Out Of Gas In The Dirty South
Posted by Sonja Ebron
Hurricanes Gustav and Ike have struck again, not with high waters and strong winds, but with the partial shutdown of a gasoline pipeline serving the southeast. Half the gas stations in Atlanta are out of gas. Those with gas inventories have long lines of cars with drivers willing to pay very high gas prices. Georgia officials recently negotiated a waiver of environmental regulations that required gas in Atlanta to carry anti-smog chemicals, so gas has been imported from surrounding areas. But even gas imports haven’t reduced the lines at gas stations, which are expected to last through mid-October.
Atlanta is not alone. The same pipeline supplies gas stations throughout the southeast:
Drivers in Charlotte reported lines with as many as 60 cars waiting to fill up late Wednesday night, and a community college in Asheville, N.C., where most of the 25,000 students commute, canceled classes and closed down Wednesday afternoon for the rest of the week. Shortages also hit Nashville, Knoxville and Spartanburg, S.C., AAA said.
The governor says it’s all in our heads:
Georgia Gov. Sonny Perdue said Wednesday that there were shortages of gasoline in parts of metro Atlanta, and he called some of the panic “self-induced.”
“There is ample fuel in the city,” he said. “It’s not everywhere it needs to be, but we do not have a crisis in the sense that we don’t have fuel coming in.”
The governor is not alone in blaming the victims:
But economists and other experts say individuals — not just Americans — are hard-wired to respond quickly when they are scared, and in a way that is not always in their own, or their neighbors’, best interests.
Dennis Jacobe, chief economist for Gallup Inc., said an emotional response is quite normal when expectations — such as gas being available or the safety of a money-market fund — suddenly are called into question.
“When those basic assumptions of your daily life are violated, it sends you a shock and you do get emotional, irrational reactions,” Jacobe said. “That means panic.”
Lars Perner, an assistant professor of clinical marketing at the University of Southern California, said the combination of worries about the economy and gasoline supplies may have exacerbated motorists’ reactions.
“Once you get into that kind of negative thinking, you often have a vicious cycle going on,” Perner said. “You get into sort of a protective instinct that comes out — and you go and fill up.”
But Brian O’Keefe at Fortune Magazine says the real problem is historically low gas inventories:
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.”
That means we can expect shortages of gasoline and other essentials whenever crisis strikes. There are no good solutions. Georgia’s Governor Purdue has asked federal officials to release oil from the Strategic Petroleum Reserve, but it could take weeks for the refineries and pipelines to deliver the gas to metro Atlanta. We live in interesting times.
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