The Gasoline Supply

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Friday, September 2, 2005; 2:55 PM

What is the gas supply situation in the metropolitan area?

With the Labor Day weekend approaching, several stations in the Washington area ran dry Thursday. Some local customers said rising prices prompted them to top off their tanks, contributing to the area's diminishing gas supplies. Longer lines at pumping stations are becoming a common sight.

Some Maryland stations were considering shutting down late Thursday because of problems with a fuel-truck delivery. In West Virginia, stations ran out of gas overnight, only to be saved by a new supply of fuel arriving by truck before the morning rush hour.

Despite a rumor that arose Friday, the Maryland state government is not ordering any gas stations to be closed. "Marylanders can ignore the rumor that the state is closing down gas stations today, or any other day. The rumor is absolutely and entirely untrue," Gov. Robert L. Ehrlich Jr. (R) said in a prepared statement.

Some oil companies, including Chevron Corp., have begun rationing the amount of gas they sell to suppliers.

Prices may be highest at the smaller, independent stations that don't have a locked-in corporate supply, which usually have the lowest gas prices, a spokesman for the American Automobile Association said.

Two major pipelines disrupted by Hurricane Katrina that provide much of the Washington area's gasoline showed signs of life Thursday, although it could be days before they are running up to full capacity. Colonial Pipeline Co. said that it was operating at 40 percent of capacity and that it hoped to operate at 61 percent by today and 86 percent by the middle of next week. Officials with the other pipeline, Plantation Pipe Line Co., said the line is operating at 25 percent.

What about the fuel situation beyond the metro area?

Shortages have had profound effects in many areas of the eastern United States that depend on pipelines from the Gulf Coast. Customers in the mountains of North Carolina could buy only premium gasoline because regular had sold out. Some oil companies, including Chevron Corp., have begun rationing the amount of gas they sell to suppliers.

Industry officials said a small-but-growing number of independent gasoline retailers in the Southeast and Midwest may simply turn off their pumps in the days ahead, either because of shortages or because wholesale prices climbed so high so quickly that they cannot compete without selling fuel at a loss.

General Motors yesterday was already blaming Katrina in part for a 16 percent drop in sales in August.

Our Impact on Washington blog has information on the gas situation in the most popular destinations for D.C.-area travelers.

How high are gas prices right now?

Gas prices in the Washington area varied yesterday from as low as $1.08 in rural Maryland to $3.50 in some parts of Bethesda. The average price of gas for the Washington area rose 5 cents, to $2.73, Thursday from $2.68 on Wednesday.

Outside the area, pump prices rose to just under $6 a gallon at some retail outlets in the South on Thursday. Confused drivers in Georgia saw prices that had climbed as high as $5 a gallon suddenly drop back to $3 in the span of 24 hours.

Gas prices jumped by more than 50 cents a gallon Wednesday in Ohio and 30 cents in Maine. In southern Illinois, gas prices at some stations jumped more than 50 cents in less than four hours Thursday morning.

According to GasPriceWatch.com, which tracks retail gas prices around the country using volunteers, average gas prices in the United States were just over $3 a gallon Friday morning.

D.C.-area residents can compare prices among local gas retailers at:

  • http://www.washingtondcgasprices.com/
  • http://www.gaspricewatch.com/
  • http://www.aaamidatlantic.com/fuel_finder.asp
  • How high are prices likely to go?

    Rayola Dougher, manager of energy market issues at the American Petroleum Institute in Washington, said it was too early to tell how long prices would continue to rise and whether they would reach a national average of $4 a gallon because it is unclear how soon normal operations will resume at the refineries and pipelines in the Louisiana area.

     White House economic adviser Ben Bernanke predicted gasoline prices would go higher, then drop when supplies are restored. The Consumer Federation of America, which is normally a critic of Big Oil, said Thursday that $3 gasoline was justified, given current market conditions.

    Crude oil prices dropped more than $1 a barrel and gasoline futures fell sharply Friday as key U.S. allies discussed releasing supplies from their stockpiles.

    What is being done to ensure that prices aren't abusive?

    Consumers angered over soaring gas prices made 5,800 calls yesterday to the Energy Department's price-gouging hotline.

    Attorneys general in Virginia and Maryland lack the power to prosecute price gougers but can refer suspected incidents to federal agencies such as the Federal Trade Commission. In Georgia, Gov. Sonny Perdue (R) signed an executive order Wednesday authorizing state sanctions against gas stations that gouge consumers. In New Jersey, acting Gov. Richard J. Codey (D) ordered increased state inspections at gas stations for possible price gouging, according to Associated Press.

    A statement issued Wednesday indicated that the Virginia government does not consider the gas-supply situation serious enough to warrant an emergency declaration that would prohibit sales of necessary goods and supplies at an "unconscionable price" although Gov. Mark R. Warner (D) has instructed the Virginia Department of Agriculture and Consumer Services to monitor the marketplace.

    The Energy Deparment provides a price-gouging report form online. Angry consumers made more than 5,000 calls Thursday to the department's price-gouging hotline.

    What about airports and airlines?

    The Metropolitan Washington Airports Authority denied a trade report Wednesday that said Dulles International Airport was one of 10 that could face jet fuel shortages. Dulles and National are supplied by the Colonial and Plantation pipelines, and they have a two-week supply of fuel on hand, the authority said.

     However, some airports in the storm-affected areas are either closed or subject to emergency restrictions. Their status can be monitored on the FAA Web site.

    But shortages may not be the biggest fuel problem for the nation's airline industry. The premium that refiners charge to turn oil into jet fuel has shot from $3 a barrel at the beginning of the year to $25, pushing the effective price of a barrel of oil to around $95 for the already ailing airlines. Cutthroat competition from new, low-cost airlines continues to prevent carriers from passing all those costs onto consumers. Now, airlines on the brink of bankruptcy, such as Northwest and Delta, could topple, with broad ramifications.

    What is the federal government doing?

    The Energy Department on Thursday approved three loans of crude oil from the 700 million-barrel Strategic Petroleum Reserve. The department agreed to provide 6 million barrels of oil to Exxon Mobil Corp., 1 million barrels to Placid Refining Co. and 1.5 million barrels to Valero Energy Corp. Also yesterday, the Bush administration relaxed federal rules to allow foreign oil tankers to transport oil from one U.S. port to another. Industry officials said that would help move supplies to areas that need them.

    The Bush administration has also relaxed environmental regulations requiring some areas to use special summertime gasoline blends designed to reduce pollution. Oil industry officials said relaxing that rule allowed supplies to be sent to Atlanta yesterday, relieving rapidly rising prices.

    When will supplies improve?

    The government warned on Thursday that some U.S. refineries shut by Hurricane Katrina may not resume processing oil for several months. Floodwaters and mandatory evacuation orders have prevented some oil firms from assessing damage to their refineries, and other logistical problems have limited their ability to inspect offshore oil platforms.

    Thousands of workers who were evacuated must return to their posts, but many of them have no homes to return to. And as long as the region has no electricity, refineries cannot reach full capacity.

    But oil analysts and company officials said they expected an increase in imports of gasoline from Europe within two weeks. That could help to bring down prices and ease supply disruptions, they said.

    -- Compiled from staff and wire reports and government Internet sites.


    © 2005 The Washington Post Company

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