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AP
Gas shortage plagues the Southeast

By KATE BRUMBACK, Associated Press Writer Mon Sep 29, 8:07 PM ET

ATLANTA - Motorists are rising before dawn so they can be at the filling station when the delivery truck arrives. Some are skipping work or telecommuting. Others are taking the extreme step — for Atlanta — of switching to public transportation.

Across a section of the South, a hurricane-induced gasoline shortage that was expected to last only a few days is dragging into its third week, and experts say it could persist into mid-October. The Atlanta area has been hit particularly hard, along with Nashville and western North Carolina.

Those lucky enough to find gas are paying more than drivers elsewhere around the country.

"I've used up gas just looking for gas," said Larry Jenkins, a construction worker who pulled his red pickup truck into a Citgo station in Charlotte, N.C., on Monday. The sign said $3.99 a gallon, but the pumps were closed. Many filling stations in the area have not had gas for days.

"Right now, I'll pay anything for gas," Jenkins said. "I don't care if it's $5 or $6 a gallon. I need it."

The shortage started with the one-two punch of Hurricanes Gustav and Ike, which shut down refineries along the Gulf Coast. Now, more than two weeks after Ike, many refineries are still making fuel at reduced levels.

While other parts of the country get gasoline from a variety of domestic and overseas sources, the Southeast relies heavily on two pipelines that carry fuel from the Gulf of Mexico. Because the gasoline moves at just 3 to 5 mph, it can take up to 10 days to reach Atlanta.

A tendency among panicky drivers in the hardest-hit areas to top off their tanks every time they pass an open station has only made matters worse.

"Fuel is coming back into the system, but as soon as it comes in, it's being sucked back out by consumers who are afraid the shortage is going to continue," said Ben Brockwell of the Oil Price Information Service in Wall, N.J.

In the meantime, government agencies have postponed public hearings, community colleges have canceled classes, and some companies have provided vans for carpooling or encouraged employees to work from home.

Hours-long lines, "No gas" signs and plastic bags covering fuel-pump nozzles are familiar sights around Atlanta, where drivers have become intimately familiar with fuel delivery schedules, rising before daybreak when they know gas is coming to a certain station.

"I was just in Atlanta yesterday. There is no gasoline in Atlanta, in Charlotte, in Chattanooga. It's like a Third World country," former House Speaker Newt Gingrich said Sunday on ABC.

Police officers and a security guard were on hand to manage the flow of cars at a downtown Atlanta gas station around midday Monday.

Kathy Burdett, 49, of Forest Park, said the shortage ruined her weekend plans to visit Stone Mountain with out-of-town guests.

"I didn't go anywhere all weekend and we kept close to home," said Burdett, who had to hunt for the gasoline her friends needed to make it home to Tennessee.

The average price for regular gas Monday was $3.94 per gallon in Georgia, 30 cents higher than the national average, according to the AAA. Motorists were paying an average of $3.89 a gallon Monday in North Carolina and $3.80 in South Carolina.

Authorities in North Carolina and Tennessee said they were investigating reports of price-gouging, while Georgia's consumer affairs office has subpoenaed sales records from 130 gas stations because of similar complaints.

Even in Atlanta, a city notorious for long commutes and traffic, some drivers were turning to public transportation. Although the MARTA bus and subway system did not have ridership numbers for September, a spokeswoman said parking lots at stations were busier than usual.

As she waited in a gas line at an Atlanta station, 27-year-old Kasheeda Washington said she planned to start taking the bus because driving from her home in suburban Marietta to two jobs in Atlanta and to classes at the downtown campus of Georgia State University had become too expensive.

"I would have never thought this day would come when I would have to wait for gas," she said.

Associated Press writers John Porretto in Houston, Juanita Cousins in Atlanta, Katrina A. Goggins in Columbia, S.C., Randall Dickerson in Nashville, Tenn., and Mitch Weiss in Charlotte, N.C., contributed to this report.

Fortune
More gas shortages on the way
Tuesday September 30, 7:30 am ET
By Brian O'Keefe, senior editor

While Congress and Bush administration officials have been working to complete a bailout plan and stem the financial contagion on Wall Street, a different kind of economic crisis emerged across the South this week: A severe, hurricane-related gasoline shortage has curtailed trucking from Atlanta to Asheville, N.C., and created a wave of panic buying among motorists.
While Congress and Bush administration officials have been working to complete a bailout plan and stem the financial contagion on Wall Street, a different kind of economic crisis emerged across the South this week: A severe, hurricane-related gasoline shortage has curtailed trucking from Atlanta to Asheville, N.C., and created a wave of panic buying among motorists.


The return of gas lines has largely flown under the radar of politicians who are usually keenly attuned, because their constituents are, to what's going on at the pump. But more of the Capitol gang should be paying attention to this.

That's because nationwide our gasoline inventory is shockingly low. Liquidity must be restored soon to this market, or we could be facing a crippling run on the gasoline bank. And if you think Americans are outraged about Wall Street, wait until their Main Street grocery store doesn't get the bread and milk delivery for a week or two.

Back to the '70s

The scenes over the past several days in places like Nashville, Tenn., Anniston, Ala., and western North Carolina looked like file footage from 1979 - with bags over empty gas pumps and quarter-mile long lines of cars waiting to fill up at stations that hadn't run out. AAA reported that drivers were so desperate that they were following tankers to gas stations to ensure a fill-up.

In Georgia, Gov. Sonny Perdue got a waiver from the Environmental Protection Agency to temporarily allow stations to sell high-sulfur gasoline. (Correction: An earlier version of this story said Louisiana received the waiver and incorrectly named Perdue as that state's governor.) In Alabama, Gov. Bob Riley ordered a state of emergency to prevent price gouging by station owners that do have gas.

What's going on? The immediate answer is that the double whammy of Hurricanes Gustav and Ike, which swept through the Gulf of Mexico earlier this month, caused much of the Gulf's oil drilling and refinery production to be shut down. In particular Ike, which hit refinery-rich Southeastern Texas on Sept. 13, caused massive power outages in the Galveston and Houston areas.

As of this week, more than a dozen refineries around Texas City and Port Arthur were not operating at full capacity and, according to the Department of Energy, six refineries, with a combined capacity of 1.6 million barrels a day, were still not running at all.

A bigger problem

But while the current shortages can be traced directly to the two hurricanes, the severity of the problem points out a bigger issue: The U.S. has been operating for a while with razor-thin spare gasoline capacity.

In its most recent Weekly Oil Data Review, Barclays Capital pointed out that the U.S. gasoline inventory has reached its lowest level since August 1967, when demand was a little more than half its current level of 9.3 million barrels a day. At 178.7 million barrels, inventories are 21.6 million barrels below their five-year average.

None of this surprises industry watchers such as Matt Simmons, the chairman of Houston energy industry investment bank Simmons & Co. and chief spokesman for the Peak Oil movement. I recently wrote a profile of Simmons for Fortune ("The prophet of $500 oil") and I can report that he has been warning about the potential of gasoline shortages in the U.S. for months.

"Our system is so fragile," he told me recently. "All you need is a tiny change to go from 'Oh, we're in fine shape' to an unmitigated disaster."

Simmons points out that the gasoline weekly stock reports have been trending sharply downward since last winter (with a brief upturn in the spring), and that even before Gustav and Ike we were in "just in time" supply mode.

Getting back to a safer level of extra capacity isn't simple, either. Once the refineries get back up and running, they'll drain the already low crude oil inventories. Unless gasoline demand stays low, Simmons believes, we'll have a hard time clawing back to stability.

That's why he worries about a top-up catastrophe that could cripple the trucking industry and disrupt food deliveries.

As he told me the other day: "If we end up having gasoline shortages, the odds are about 90% that Americans will do what we always do: We'll top up our tanks. And in topping up our tanks, within three or four days we'll drain the pool dry and then within seven days we'll run out of food."

That sounds awfully dire. And it probably won't happen. But, then again, a couple of months ago hardly anybody would have predicted that AIG would collapse, Congress would be mulling a Wall Street bailout, and '70s-era gas lines would be back.

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