The Oil Drum | News Bullets

News Bullets

Posted by Prof. Goose on August 30, 2005 - 11:57pm

One thing we talked about for the last couple of days are not just high prices, but the effects on gasoline and other fuel availability throughout the country. Atlanta may already be facing problems AJC via Drudge).

From the NYT, if you're flying this weekend, check before you go to the airport.

The scope of the tragedy is just being realized.

Hurricane 'will force consumers to reduce fuel use.'

CNN: Gas Crisis Looms. The impact of Hurricane Katrina on U.S. oil production and refinery capabilities may be worse than initial reports estimated and could lead to a national gas crisis in the short-term, analysts warned Tuesday.

snippets below the fold.

From the AJC (via Drudge) on GA gas problems:

Metro Atlanta drivers are facing the possibility of paying considerably more than $3 a gallon for gas by Labor Day -- if they can get it at all, The Atlanta Journal-Constitution is reporting Wednesday.
The two pipelines that bring gasoline and jet fuel to the region are down -- powerless to pump as Hurricane Katrina wreaked havoc on electrical infrastructure.
The metro Atlanta region generally has about a 10-day supply of gasoline in inventory, said BP spokesman Michael Kumpf. The pipelines have been down for two days.
Alpharetta, Ga.-based Colonial Pipeline Co., cut off from its suppliers on the Gulf Coast, is now pumping gas from huge storage tanks, many in Powder Springs, Ga. Whether electric power can be restored to the pipeline pumps before supplies run out is "the great uncertainty ... that hangs over all of us," said Daniel Moenter, a spokesman for Marathon Ashland Petroleum, a major supplier of metro Atlanta's fuel.

From the NYT on flights:

The airline industry felt the brunt of Hurricane Katrina yesterday, with some airports running low on jet fuel and carriers canceling hundreds of flights. Meanwhile, Wall Street feared that the financial problems of the sickest airlines could grow worse.
The industry's trade group, the Air Transport Association, said the nation's supply of jet fuel had been cut 13 percent because of damage to refineries on the Gulf Coast.

News Bullets

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9 comments

Halfin on August 31, 2005 - 12:36am Permalink | Comments top

Good news on gasoline availability from Green Car Congress, http://www.greencarcongress.com/2005/08/epa_grants_emer.html .

"The EPA is granting an emergency waiver of clean fuel standards in Alabama, Florida, Louisiana and Mississippi because the impact of Hurricane Katrina 'will prevent the distribution of an adequate supply of fuel to consumers that is compliant with the Clean Air Act.'"

They are going to be allowed to deviate from the fuel volatility standards, which will give the refineries more flexibility in how they operate and improve their efficiency. Even better:

"Further, because of the expected shortage of motor vehicle diesel fuel meeting the 500 parts per million (ppm) sulfur standard, EPA will temporarily allow regulated parties to supply motor vehicle diesel fuel to affected states having a sulfur content greater than 500 ppm."

This should allow refineries to use more of the high sulfur "sour" crude and further increase their efficiency, allowing them to run at full capacity. It's been noted that much of the oil in the Strategic Petroleum Reserve is sour crude, and I wouldn't be surprised to see further relaxation of air quality standards in order to allow that oil to be used efficiently.

It's great to see that the federal government is working to solve problems and not letting the bureaucracy get in the way and make things worse than they already are.

Anonymous (not verified) on August 31, 2005 - 6:21am Permalink | Parent | Comments top

Halfin, why not keep to the existing laws and let the market sort it out? Why interfere with the market???

Anonymous (not verified) on August 31, 2005 - 3:47am Permalink | Comments top

Me too, Halfin. I'm tickled pink to see that the gov't is allowing us to pump more sulphur and ozone into the atmospere.

Engineer-Poet on August 31, 2005 - 4:25am Permalink | Comments top

I was slightly surprised to find some words here:

Claude Mandil, the IEA's Executive Director, said that a much-needed change in onsumer habits, required to halt the oil-price run, would not happen if governments intervened by lowering taxes on the price of fuel. He said: "It's not because I want people to be hurt, it's just because I think that market signals are useful."

I'm not used to seeing endorsements of market economics from bureaucrats.

mw on August 31, 2005 - 5:35am Permalink | Parent | Comments top

The IEA is not a function of the US goverment - the person you've quoted is not a bureaucrat. I believe you are confusing the IEA with the EIA, the US Energy Information Association.

As for the Department of Energy, Secy Bodman confirmed live on CNN this morning that price caps were not something he would ever endorse, which is in keeping with the ideological leanings of the current government. In this case I fully agree with such leanings; I'd like to see gasat 5$ and stay there for a while.

Engineer-Poet on August 31, 2005 - 10:05am Permalink | Parent | Comments top

No such confusion; my impression was that IEA was UN or the like, which is also rather anti-market.

mw on August 31, 2005 - 9:35am Permalink | Comments top

Well... product supplied up again last week - 4 week average up 2.3% and refinery capacity utilization at 97.1% and still gasoline supplies were dropping. Could be exciting.

Total product supplied over the last four-week period has averaged 21.5 million barrels per day, or 2.3 percent more than averaged over the same period last year. Over the last four weeks, motor gasoline demand has averaged over 9.4 million barrels per day, or 1.2 percent above the same period last year. Distillate fuel demand has averaged 4.0 million barrels per day over the last four weeks, or 3.3 percent above the same period last year. Kerosene-type jet fuel demand is down 6.7 percent over the last four weeks compared to the same four-week period last year.

Next weeks report... can hardly wait.

mw on August 31, 2005 - 9:35am Permalink | Comments top

http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/weekly_petroleum_status_report/curren t/txt/wpsr.txt

Halfin on August 31, 2005 - 1:49pm Permalink | Comments top

Even more good news, the EPA has now extended the waiver to cover all 50 states, http://www.epa.gov/katrina/index.html#aug31johnson .

This will allow the refineries to produce a single grade of gasoline and sell it everywhere, without having to create specific grades for different states, counties and even cities. That should definitely help with the refinery shortage by letting them operate at maximum capacity. It should also help avoid localized shortages because gasoline will be the same everywhere in the country, a reform long overdue IMO. See the map at Econbrowser for the crazy quilt of mandated gasoline formulations, which has now been temporarily suspended:

http://www.econbrowser.com/archives/2005/08/boutique2.gif