Gas consumers urged to steer clear of panic

Motorists: Experts say supplies should hold up, as long as the public maintains usual buying habits.

September 01, 2005|By Paul Adams, Meredith Cohn and Laura Barnhardt | Paul Adams, Meredith Cohn and Laura Barnhardt,SUN STAFF

Gasoline retailers and oil industry experts said yesterday that there should be enough gas to go around for motorists, truckers and airlines as long as consumers avoid panic-buying in the aftermath of Hurricane Katrina.

But that's just what some price-conscious motorists were doing yesterday. In Baltimore and across the nation, isolated reports surfaced of gas stations running low on, or running out of, regular unleaded gasoline as drivers rushed to fill up before prices go higher.

Lines and shortages were reported in Maryland and throughout the country yesterday, from Phoenix, Ariz., to Bloomington, Ind. Shortages were so widespread in the stricken Gulf Coast states that the Red Cross couldn't get gas for relief vehicles. As prices passed the $3-a-gallon mark in some areas, analysts said consumers were scurrying to fill their tanks - reminiscent of scenes from the oil crises of three decades ago.

With pipelines from the Gulf damaged and 10 percent of the nation's refining capacity wiped out by Katrina, the nation's gasoline inventory is rapidly approaching its all-time low.

Experts fear that the buying frenzy could further strain a system near the buckling point because of storm damage to one of the nation's most critical oil-producing regions. Replacing production wiped out by Katrina could prove especially problematic for the Eastern Seaboard, where retailers are normally nourished by a pair of gas pipelines that originate in storm-ravaged Louisiana.

With the pipelines temporarily out of commission, that gas has to come from someplace else. Anxious traders pushed gasoline futures up 17.55 cents yesterday to $2.65 a gallon on the New York Mercantile Exchange, or about 35 percent higher than Friday's close.

Crunch after 9/11

A similar crunch occurred after the Sept. 11, 2001, terrorist attacks, said John Eichberger, director of motor fuels for the National Association of Convenience Stores, which represents thousands of gas retailers. Some retailers saw demand surge five-fold Sept. 12, 2001. A comparable jump today might have a devastating impact on supplies.

"It would help if consumers don't panic-buy, don't pre-buy," he said. "Buy what you normally do."

Wholesalers are rationing customers, meaning retailers are able only to take delivery of their normal supplies, and no more.

Yesterday, the Bush administration moved to help relieve shortages by temporarily easing pollution standards on gasoline and diesel fuel in several states and releasing crude oil from the U.S. strategic reserve, which was last tapped after disruptions caused by Hurricane Ivan last year. The Energy Department said this latest release would enable refineries to replace stalled shipments from oil tankers and storm-damaged offshore oil platforms.

The supply strain is starting to show, despite prices rapidly climbing above $3 per gallon. A Royal Farms convenience store in Glenelg, in Howard County, ran out of gas with cars in line yesterday. By midday, the Crossroads Exxon on Ritchie Highway in Pasadena was about a half-hour from running dry.

Customers keep coming

Ruman Memon, manager of the Crossroads station, had raised prices four times since the previous day in hopes of stemming the tide of motorists lining up at the pumps. But they kept coming.

"Everyone is filling up because tomorrow will be worse," he said. "I called Exxon and was told the refinery was out of gas."

The station was selling a gallon of regular unleaded for $2.59 - cheaper than the price at two competitors across the street. Memon said Exxon electronically monitors his tanks and knows when to send him more. The oil company usually sends him about three 8,800-gallon tankers every two days, but none had arrived yesterday.

It's the second time in two weeks Memon has teetered on empty because anxious motorists were pumping two tankers' worth a day.

The situation was similar at the Hess station on Joppa Road in Baynesville near Towson, where traffic jams formed Tuesday night as the station was selling regular unleaded for $2.61. The price jumped 13 cents overnight to $2.74 and then another 3 cents to $2.77 in the afternoon - still seven to 22 cents less than competitors down the street.

"It's been nuts," said Karla Porter, whose husband, Ray Porter, owns the station. "We had lines of cars both ways on Joppa. It was total gridlock. The police had to come clear the road."

The station sold out of regular at 10:30 p.m. Tuesday, a half-hour before closing. Normally, the station sells 5,000 gallons per day, Porter said. On Tuesday, it sold 11,000 gallons. By 5 p.m. yesterday, it had sold 9,000.

The Department of Energy said producers had 194.4 million barrels of gasoline in inventory as of Friday, which doesn't include the fuel sitting in tanks at gas stations or in people's cars. The lowest that number ever reached was 185.6 million barrels on Aug. 29, 1997. That's the threshold considered the industry's "minimum operating level."

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