Anatomy of a gas crunch

Gas station after gas station with plastic bags tied over the pumps. Tense drivers stuck in hours-long lines. Packed buses and nearly empty restaurants. These have become familiar sights in Asheville and environs over the past two weeks during the area’s worst gas crisis in decades.

Drained dry: Cars line down the street near a gas station on Leicester Highway last week. A combination of hurricane-induced shortages, panic and the nature of the fuel-distribution system created a severe gas shortage in the region. Photo By Jason Sandford

On one of those packed buses last week, passengers observing the cars lined up down Haywood Road waiting for gas shook their heads. “This is crazy,” one of them said. “The government has got to do something.”

On Sept. 25, the gas lines at the Shell station at 40 Merrimon Ave. were long, and the tension was palpable. By Sept. 29, however, the situation had eased considerably. Asheville resident Pamela Paddock filled her tank as she chatted with a friend. Although business was brisk, there were no lines in sight, and the price of unleaded sat at $4.19 a gallon.

“I’m delighted to find gas here: I just breezed on in,” said Paddock, adding that she’d made it through the crunch so far because, “I hadn’t needed [gas]: I cut back on trips, on how much I was using.”

Meanwhile, at the Exxon station across the street, brown paper bags still covered the fuel pumps.

A Sept. 24 press conference called by city, county and state officials assured residents that help was on the way, though they emphasized that supplies could remain spotty through the end of the month. The overall message was: Don’t panic. Meanwhile, both local governments shut down offices and took other measures to conserve what fuel they had for emergency services.

“We realize right now that a lot of our citizens are struggling; our businesses are struggling,” said Buncombe County Board of Commissioners Chair Nathan Ramsey, adding that the county was closing offices Sept. 26 and 29, creating a long weekend. “The county is not suggesting anyone panic. The county is taking these measures to calm panic by making more fuel available to our community.”

Vice Chair David Gantt sounded a similar note. “This is an emergency; this is a really bad situation—we just don’t need to panic about it,” he said. “Supplies will get back to normal. We’re going to get through this; we’re going to be fine.”

On Sept. 25, Gov. Mike Easley‘s office announced that it had persuaded the major oil companies to send additional tanker trucks to the region from Wilmington, N.C., Tennessee and South Carolina carrying hundreds of thousands of gallons of fuel.

But while the lines are easing and things may be slowly returning to normal, one big question remains: How did this happen?

Breakdown

Normally, most of us don’t give much thought to the fine points of how the fuel we buy gets produced and distributed. But in Western North Carolina, the process goes something like this: Refineries on the Gulf Coast process crude oil into gasoline, which then goes up through the Colonial Pipeline Co.‘s system to distribution centers such as the one in Spartanburg, S.C., that provides most of Asheville’s fuel.

When the gas gets to Spartanburg, Colonial’s customers get their fuel and truck it up to the mountains for delivery to gas stations. However, the industry’s big dogs—companies like Exxon and BP—have first dibs on the available supply. Normally, this isn’t a problem, but if there’s a shortage, local independent distributors such as Biltmore Oil (owned by Eblen) and Asheville Oil have to settle for what’s left—if there is anything left. Customers submit their fuel needs about a year in advance, requesting a specific amount for each month based on the previous year’s experience for that month. But the bigger companies sign long-term contracts involving much larger amounts of fuel—making them priority clients.

This arrangement is a function of both geography and economics. The Raleigh area, for example—being on lower, flatter ground and closer to the East Coast—can also get gas via a pipeline from Wilmington (which has a refinery processing oil that’s shipped in to the port city).

As long as gas is flowing normally, the system works fine. But any sort of glitch can expose the system’s limits—and lack of flexibility. The one-two punch of hurricanes Gustav and Ike shut down refineries in both Louisiana and Texas—which is part of why the current crunch has lasted longer and bitten deeper than the 2005 shortage caused by Hurricane Katrina. Although that storm is believed to have caused more severe damage (based on current estimates of Ike’s total impact), Katrina left most of the Texas-based refineries and pipelines untouched and still in operation. This year, on the other hand, some refineries simply went off-line before the storms hit; others sustained actual damage.

Damaged or not, however, it can still take considerable time—a week to 10 days or more—before refineries’ production returns to normal, and even longer for that newly processed fuel to reach consumers. As of Sept. 25, 19 refineries were still down or operating at a reduced capacity, while 13 were fully operational, according to Colonial Pipeline Co. spokesperson Steve Baker. The Alpharetta, Ga.-based company distributes gasoline, home heating oil and other petroleum products as far north as New Jersey through its extensive network of pipelines.

And at such times, this area is particularly vulnerable. “The mountains have always been more isolated, and when you’ve got a situation like this—with the country’s gas production being cut by a third or a quarter—they really feel the sting,” AAA Carolinas spokesperson Tom Crosby told Xpress.

Such shortages hit the independent gas stations and distributors hardest—leaving them literally high and dry.

“We’ve found out recently how heavily dependent the region is on the independent dealers, and those people are getting the least amount of gas at this time,” Buncombe County Deputy Fire Marshal Mack Salley said during the Sept. 24 press conference, adding that Colonial’s Spartanburg center was running low and was “restricting supplies to the branded [large] companies: The independents are shut out.”

Panic sets in

Once the news gets out, panic exacerbates the situation. As people become aware of the shortage and worried that gas might run out, they go to fill up when they normally wouldn’t. And when only a few gas stations in an area have any fuel to sell, it’s even harder to meet the added demand.

“In times like these, we tell people to only fill up if they get below a quarter of a tank,” Crosby said with a chuckle, adding, “But a lot of people really, really want to top their tank off.”

Sheriff Van Duncan, too, said he believes panic is making things worse.

“A lot of this problem seems to be driven by people panicking and driving around from station to station looking to top off their tanks,” he noted. “Fuel supplies that [typically] last two to three days are lasting a matter of hours, because people are in that panic mode.”

But while cities and counties can encourage gas-station owners to limit sales to a specified amount per customer, they can’t generally legally force private businesses to take such a step. The situation changes somewhat if the governor declares a state of emergency (which hasn’t happened); Asheville, says Mayor Terry Bellamy, also has the power to declare a local emergency. But even then, there’s little to prevent someone from getting around the rules, such as by driving from station to station.

Similarly, the government typically has little influence on oil-delivery routes. Gov. Easley’s press release acknowledged this, saying: “I am grateful to the oil companies for trying to get gas to our people. They do not have to make these changes in their delivery routine, and I have no power to make them. They have agreed to do this voluntarily.”

Elected officials steamed

Not everyone was sounding so thankful, however. The previous day, state Rep. Charles Thomas attacked the whole oil distribution system.

“The public does have every right to be angry,” said Thomas. “If the big oil companies can’t do a better job of managing their supply, then they are begging us to regulate them.”

Baker, however, defended Colonial’s allocation system with a long sigh and a note of frustration in his voice. “Deliveries are made in the amount that our customers asked for,” he told Xpress. “Every year, they set how much they’ll need for a month; there’s no magician that’s waving their wand and ordering all of this. We’re working as fast and as efficiently as we can to get this resolved. I hope everything calms down soon and gets back to normal.” In fact, however, the smaller independent customers are not necessarily getting the amount of fuel they asked for.

Bellamy also maintained that the mountains shouldn’t be penalized “because we have these family-run businesses like Eblen that have been a part of this community for so long.”

She also blasted the governor’s office for what she saw as a tardy response to the crisis.

“Western North Carolina needs to stand up and tell the governor how we feel. North Carolina doesn’t stop at Hickory: It shouldn’t take one of our colleagues in Raleigh to make it happen. I’ve gotten e-mails from moms telling me they need to get their kids to a doctor’s appointment. It’s just disappointing in a day and time like this to see that we all have to bond together to make sure Raleigh knows we exist.”

By Monday afternoon, Crosby of AAA Carolinas was only cautiously optimistic, following a day when many gas stations had closed to replenish their supplies.

“We’ve seen a little bit of improvement,” he told Xpress. “But it’s still pretty much the same situation we had before: The product is reaching the pumps, but slowly. Hopefully as people fill up there will be less panic pumping.”

So is Asheville out of the woods yet?

“Hard to say,” Crosby said after a pause. “Each day should get a bit easier.”

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2 thoughts on “Anatomy of a gas crunch

  1. cwaster

    “However, the industry’s big dogs—companies like Exxon and BP—have first dibs on the available supply”

    oh? then why did the Exxons run out? Still smells fishy to me.

  2. Erin

    Per the article:

    “Damaged or not, however, it can still take considerable time—a week to 10 days or more—before refineries’ production returns to normal, and even longer for that newly processed fuel to reach consumers. As of Sept. 25, 19 refineries were still down or operating at a reduced capacity,”

    I.e. production and transport were slowed down as it was. Then, companies with the biggest contracts on got dibs on what was available- which, apparently, was not as much as usual.

    So- the independents were not getting any gas, and the largest comaanies were getting it slower then usual- due to the hurricanes.

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