DES MOINES, Iowa -- A shortage in the supply of unleaded gasoline drove up retail fuel prices and caused some terminals in Iowa to run out of gasoline on Tuesday, said the Associated Press.
Terminals in Iowa City and Fort Dodge had no unleaded gasoline, said Bruce Heine, a spokesperson for Magellan Midstream Partners, which has an 8,500-mile refined petroleum pipeline system including 47 terminals, eight of which are in Iowa. The pipeline transports gasoline and diesel fuel from refineries in Oklahoma, Kansas and the Texas Gulf Coast region and from [image-nocss] the Minneapolis area.
Right now we're not receiving adequate supplies of no-lead gasoline, he told AP.
He said Iowa City and Fort Dodge were expected to get fuel Tuesday night.
He added that larger-volume terminals in Des Moines, Mason City, Omaha and Kansas City will have fuel, so truckers may have to drive farther to get fuel to supply gas stations.
The scenario we have today in Iowa is simply one where supply is not meeting demand, Heine said. Today, we are unable to supply all of our terminals in Iowa with no-lead. That is a function of lower volumes of supply coming into the pipeline system. It's not a problem with the pipeline or distribution.
Low gasoline supplies across the state of Iowa have forced petroleum transport companies to reroute unleaded gasoline to higher-priority terminals, said the Iowa Department of Natural Resources. Sunday and Monday most terminals in Iowa ran out of the unleaded gasoline and had to turn gasoline delivery drivers away. The shortage came as refineries switched from winter to summer gasoline supply, and as the Wynnewood, Okla., refinery was shut down this past weekend when it was hit by lightning.
The switchover from winter to summer gasoline has caused a decline in supply. That, coupled with the Wynnewood, Okla., refinery shutting down about two million gallons of production per day, has led to a decrease in total supply, said Brian Crowe, energy analyst for the department. This supply hiccup is something that is fairly common, and the suppliers, refiners and terminal operators are well-equipped to deal with such issues. Supply will be diverted as long as needed to high-need areas, major hubs like Des Moines and Omaha, and we should return to business as usual within a week or so.
A few gas stations in Des Moines reported that they were unable to get gasoline on Monday, but they received their gasoline orders first thing on Tuesday morning.
Experts said refinery snags left the two Iowa storage facilities short of fuel, according to AP. Such snags are a reminder of how tight the U.S. gasoline market is. Analysts also said any more supply disruptions between now and the start of summer will likely cause prices to jump to more than $3 a gallon.
A series of refinery accidents and outages, including shutdowns in Texas, Indiana and Oklahoma, have contributed to the recent decline in gasoline supplies. Iowa is particularly susceptible to spot outages in times of shortage because it's at the edges of the nation's pipeline system, AP said.
And according to a Wall Street Journal report, refining's perception problem has taken a new, unflattering turn: Not only are there not enough U.S. refineries, they don't run right. After several years of calls for more production capacity, attention has shifted to what appears to be an unusual number of breakdowns and extended downtime that has raised concerns about the adequacy of oil-product supplies, the report said.
Recent weeks, a period when refineries ramp up production, have been plagued by unit malfunctions, fires and other mishaps, said the Journal, and oil futures and wholesale prices have staged rallies that traders say are due to the prospect of lost supply and falling inventories.
The problem is we have an antiquated refining system that continues to fall apart and is having significant problems coping at utilization rates normally seen at this time of year, Nauman Barakat, senior vice president at Macquarie Futures USA, New York, told the newspaper.
The operational problems have affected refineries of all sizes, all types of processing units, all regions and were caused by all kinds of events, including fires, severe storms, crane accidents, human error and rodents' unfortunate contact with electrical substations.
Some recent examples include BP's refinery in Whiting, Ind., where a fire one week and a power outage the next shut crude and gasoline processing units; Valero Energy Corp.'s plant in Norco, La., where mechanical failure shut a gasoline-producing unit; and Marathon Oil Corp.'s refinery in Garyville, La., where a fire shut a gasoline-production unit.
The oil market, still reeling from the mid-February fire at Valero's McKee refinery in Texas and the price fallout that resulted, reacted to the incidents with massive buying, the report said.
Some industry observers and participants, while noting the large number of incidents, were not so quick to attribute the operational problems to aging infrastructure, however. They point to changes in refineries and fuel composition, how companies carry out scheduled maintenance and labor issues. I think you're looking at random events that aren't common but they're clustered, John Jenkins, director of the refining, chemical and petrochemical consulting for Jacobs, a division of Jacobs Engineering Group Inc., told the paper.
Seasonal maintenance turnarounds are better planned than they used to be, but may be taking longer because of contractor work-force issues, said the report. There are problems getting workers, problems with their level of experience and productivity, said Jacobs.
In addition, ramping up high-temperature, high-pressure units after shutting them down to perform repairs is a process fraught with glitches.
As they come up, units can leak and malfunction until they get hot, he said. Until you're up and running comfortably, the probability of having a problem is higher.
Valero's head of refining said the addition of units, called hydrotreaters, needed to make mandated lower-sulfur gasoline and diesel has made all units in refineries more related. As a result, outages of those units can restrict the amount of petroleum feedstock processed throughout the refinery.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.