NEW ORLEANS -- Gasoline prices as high as $4.99 a gallon; $10 limits on the amount of gasoline each consumer can purchase at a gas station. A lack of power preventing refugees from getting the gasoline they need to reach somewhere safe to stay. These are just a couple snapshots of petroleum retailing in the United States following what President George Bush called the worst natural disaster to ever touch American shores.
While the business-related angles of the Hurricane Katrina story are important and numerous, the true story remains the trauma and [image-nocss] safety of those who lived in the most-ravaged areas of the country. CSP Daily News extends its thoughts and prayers to those affected by the Category 5 storm that came to shore Monday morning and continues to wreak havoc on the Gulf Coast.
As news spread that President Bush had approved the release of oil from the Strategic Petroleum Reserves (SPR), as reported yesterday in a CSP Daily News Flash, even Bush himself noted in a brief address yesterday afternoon that the action was a mere Band-Aid for the gasoline problems that are expected to continue across the country over the next few months. It will take some pressure off gas prices, Bush said, but people need to understand, this storm has hindered the ability to make gasoline and to transport it.
Just where that additional crudein an amount yet to be determinedmight be refined remained the overwhelming question. Oil companies with refineries along the Gulf Coast accounting for about 10% of the U.S. refining capacity were still unable yesterday to assess all the damages those refineries had incurred. Many of the problems refineries are encountering include flooding and power outages, officials said.
Murphy Oil Corp., El Dorado, Ark., has a 120,000-barrel-per-day (bpd) refinery in Meraux, La., which is across the river and approximately 10 miles away from New Orleans. Mindy West, director of investor relations, told CSP Daily News that company officials on Tuesday flew over the refinery, which they had shut down prior to the hurricane coming to shore. She said there is flooding but not to the extent that had been feared. As of midday yesterday, Murphy officials had hoped to get a team into the facility, which is only accessible by boat via the river.
West had no idea when the facility might be up and operational, noting that one of the biggest obstacles was the lack of power. Additionally, she said locating employees was an issue because they had evacuated the area and cell phones are apparently not working in the area. Murphy also operates gasoline facilities in the parking lots of more than a dozen Gulf Coast-area Wal-Mart locations, many of which, according to West, have been affected by flooding.
For Valero Energy, San Antonio, estimates were one to two weeks before its St. Charles, La., refinery would be up and running. Mary Rose Brown, senior vice president of corporate communications, said simpler refineries could start up in the three-to-five-day range. More complex refineries, such as Valero's 260,000-bpd operation, typically require five to seven days to get up and running.
Power and labor remain an issue for Valero, as well. Estimates for power to return are between two and three days. As for labor, how quickly local officials will allow area residents to return to the site remains a question. Power was also an issue with the company's other Louisiana refinery in Krotz Springs, where pipeline power shortages reduced production rates.
The good news is that despite the flooding in the St. Charles facility, the refinery sustained no major damage. No oil leaks or spills were evident. In addition, the government's decision to open up the SPR was seen as good news for Valero officials. This gives us confidence that we will have the crude we need when our St. Charles refinery is ready to start up again, Brown says.
And at Marathon Petroleum Co., which has a 245,000-bpd refinery in Garyville, La., Angelia Graves, director of public and state government affairs for the Findlay, Ohio-based refiner-marketer, said the company shut the refinery down last Sunday and it is optimistic that the refining capacity is in good shape. However, as of midday yesterday, company officials had not received further word on the damages or when the refinery would be back up and running.
The Environmental Protection Agency (EPA) also is doing its job to provide relief from gasoline shortages where it's most needed. The EPA said on Tuesday it has temporarily eased fuel regulations for Alabama, Florida, Louisiana and Mississippi to prevent gasoline and diesel shortages.
The fuel waiver allows fuel suppliers to sell gasoline that has a higher Reid Vapor Pressure (RVP) and diesel that has higher sulfur content than normally allowed. The waiver will allow refiners through Sept. 15 to supply gasoline meeting an RVP standard of 9.0 and diesel with sulfur content higher than 500 parts per million. EPA administrator Stephen Johnson said the waiver is necessary to ensure that the Hurricane Katrina natural disaster does not result in serious fuel-supply interruptions around the country.
Clickon the "Download Now" button below toview the EPA letter concerning the waiver.
Meanwhile, officials at the National Association of Convenience Stores (NACS) continued to ponder its plans for The NACS Show, which is scheduled to be held October 29 through November 1 in New Orleans. NACS officials had nothing new to report late yesterday. The association is expected to make an announcement about its plans for the show by the end of this week.
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