After hurricane season was very quiet for the first few weeks of September, weather was a major factor in October. States in the Southeast were just beginning their recovery from Hurricane Helene at the end of September when Hurricane Milton made landfall on October 9. In this update, we’ll dive into the figures for a few of the regions hit hardest by extreme weather, including Florida and parts of the Carolinas.

Last month’s data

Hurricanes led to abnormal changes in nearby rack prices, and as a result, margins  

In September, we tracked sign prices and rack prices falling as most stations around the country completed their transitions to their cheaper winter fuel blend. This month, sign prices continued falling, but to a much lower degree. Whereas the national average sign price dropped by about 19 cents in September, it only fell by about 7 cents per gallon in October.

Rack prices, meanwhile, fell on average, as we’d generally expect them to do at this time of year. In the West, the rack price fell by nearly 15 cents per gallon, far larger than the 3-cent drop nationally. That’s partially due to the region’s distinct regulations and warmer climate — stations in the West are generally a bit slower to switch to the winter blend. Whereas sign and rack prices dropped significantly in the rest of the country last month, that impact is just beginning to take place in the West, and it will continue through November. In the Midwest, meanwhile, the drop in rack prices is consistent with sluggish international demand for crude oil and a domestic slowing of travel.

But there were some notable differences in other regions. The increases in rack price — most notable in the South, but also in the Northeast — were likely due to the hurricanes that disrupted the region and affected transportation costs.

For that reason, margins decreased month-over-month in the Northeast and South, but they were up in both the Midwest and the West. Keep in mind these figures just represent the month-over-month changes, not the margins themselves — right now, margins are healthy across the country.

It’s no surprise that the weather impacted transactions as well. Although we normally see seasonal declines in travel after the summer, leading to lower fuel and c-store transactions, both of those national averages were up in October. In large part, these trends were due to transaction increases in the South, which was recovering from two hurricanes. In other regions, we saw confident declines, which is more in line with expectations for the season.

We’ve been talking a lot about the impact of weather in October, so let’s do a deeper dive. Here, we’ll visualize the impact of hurricane season in the South with a few charts.

First, consider the impact of the two hurricanes on average daily transactions and revenue for all fuel grades across Florida. As we can see in the chart below, transactions spiked right before the hurricanes made landfall as residents evacuated for safer areas. Once the hurricanes arrived, transactions and revenue dropped precipitously. In the aftermath, transactions ticked back up — especially in the time period between the two hurricanes. With recovery underway, transactions have held relatively steady since Hurricane Milton.

The impact of the two hurricanes is likely larger than our chart is showing. We’re measuring the average metrics per site per day, and when we do that, we exclude stations that are closed. During the past month, many stations across Florida had to close for extended periods due to power outages.

When it came to Florida, stations saw elevated traffic in advance of the storms. However, stations in the western Carolinas saw the opposite. Consider the spike in gallons sold immediately after the flooding caused by Hurricane Helene.

On September 28, there was a 110% increase in the number of fuel gallons sold relative to the same date in 2023. Much of this trend can be pinned on the fact that cities like Asheville are not traditionally on “hurricane watch,” while residents of Florida are more than used to evacuation orders by now. 

Predictions and considerations

Thanksgiving brings travel, but also a slowdown in activity

November brings sustained cold weather to most of the country; the end of the month also begins the holiday season. Despite an expected uptick in travel for Thanksgiving, we also anticipate a decrease in normal business activity. Therefore, we’re projecting lower demand for fuel and convenience items on the whole.

We also expect to see further meaningful drops in rack and sign prices in the West, as the most populated regions in California complete their winter blend transitions.

Potential tailwinds: 

1. The economies of other high-income countries are performing relatively poorly, compared to the United States. Slower economic activity abroad might keep crude oil prices low, which would translate to lower domestic sign prices.

2. The Federal Reserve issued a 0.25% cut in interest rates and is expected to make another cut in December, so the perception that inflation is cooling will spur economic activity from consumers and businesses alike.

3. Healthy profit margins will likely continue through November.  

Potential headwinds: 

1. OPEC+ announced it will extend production cuts through December 2024, which will keep crude prices slightly elevated. 

2. Inclement weather is unpredictable and could continue to impact both supply and demand in the South.

3. Elevated risk of conflict in the Middle East could interrupt the global supply of oil coming from the region, increasing sign prices for consumers. When this happens, retailers often hesitate fully passing on price increases in favor of a gradual approach that doesn’t isolate customers. Such an approach allows profits to temporarily drop.

Want a closer look at the data?

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