Friday, April 21, 2006

East Coast Gasoline Disruption

Today, the price of oil hit $75/barrel and President Bush still doesn't have an enery policy worthy of the name. Gasoline stocks have been dropping sharply for the past few weeks though oil imports seem roughly about normal. Here's an article from the Virginian-Pilot:
Equipment failure at a leading terminal for gasoline distribution is being cited as one reason Hampton Roads has suddenly found itself running low on gas.

At a Chesapeake energy storage and distribution terminal, a device that captures gasoline vapors failed last weekend and forced the terminal to close.

Repairs quickly followed, but disruptions in the gasoline supply rippled almost immediately through Hampton Roads. Shortages continued Thursday, keeping motorists guessing about where to find gas.

Some stations that were out of supplies Wednesday were replenished Thursday, while others waited for deliveries with no clear idea of when they would come.

The problem at the Chesapeake terminal was not the sole reason supplies were tight.

Other factors also were bearing down on the region’s gasoline supply, including the conversion to fuel containing ethanol additives and the annual switch to lower smog-producing summer blends.

A spokeswoman for Kinder Morgan, which runs the Chesapeake terminal, could not be reached to comment on equipment problems at the company.

One of the owners of Kinder Morgan is a former president of Enron; I keep noticing the name of Kinder Morgan nearly every time there's a disruption in pipeline deliveries or distribution.

Here's an article from The New York Times explaining that a transition involving ethanol is the main culprit:
A few dozen gas stations from as far south as Virginia to as far north as southern New Jersey were reportedly closed today as they switched from gasoline mixed with the additive MTBE, or Methyl tert-butyl ether, to fuel that is combined with ethanol.

Though it has been anticipated for months, the transition is proving difficult in some areas because suppliers and gas stations must first drain and clean their hulking storage tanks. Getting ethanol from the Midwest to the rest of the country has also proven a challenge. Last month, 60 service stations near Dallas ran dry because of the switchover.

"It's unfortunate; however it's a necessary transition," said John Eichberger, director of motor fuel issues for the National Association of Convenience Stores. "It's happening all up and down the coast from Richmond to Philadelphia."

New York and Connecticut, which have already banned MTBE, are not experiencing outages.

These kind of things can be planned with minimal disruptions so I take the reports with a grain of salt. Here's another article from Kansas City:
According to Fortune magazine, oil companies are still getting record profits. Exxon posted $340 billion in revenue; Chevron had $190 billion.

However, when the price of gasoline is high, gas station owners don't necessarily make a lot of money, Mahoney reported.

"Over the last year, I used to make 4 cents to 6 cents per gallon. Not anymore. Now, maybe it's a penny. Sometimes I don't make a thing on it," gas station owner Sam Zirpolo said.

Congress is expected to hold hearings on the high cost of gasoline later this year.
Hearings later this year? What exactly are the Republicans in Congress doing? Counting their campaign money? In any case, the do-nothing Republican Congress is currently on recess.

Maybe the current shortages in the east are simply due to transitioning to a new gasoline mix. But there is clearly a worldwide oil problem and thus a worldwide energy problem. Republicans should be doing more than sitting on their hands winking at the oil companies.

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