The war in Iran is being felt at South Florida gas pumps now and may cool an already tepid regional housing market.
The sharp jump in gas prices has been fast as global oil markets react to the U.S.-Israel joint attacks in Iran and the Iranian missile and drone strikes against its neighbors. While the price drivers are paying in South Florida remains far below record levels, the price per gallon of regular unleaded gas has skyrocketed 25% in just one month.
The average price was $3.75 a gallon across the region, according to the AAA Fuel Gauge Survey. The same fill-up cost under $3 a gallon in early February.
Almost all gasoline in Florida is shipped via cargo tanker. Port Everglades in Fort Lauderdale is the main terminal serving South Florida. Tens of millions of barrels of gasoline are offloaded each year.
There are no oil refineries in Florida, so finished gasoline must be shipped in. That additional transportation adds to the cost drivers eventually pay. And the Sunshine State has a thirst for gasoline. Thanks to the shape of the state and a growing population, Florida is the third largest energy-consuming state in the country. The demand is led by transportation to fuel commuters and tourists, including the airline and cruise industries, which are powered by petroleum.
While gas prices have shot up in the past month, they are more than $1 a gallon below record highs set in mid-June 2022 when pump prices averaged almost $5 a gallon in South Florida. The result is consumers are spending more money on filling up.
The price jump comes as Spring Break crowds come to Florida. The state was a top search destination for Spring Break through January, according to an analysis of Google data by travel search firm Upgraded Points. The second quarter of the year, which includes Spring Break, usually is one of the busiest periods for tourism in the state, attracting more than 31 million visitors.
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Floridians had been feeling better about the economy prior to the quick increase in gas prices. Consumer sentiment increased for the third consecutive month in March. The University of Florida Consumer Sentiment Index rose to a one year high in February. Director Hector H. Sandoval credited “easing inflation and a stabilizing unemployment rate” for the improved outlook.
Regional inflation cooled in February with the Consumer Price Index rising 2.1% from a year ago. That’s down from an annual inflation rate of 2.6% last reported in December. Energy prices helped slow inflation, but that has been erased due to the quick increase in gasoline prices since Pres. Donald Trump ordered military attacks on Iran.
The sudden increase in energy prices and impact on overall inflation may dampen a recovery in the housing market. Miami Realtors Association Chief Economist Gay Cororaton predicts the average 30-year mortgage rate will climb to 6.8% this year, up from 6% in early March. Such an increase would add $200 to the monthly payment on a $400,000 mortgage.
“Rising crude oil prices will likely push up inflation and interest rates and lower economic growth, setting back the housing recovery to 2027,” Cororaton wrote in an analysis.
She still expects the 7-figure-plus market in South Florida to remain active, noting the wealth migration from the northeast and California has shown no signs of slowing. Those wealthier buyers also tend to use cash instead of borrowed money, insulating them from the higher cost of rising mortgage rates.
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South Florida’s single family home pricing also may be less affected by a slower market thanks to a lack of supply. The region had less than six months supply of homes for sale in January. That is half the months of inventory compared to condominiums.
