After I overheard some conversation among Wawa supervisors at their Glen Mills store about possibly running dry on some gas pumps by this weekend, and then seeing every station filled with cars waiting to get gas, I went on-line to see if there was some sort of gas shortage in the area. The following is taken from the Philadelphia Inquirer web site.
Problems at refineries have disrupted some supplies. AAA warned that problems could continue for weeks – and drive prices higher.
By Harold Brubaker, Edward Colimore and Marc Schogol
Inquirer Staff Writers
As if rising prices weren’t enough, the tanks have run dry at some Philadelphia-area service stations in the last few days as the refining industry stumbles through a change in the formulation of gasoline.
Oil refiners are phasing out a petrochemical that makes gasoline burn cleaner but which also has been found to contaminate groundwater. Refiners are switching to corn-based ethanol.
The changeover is creating supply-chain bottlenecks because much work must be done at fuel terminals and service stations to handle ethanol.
The maintenance-related shutdown of one area refinery, production problems at another, and the change from winter-blend to summer-blend gasoline are exacerbating the problems.
“There is truly a dearth of supply in the Philly and New York markets today,” Wayne Hummel, of Liberty Petroleum L.L.C., said yesterday. His firm supplies 40 stations in the Philadelphia region.
Hummel said four Liberty stations had run out of fuel the last two days, as tanker trucks drove from terminal to terminal, unable to find fuel. “It’s ugly. It’s very ugly,” he said.
AAA Mid-Atlantic warned drivers yesterday that gasoline-supply disruptions could continue for the next few weeks and contribute to higher pump prices.
The group said the average gasoline price in Philadelphia and its Pennsylvania suburbs had climbed 52 cents a gallon – or 22 percent – to $2.85 since the most recent upturn began on March 7. In South Jersey, yesterday’s average was $2.71 a gallon, an 18 percent increase from a month ago. A key benchmark price for crude oil on the New York Mercantile Exchange yesterday was $71.95 a barrel, up more than $10 from a month ago.
Catherine Rossi, spokeswoman for AAA, said she knew of eight stations in the region that were out of fuel yesterday.
Areas of Virginia and Texas, also going through the ethanol conversion, have experienced similar supply disruptions, said Jeff Lenard, spokesman for the National Association of Convenience Stores.
Locally, gas retailers said scheduled deliveries had been late – sometimes up to a day or more – causing them to turn customers away.
Lou Stiles’ Sunoco service station in Mount Laurel ran out of gas at least four times this month. Yesterday afternoon, he ran out of regular and was waiting for a tanker.
“We’re a 24-hour operation and pay two men to stay on when there’s nothing to do but wait for a load of gas,” said Stiles, who has operated the station at Route 38 and Hartford Road for 40 years.
As of 6:25 p.m., cones were blocking the gas lanes at the station.
Jai Kulkarni, owner of a Lukoil station and Kwik Farms convenience store on Route 23 in West Conshohocken, said he was out of gas for about four hours Wednesday. He kept the convenience store open, but he closed the pumps – at a cost of $200 an hour in lost sales.
At that station yesterday was Vinnie Zambuto, a 31-year-old graphic designer from Coatesville who said he had never seen a dry gas station before encountering one last week. Recalling the gas shortages of the 1970s that his “parents keep talking about,” he said he hoped the new shortages were short-lived.
“I’m hoping it will work itself out.”
The conversion to ethanol was prompted by the federal Energy Policy Act of 2005, which left refiners vulnerable to groundwater contamination suits and mandated greater use of renewable fuels. The use of ethanol forced gasoline retailers to clean their tanks, remove all water from them and install extremely fine filters on their pumps.
Ethanol is a solvent that picks up any gunk in tanks and readily blends with water. Those properties could ruin a 9,000-gallon tank of gasoline at a huge cost to a retailer.
It costs up to $1,500 to clean tanks, said Kevin S. Kan, president and chief executive officer of American Auto Wash Inc. in Malvern, which operates 18 stations in the region, including 13 BPs that have converted to the ethanol blend.
Ethanol is logistically more complicated than the petrochemical it replaced – MTBE, or methyl tertiary butyl ether. Refiners could blend MTBE into gasoline at the refinery and send the finished gasoline through pipelines to terminals.
But ethanol must be blended into gasoline at the terminal because it would mix with water if it were sent through pipelines, ruining the fuel. So, fuel terminals have to go through a similar process of cleaning tanks to store ethanol before it is blended.
They must also install blending equipment.
Independent gasoline distributors said few fuel terminals had gas yesterday. Those that did, such as the former Exxon terminal in South Philadelphia now owned by Pacific Energy Partners L.P., had trucks waiting four hours for fuel because the terminal was filling trucks in only two of the five lanes that they use normally. “We are doing our best to activate the others,” said Jennifer Shigei, manager of investor relations for the Long Beach, Calif., company.
The three companies that operate refineries on the Delaware River – Sunoco Inc., Valero Energy Corp., and ConocoPhillips – declined to discuss the supply situation in much detail.
Valero spokeswoman Mary Rose Brown said the company’s Paulsboro refinery began blending ethanol yesterday, but did not respond to a question about a disruption there this week.
Shannon Breuer, a spokeswoman for Sunoco, said the company was “focused on being a reliable supplier” and was confident that any problems would be short-term.