FRANKFORT, Ky. -- Kentucky retailers with antiquated fuel dispensers face a dilemma reminiscent of the computer threats from Y2K. Lack of preparation this time around could result in a fine rather than the end of civilization, but the issue most likely is not isolated to retailers doing business in the Bluegrass State.
The majority of Kentucky's fuel marketers will operate normally if the price per gallon crosses the $4 threshold, but many stores in rural outposts have older pumps that simply weren't designed to accommodate such a lofty price point. [image-nocss] Marketers got around that problem once beforein 2005, immediately following Hurricane Katrinaby converting prices to half-gallon rates. But the state has told them that, in the future, such a solution simply won't do.
At the request of the state Department of Agriculture's division of regulation and inspection, the Kentucky Petroleum Marketers Association surveyed all of its more than 3,500 members to determine what percentage of the state's retail pumps would not register $4 per gallon. The majority of membersas much as 70% of all marketers in the state, according to KPMA president and executive director Richard A. Maxedonreported that their pumps were in compliance.
So where does that leave the remaining 30%, which includes convenience stores, gas stations, unattended sites and boat docks?
"With the price of diesel so close to $4, they need to be prepared," Maxedon told CSP Daily News. "The division of regulation and inspection has put [marketers] on notice. Post-Katrina, when prices spiked, we got the half-gallon law suspended for a while. It's not going to be suspended again."
When state gas prices shot above $3 per gallon in Katrina's wake, the Department of Agriculture's office of consumer and environmental protection met with legislators and passed an emergency regulation through the governor's office. This allowed noncompliant marketers to do half-gallon pricing, but merely on a temporary basis, according to Dr. Wilbur Frye, the office's executive director.
"It has not been an issue since," Frye told CSP Daily News. "Most of them, if not nearly all of them, got their pumps converted so they could go above $3 without any difficulty. Now we're approaching $4."
For now, the concern seems to revolve around higher-pried diesel fuel.
"Generally, the price of diesel has been within 15 cents [of $4], especially in rural areas," said Maxedon. "There's a much higher differential between diesel and unleaded, and it averages half a dollar. In metropolitan areas, unleaded will retail for $2.89. But in rural areas, I've seen it above $3 a gallon."
In researching the situation, Maxedon learned that most of the noncompliant marketers had older, mechanical pumps. Most mechanical pumps should be able to be converted inexpensively, using a kit that costs less than $350, according to Frye.
Electronic pumps are a different issue. Most electronic pumps should be able to accommodate $4 prices. If not, a software upgrade should make them compliant. A spokesperson for pump manufacturer Gilbarco Veeder-Root, Greensboro, N.C., confirmed that all of the company's electronic dispensers can price to $9.999 per gallon.
When asked about deadlines for having the conversion work completed, Frye said, "When is fuel going to $4 a gallon? That's the deadline right there. We hope it doesn't get there. We hope we don't have to enforce this."
But the issue is most likely not isolated to Kentucky.
"I'm sure it's a problem for other states," said Frye. "I don't think Kentucky would be the only state that has service stations with older-technology pumps that would have to be converted. I do believe that most states do not allow half-gallon pricing. So they would be under the same requirements."
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