Shortages Persist in Southeast

Atlanta, Nashville, other areas in region still seeing long lines, panic buying, more

Angel Abcede, Senior Editor/Tobacco, CSP

ATLANTA -- The ongoing weather-related gasoline shortage in the Southeast that has left some places dry and others with two-hour gasoline lines is expected to continue for as long as another two weeks, energy experts and industry officials said, according to USA Today.

As CSP Daily News has been reporting, the shortage began two weeks after Hurricane Gustav hit the oil-refining regions of the Gulf Coast on September 1. Operations that shut down before that storm were just coming back online when Hurricane Ike hit, forcing another shutdown. The fuel shortage, now in its third week, is particularly [image-nocss] acute in Atlanta, Nashville, Tenn. and in parts of the Carolinas and Alabama.

Some metro Atlanta drivers are calling 911 to find out which stations have fuel, said WSBtv, even though a gasoline shortage does not constitute an emergency. The Associated Press said some Atlanta motorists were spotted tailing gasoline tanker trucks to their next stop.

The pipelines that supply the region are operating at less than normal capacity, due largely to storm-related power outages at Texas refineries, Kenneth Medlock, energy fellow at the Baker Institute, a nonpartisan public policy think tank at Rice University in Houston, told the newspaper.

The Southeast, the only region of the nation that has no oil refining or major gasoline storage capacity, pumps all of its gasoline in by pipeline, he said.

"In isolation, neither of these storms would have been that big a deal, because there's enough inventory [at retail outlets] to make up the shortfall," Medlock added. "But there was a three- to four-week period of refinery capacity not operating. That's basically a month when nothing's being produced."

Panic buying made the problem worse, Marylee Booth, executive director of the Tennessee Oil Marketers Association (TOMA), told the paper. "If people saw a tanker drive up to a station, they'd start lining up. The panic has died down. It's getting a little better every day."

She told CSP Daily News, "Two weekends ago, 85% of the stations in Nashville were closed, primarily due to panic buying. Other parts of Tennessee were not so badly affected, although fuel supplies have been tight. We'venoticed that, now, most stations are open. They may be selling only one grade of gasoline and may have only a few of their pumps open....but they are open and there are no long lines of people trying to buy gasoline. We see the fuel supply situation easing up day by day. Hopefully, supply will be back to normal in a week or two."

Gary Harris, executive director of the North Carolina Petroleum & Convenience Marketers (NCPCM), whose members sell about 90% of the gasoline in North Carolina, told USA Today that he expects two to four more weeks of shortages. "There was a lot of panic buying fueled by media coverage of the shortage," he said. "Now, it's hard to catch up."

For Mansfield Oil, Gainesville, Ga., trucking in product from distant markets has helped, although officials there say such long hauls are really a "last remedy we have beyond the local inventory we keep on hand in terminals in Atlanta," according to Doug Haugh, executive vice president and CIO. "That inventory certainly helped us deal with the shortages last week, but this has gone on longer than anticipated and neither our positions nor those of our refining partners on the branded or unbranded side have been replenished as rapidly as needed."

Having gone through post-hurricane shortages before, Mansfield had all of the 520 sites it supplies "full to the brim" and were able to keep most wet until last Friday, Haugh told CSP Daily News. The company has been able to resupply some of its sites via limited allocations of branded product or long-haul loads trucked in from markets as far as Savannah, Ga., and Baltimore, but "we unfortunately have more sites out in markets like Charlotte and Atlanta than we [can supply.]"

Haugh attributed their situation to Gulf Coast refineries shutting down prior to Gustav, with some just coming back up after Ike. It resulted in several weeks with 10-15% of the nation's refining capacity offline. With much of that capacity flowing through the Colonial Pipeline system--a main artery for Atlanta and numerous other Southeastern markets, the result was lingering shortages.

"While some pipeline batches have started to come in, the entire market is a long way from being adequately supplied," Haugh said. "And it looks like the rest of this week is going to be very difficult from a supply standpoint."

On Monday, Georgia Governor Sonny Perdue asked President Bush to direct the Department of Energy to release a significant amount of crude oil from the Strategic Petroleum Reserve (SPR).

"As President Bush and Congress work on a plan to rescue our financial markets, I urge them to also focus on our fuel shortage in the Southeast," Perdue said. "As refinery capacity is returning to pre-hurricane levels, I believe a surge in crude from the reserve would bridge the gap until full production resumes and lessen the impact of shortages on the daily lives of our citizens." (Click the Download Now button below to view the full letter.)

But while other Southeast states were asking for help with gasoline shortages, Perdue waited a week before requesting a waiver freeing up extra gasoline for Georgia, reported WSBtv. Officials in Kentucky asked on September 15 for a waiver from the federal Environmental Protection Agency (EPA) to lift restrictions requiring "boutique" fuel formulations. It was granted the following day. Virginia and Tennessee also asked for similar waivers after Gustav and Ike.

On September 22 Perdue sent a letter to the EPA, the report said, and the agency granted the waiver for Georgia the next day.

Critics said more fuel would be flowing into Georgia if Perdue had acted faster.

Perdue left Saturday on a week-long economic development mission to Spain, Portugal and Italy, the report said.

Angel Abcede, CSP/Winsight By Angel Abcede, Senior Editor/Tobacco, CSP
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