OAK BROOK, Ill. -- Dan Gilligan, president of the Petroleum Marketers Association of America (PMAA), eloquently portrays the gasoline-supply problems the industry has faced this week thusly: The petroleum industry essentially is going through a heart attack. Daniel Blackburn, president of the convenience store division at Appalachian Oil Co., Blountville, Tenn., opts for a more succinct description: It's a mess!
Regardless of the words chosen to describe the current state of petroleum retailing, everyone seems to agree this is the most difficult time [image-nocss] the industry has ever seen. And it's likely to be long-lasting in one aspect or another.
There are going to be changes in federal laws and regulations as a result of this that will change the industry forever, Gilligan told CSP Daily News. Congress is going to do a serious evaluation. This clearly showsthat going forward we need to be better prepared for this kind of situation. I'm not sure how it's going to change retail.
U.S. Rep. Joe Barton (R-Texas), chairman of the House Energy Committee, offered some ideas for change during a congressional hearing on Tuesday. I hope this is the silver lining that lets us really look at building new refineries and new pipelines and diversify the location so we are not as dependent on the area that the hurricane hit, Barton said, according to an Associated Press report.
As of yesterday afternoon, Gilligan said he had only heard firsthand reports of gasoline outages in Florida, Georgia and South Carolina. [Editor's note: This reporter came across a station on empty in the suburbs of Chicago Thursday morning.] But Blackburn said he fully anticipated the need to shut down pumps at some of his 57 Appco stores this weekend and hope for the best.
The supply is pretty much gone, and we're pulling a lot from the majors, but everybody's on allocation. We're only getting so much per day, Blackburn told CSP Daily News. If they don't get this pipeline cranked back up, we're going to see two or three days of [gasoline] outages.
Gilligan said gasoline suppliers had enacted limited allocations in at least 40 states by yesterday afternoon. They've even moved to allocation in Washington State, where all their crude comes from Alaska, he said. Marketers up there have been told the refineries up there are going to start shipping to other markets as needed. How they're going to do that, I don't know.
He also noted that as time goes by, those daily allocations are getting smaller and smaller. A lot of these states were at 110% or 120% allocation. Now we're seeing numbers at 80% or 90%, he said. That tells you what's going on. The petroleum industry essentially is going through a heart attack. Our arteries are clogged down in Louisiana and Mississippi, and we are now feeling it throughout the rest of the country. It's a big, big problem.
Most of PMAA's activity since Hurricane Katrina hit the Gulf Coast on Monday has been targeted at relieving the problem by asking federal regulators to ease their standards. So far that's added up to:
A waiver by the Environmental Protection Agency (EPA) for Alabama, Florida, Louisiana and Mississippi that allows fuel suppliers to sell gasoline that has a higher Reid Vapor Pressure than normally allowed. A second waiver by the EPA to allow the sale of diesel that has higher sulfur content than normally allowed.And, as of yesterday, a Department of Transportation waiver that allows marketers who are searching for gasoline product to send their trucks out a greater distance to find it. They may have to wait in line five hours to get the product, but he doesn't have to worry about violating the federal hours of service or state hours of service, said Gilligan.
Next on PMAA's hit list are requests for a waiver to reformulated gasoline restrictions and possibly a waiver request for gasoline sulfur-content rules.
Retailers, politicians and others, meanwhile, are trying to discourage a panic-buying mentality that can further stress the system. Our gasoline system is not meant to handle everyone filing up their tank at the same time, Dan Pickering, president of Pickering Energy Partners, a Houston-based research firm, told the Dallas Morning News. The United States consumes about 9.3 million barrels of gasoline a day, and as of Aug. 26, there were 194.4 million barrels of gasoline inventories.
NACS Show Update
The National Association of Convenience Stores (NACS) continues to weigh its options for postponing or relocating the NACS Show 2005, which is scheduled to be held Oct. 29 through Nov. 1. Yesterday, the association issued this memo:
We are very sensitive to providing full, complete and timely information regarding the status of the NACS Show 2005. Out of respect for the New Orleans Convention and Visitors Bureau and the people of New Orleans, we are honoring their request to allow them adequate time to assess the situation and determine their ability to host the NACS SHOW as currently scheduled. As widely reported in the news media, the city's infrastructure and communication systems are severely impaired making prompt assessments extremely difficult. We ask your patience in awaiting definitive information. While we await their final assessment, we have been actively engaged in researching viable options in the event that New Orleans is not capable of hosting the NACS Show this year. We hope to have a complete assessment available and definitive plans in place by the end of next week and will, in the interim, continue to provide updates as more information becomes available.
Meanwhile, the Chicago Tribune reported yesterday that New Orleans had cancelled all conventions for the next two months. Every convention that is booked for the next 60 days has been notifiedthat we will assist them in relocating to another city or rescheduling in New Orleans at a later date, Kitty Ratcliffe, executive vice president of the New Orleans Metropolitan Convention & Visitors Bureau, told the newspaper on Wednesday.Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.