Some Local Gas Stations Run Out Of Regular Gas

Prices Expected To Climb As Hurricanes Cause Shortfall

Thursday, September 11, 2008
Gas line at the Wal-Mart in Brainerd
Gas line at the Wal-Mart in Brainerd
- photo by Greg Bagby

Some Chattanooga gas stations began running out of regular gas on Thursday afternoon after suppliers said back-to-back hurricanes were causing unprecedented short supplies.

There were long lines at local gas stations, and many customers found plastic bags draped over the regular pumps.

At the Brainerd Wal-Mart, the line was all the way to the edge of Greenway Drive.

Some local stations that still had gas were raising their prices sharply - with one East Brainerd station going up over 60 cents on Thursday to above $4 a gallon. However, the price has not yet gone up appreciably at other stations.

Police officers were at some stations trying to help with traffic jams and calm angry motorists.

Suppliers said prices are expected to surge as the hurricanes in the Gulf are decimating supplies.

"The price we pay went up 50 cents earlier today and I would not be surprised if it goes up another dollar tonight," said Jay Moore of JAT Oil on Thursday.

He said his firm is having to limit the amount it supplies local gas stations.

Mr. Moore said, "Whereas, we would deliver a whole load to a station, now we are allocating that among three stations."

Earlier Thursday, many local stations began posting signs limiting customers to 10 gallons per purchase.

Mr. Moore said the dramatic drop in gas available can be blamed on the fact that Gulf oil workers left their rigs for days due to Hurricane Gustav and now they are having to leave again due to Hurricane Ike.

He said the gas price normally changes at 6 p.m. each day. "Now we are seeing several changes a day."

Mr. Moore said he expects that a number of local stations may stop selling gasoline rather than paying the much-inflated prices caused by the hurricanes.

A local service station operator said the gas supply has been tight in recent days and getting tighter than he has ever seen.

He said he expects the price he has to pay for gas may soon go to $4.50 or $5 per gallon.

Knoxville is also dealing with the gas shortage, and a number of stores there have run out of gas.

With Hurricane Ike aiming for the many oil refineries near Houston, a number of major oil companies have shut down operations there.

Meanwhile, due to the gas shortage in the Southeast, the Environmental Protection Agency temporarily waived clean-air requirements for nine Southeastern states including Tennessee.

A notice sent out by the Oil Price Information Service today says, "Hurricane Ike has inspired a panic that perhaps even exceeds the panic witnessed after Hurricane Katrina knocked out four refineries for more than half a year. Gulf Coast trading this morning is absolutely frantic, and we have seen spot deals done at $4.25 gal, then again above $4.50 gal, with current offers near the $5.00 gal neighborhood.

"All of this is rooted in the belief that Ike will put another huge chunk of refining capacity on the shelf, at least until late September. The prospects of catastrophic damage to Texas plants is not yet reflected in RBOB futures, which at this moment are up 11cts gal to $2.77 gal for October delivery.

"Gulf Coast gasoline quickly traded at $1.00 gal over futures, and then moved in 25-50cts gal increments and $2.00 gal over the screen (about $4.75 gal) was done. Sellers are now asking for $2.20 gal over the Merc, and very stiff prices extend beyond the prompt cycle, although they drop by 25-50cts gal in some cases.

"Note: The days and weeks ahead are guaranteed to be extremely volatile as Hurricane Ike wreaks havoc on an already fragile U.S. fuel market. Expect to see a myriad of supply issues, and wild swings in spot and rack prices.

"Midwestern markets have yet to sort out the potential impact. We've seen bids at 25cts gal over futures, but sellers are at 75cts gal over in the Group 3 market, which would imply values in the $3.00-$3.50 gal neighborhood. Chicago is guessed at about 60-70cts gal over the screen, and even New York has seen talk of gasoline getting done above $3.00 gal.

"These numbers represent moving targets and the panic that has gripped gasoline has yet to fully filter into the diesel market. Prices there are talked at 22cts gal over the screen at the Gulf Coast, which puts the absolute number around $3.17 gal.
Some suppliers are reacting to the spot surge in record time. We've already confirmed that Valero has raised gasoline at a number of points by 50cts gal."

Line for gas at Brainerd and North Moore roads
Line for gas at Brainerd and North Moore roads
- Photo2 by Wesley Schultz

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