are now 34.47 percent from just one year ago — plummeting at a much faster rate than here in South Florida. Fourteen of the nation’s top 15 seaports for refined petroleum are in the red this year, the lone exception being the Port of Los Angeles, which is largely benefiting from a shift within Southern California ports.
Among those top 15 seaports is Port Everglades, currently the fifth-ranked in the nation, trailing only the Port of Newark, the Port of Houston, the Port of New Orleans and the Port of Boston. (Virtually all refined petroleum that enters South Florida enters at Port Everglades. Oil is not imported into South Florida.) Among the top 10 seaports, Port Everglades losses are actually the smallest — with the exception, of course, of the Port of Los Angeles, the seventh-ranked seaport.
But here’s where it gets interesting. Look at tonnage and not value, and the story changes. Tonnage is up 7.21 percent nationally — even though we are finding more of our own oil in the United States than ever.
At Port Everglades, imports by tonnage are up 29.72 percent. Bigger cars? Probably a factor. Lower prices? Also probably encouraging additional usage. More traveling as the economy continues to improve? Probably also a factor. Here in South Florida, include in the mix our tourists, who are probably driving bigger cars more miles at better prices. Add to that jet fuel — a key component of refined petroleum imports — and it makes sense that the tonnage imported would be increasing.
South Florida trade: In terms of tonnage, imports are at their highest level through the first six months of the year since 2007, up 40.93 percent from two years ago and 27.72 percent from five years ago.
Switching back to value, imports have fallen below $2 billion for the sixth year in the last seven — with the first six months of 2014 being the only exception. Prior to 2009, however, refined petroleum imports had topped $2 billion for three straight years. In fact, refined petroleum was the leading import into South Florida during a six-year stretch from 2005, when it replaced aircraft, to 2010, when it was replaced by gold.
Where it originates: Refined petroleum moves all over the world. Here in South Florida, we have sourced it from 34 nations so far this year, including Cote d’Ivoire, China, Israel and Chile.
But, for the first time in the 15 years since I first buried my nose in trade data, Venezuela is not the leading source for South Florida’s refined petroleum. Venezuela makes sense, of course. It’s close, it’s an oil-producing OPEC nation. But so far this year, South Korea is the top source for refined petroleum. Imports from South Korea are up 41.26 percent while those from Venezuela are down 36.90 percent.
Over the last two years, imports from South Korea have more than doubled while those from Venezuela are down 49.68 percent. India ranks No. 3 followed by Canada, Spain, Colombia and Russia.
On a national level, the top two sources for refined petroleum are Canada and Russia, with Venezuela No. 9. Just four years ago, it had ranked as the fifth-most important source of U.S. gasoline and other refined petroleum products.
Importance to South Florida: With the decline in value of refined petroleum imports, it is less important, relative to other South Florida imports. Through the first six months of 2015, it accounted for 6.74 percent of all imports. That’s down from 8.17 percent a year ago and 13.45 percent in 2008 right before the global economy went into its full nosedive.
South Florida competition: Unlike many commodities, refined petroleum often enters closest to where it will be used. It’s heavy, it’s highly flammable. There is no point in transporting it great distances over land if not necessary, unlike computers or clothing. Proof of that is the No. 15, No. 16 and No. 17 seaports in the national rankings: Port Canaveral, Port Tampa Bay and the Port of Jacksonville.
Coming next: Next week, I will look at an import of increasing importance in recent years, both locally and nationally, exports returned for repair. It has spawned its own name — reverse logistics — as well as trade shows, magazines and websites.
Reach Ken Roberts, president of World City, at email@example.com. Twitter: @tradenumbers.
A new No. 1 source of refined petroleum
Trinidad and Tobago
SOURCE: WORLDCITY ANALYSIS OF U.S. CENSUS BUREAU DATA