Gas Shortage Rumor, Not Reality?

September 1, 2005 8:07 PM

Gas Shortage Rumor, Not Reality?That's the news flooding the media right now. We're told that its just a delivery problem. Is that why we should believe that the big gas stations can get gas, but the mom and pop stations have problems getting their deliveries? Is this the real story, that they're just having problems making their deliveries fast enough?
posted by jmccorm (45 comments total)

My local news channel in a central state warned that small stations could run out of fuel this weekend. Then they went on to show woman filling a half dozen gas cans in her trunk. Panic buying is on the increase, but which is it? We don't have enough fuel to go around, or they can't deliver it fast enough like we're being told? Does it matter either way?
posted by jmccorm at 8:09 PM on September 1, 2005

Panic buying aside, the real problem isn't this weekend, but the coming weeks. The Department of Energy calls the situation The Sum of All Fears. With oil rigs missing, damaged pipelines, and refineries shut down, it could take several months for the U.S. to reach full production (possibly resulting in $100 oil).

My guess is this is why Bush spent so much time talking about oil as part of his comprehensive recovery strategy today.
posted by F Mackenzie at 8:19 PM on September 1, 2005

And this is something Rice and the State Dept. could be helping with--arranging for shipments from abroad of more gas/oil/etc.
posted by amberglow at 8:22 PM on September 1, 2005

People in the suburbs and small towns around Atlanta are buying gas like we're entering the Mad Max era, but intown where I live, all stations are open, there are no lines, and the only weird thing about it is that we're paying $3.15 a gallon for regular.

My mom lives slightly south of Atlanta, and saw pickup trucks LOADED with gas cans in the back, pulling out of stations after having filled all of them. And they're buying premium ('it's all we have") at $3.50 a gallon.

Report price-gouging, folks... Georgia's Office of Consumer Affairs promise to be all over this: 404-651-8600 or 800-869-1123
posted by BoringPostcards at 8:26 PM on September 1, 2005

And yet, the solution proposed is to keep it cheap artificially so that people will buy more to hoarde, and it will run out sooner. Brilliant.
posted by nightchrome at 8:28 PM on September 1, 2005

But Rice has been busy
posted by shagoth at 8:28 PM on September 1, 2005

But Rice has been busy buying shoes.
posted by shagoth at 8:29 PM on September 1, 2005

Gas went up 40 cents a gallon here in Utah overnight. Pretty much all of our gas is refined in Sinclair, Wyoming, from crude pumped there, and it would be cost-prohibitive to ship it any further. And yet, our prices have gone up at almost exactly the same rate as anywhere else in the nation.

Gouging?

Nahhhhhhhh.
posted by mr_crash_davis at 8:31 PM on September 1, 2005

Gas went up 40 cents a gallon here in Utah overnight. Pretty much all of our gas is refined in Sinclair, Wyoming, from crude pumped there, and it would be cost-prohibitive to ship it any further. And yet, our prices have gone up at almost exactly the same rate as anywhere else in the nation.

Simple. The rate has gone up because that's the price you can get for oil now. It doesn't matter where - the market is nationwide. If you don't like it, don't buy. When demand falls, so will the price.
posted by Popular Ethics at 8:39 PM on September 1, 2005

As much as I disagree with O'Reilly, today he had on some oil industry talking head, and was NAILING him with the question: why can't the oil industry take a 20% profit cut for the american people? The guy could only stutter on with crap about 1973 and panic buying. BULLSHIT!

For those that didn't see me in yesterdays thread, SUPPORT THIS COMPANY.
posted by Mach5 at 8:39 PM on September 1, 2005

Same here, most of the gasoline sold in Las Vegas comes from Southern California. Our gas prices are now about $2.90/gal (which isnt that much of a jump, prior to the hurricane I filled up at $2.60/gal).

You have to remember though, their goal is to sell it for as much as they can. If they think you'll pay $5/gal and still sell all their gasoline in a reasonable amount of time, then they'll do it. And their competitors will follow, because they know you'll have no choice.

I had a guy that I'm on a private forum with say that gas will rise to $5/gal by the end of the weekend, and rationing will begin as well. Supposedly he had "an unlce" at the head of a large oil company in TX, but I'm still very skeptical. Maybe localized to the south and midwest. I still think people would riot if it nearly doubled overnight.
posted by SirOmega at 8:42 PM on September 1, 2005

why can't the oil industry take a 20% profit cut for the american people?

Oh give me a rest. Would you give up 20% of your wage to reduce gas prices? Would you allow the executives of the companies you invest in to reduce your dividends? Hardly.
America has made its bed with the free market. Now sleep in it.
posted by Popular Ethics at 8:46 PM on September 1, 2005

And their competitors will follow, because they know you'll have no choice.

Right now, with ng at $11/1000scf, a natural gas car burns at around $1.60/gallon.
posted by Heywood Mogroot at 8:49 PM on September 1, 2005

Oh, wow I agree with O'Reilly for once.

The problem is that a 20% profit cut wouldnt mean much at the pump. Maybe 4 cents per gallon. Oil companies make, roughly, 10% profit on their revenues (that is, 90% of the revenue is expenses, the 10% is profit, which is reasonable for an energy company these days after Sarbanes-Oxley). So if the gas company sells their gas for $3/gal to the gas station, 20% of 10% is only 2%. So thats 6 cents per gallon. And that doesnt even count the taxes you paid on that gallon of gas, so it could be less than six cents.

And for that "profit = wage" fallacy, profit is AFTER ALL EXPENSES, including salaries. Cutting profit != cutting salaries. Profit is just turned around and spent on all sorts of shit like copmany yachts and private golf courses (surely they'll get government aid for all those busted oil rigs, so they wont have to waste company profits on that). If they did want to show what a nice company they were, they could deal without a new yacht.

FWIW, Bush said that instead of gas company companies cutting profits, they should instead donate those profits to the relief fund. Of course, those donations are tax deductable. ;) Perhaps he is more savvy of a businessman than I give him credit for.

Heywood: how many miles/1000scf do I get though? Is it the same MPG as I get with gasoline, or less (or more?)
posted by SirOmega at 8:56 PM on September 1, 2005

I'm sorry SirOmega but could you explain what the hell Sarbanes-Oxley has to do with 10% profit? Do you even know what Sarbanes-Oxley is?
posted by filchyboy at 9:04 PM on September 1, 2005

Yeah, it was kind of like bizarro world, cheering O'Reilly on as he went after the Cato Institute wanker. I just don't get those guys -- when people want to regulate business, they say "no, no, business can regulate itself." But then when someone proposes that the companies do something voluntary, for the good of the country, and in the aftermath of a natural disaster, they insist that the companies can't do it. Most conservatives have supported short-term price controls during periods of crisis, but I guess not these guys.
posted by mabelstreet at 9:09 PM on September 1, 2005

I'm sorry SirOmega but could you explain what the hell Sarbanes-Oxley has to do with 10% profit? Do you even know what Sarbanes-Oxley is?

Sarbanes-Oxley and the associated bills passed after Enron, Woldcom/MCI, etc, means that its the CEO's first and foremost duty to increase profits (legitamately, of course). Everything else is second. It codifies boundless greed into our system of laws.
posted by SirOmega at 9:15 PM on September 1, 2005

Oil loves me
Oil loves me not
posted by Homeskillet Freshy Fresh at 9:18 PM on September 1, 2005

I'd be impressed if O'Reilly gave up 20 percent of his salary. That is one man to whom I have no compunction about saying "shut the fuck up, asshole." Like he cares.
posted by realcountrymusic at 9:24 PM on September 1, 2005

The $100 oil prediction is based on another major problem happening in the next month or two. If there was ever a sign from Alah to activate the sleeper cells, Katrina would be it.
posted by stbalbach at 9:26 PM on September 1, 2005

Okay, last post of mine in this thread, but I found out that oil's a cruel mistress.
posted by Homeskillet Freshy Fresh at 9:29 PM on September 1, 2005

Went with the GF to fill up at 3.06/ga for regular in Phoenix today. As we sat there, some poor guy had to come out and change the sign to 3.09 for regular, 3.29 for premium.

He looked more than a little sheepish, like he was expecting people to start throwing rocks or screaming curses at him.

If it's 3.29 for premium here, it's got to be approaching 4 in Southern California.
posted by loquacious at 9:39 PM on September 1, 2005

We're still at 2.65 for regular and 2.85 for premium here in Idaho, but I'm definitely waiting for the other shoe to drop. Time to switch from the big four cylinder Pontiac Grand-Am with the nice stereo to the tiny four cylinder 5-speed escort with no stereo.


I'll miss you ipod buddy.
posted by stenseng at 9:50 PM on September 1, 2005

I paid 2.65/ga in Boston yesterday. I woke up this morning and found that the gas stations near my apartment had regular going for $3.450/ga. Super was $3.70. I seriously thought I was still asleep.

After bopping around the city, and seeing a wide swing between $2.99/ga and $3.60/ga for regular, I called the state AG to file a gouging complaint. Apparently only 50 other people did the same.

Perhaps someone can explain something to me. Do smaller, local gas stations prepay for the gasoline they receive? Even if they don't, how can they radically and legitimately change the price of the gas that's already in their holding tanks?
posted by zerokey at 9:54 PM on September 1, 2005

Heywood: how many miles/1000scf do I get though? Is it the same MPG as I get with gasoline, or less (or more?)

That was an energy-equivalent comparison. I don't know the relative efficiencies of natural gas vs. gasoline though.

Plus I read something about burning naptha (search for gunnerman a-21, like here), but that sorta vanished off the face of the earth for some reason.
posted by Heywood Mogroot at 9:58 PM on September 1, 2005

Interestingly, I was reading earlier a news item from 2 weeks ago about the fact that there are -- oops, were -- only 149 refineries in the United States, and that we import 10% of our gasoline.

Of course, this item was written before Katrina. If memory serves, yesterday CNBC said something like 10-12 refineries were damaged.
posted by ilsa at 10:06 PM on September 1, 2005

zerokey: Even if they don't, how can they radically and legitimately change the price of the gas that's already in their holding tanks?

This came up in a recent askMe thread. They charge more because:
a) the market will bear it.
b) they'll have to pay that much to replace the gallon they sell you.
posted by Popular Ethics at 10:06 PM on September 1, 2005

Thanks a lot, Popular Ethics. I read through it, and it now makes enormous sense to me. Quite enlightening, really.
posted by zerokey at 10:13 PM on September 1, 2005

If it's 3.29 for premium here, it's got to be approaching 4 in Southern California.

about 3.25 at the low-cost stations in West Hollywood. up from 3.09 on Tuesday. I give it until next week we'll be at 4.
posted by menace303 at 10:30 PM on September 1, 2005

"If it's 3.29 for premium here, it's got to be approaching 4 in Southern California."

As of today, when I had to get gas, the price averages that I saw in Orange and in Long Beach (SoCal), have been
$3.97 Regular Unleaded
$3.07 For 89 Octane
$3.17 for Premium

It is probably a good ten to fifteen cents more expensive in LA.
posted by msjen at 10:33 PM on September 1, 2005

it's at about $3.80-4.00/gal for premium here in Australia (AUD1.30-1.40/L).
posted by polyglot at 10:36 PM on September 1, 2005

I filled up today, @ $2.92, even though I only needed half a tank. Not sure if this is the last sub-$3 tank of gas I'll have...
posted by Heywood Mogroot at 10:53 PM on September 1, 2005

polyglot: Exactly. Why do I get the impression some people think cheap petrol is a human right?

Even more annoying is the fact that the ones that whine the loudest are the free market cheerleaders. Now they want price control!
posted by spazzm at 11:12 PM on September 1, 2005

zerokey, were the stations with 2.99/gal prices older mom & pop places? I read something yesterday about how the gearing on the old pumps at some stations aren't set to go above 2.99. So some stations were stuck selling it at that price.
posted by [insert clever name here] at 11:27 PM on September 1, 2005

No..the 2.99 was at a fairly modern Texaco. (It was the mom and pop places that tended to have the $.20-$.40 extremes).

I'm tempted to go over there and check what is now, for the sake of curiosity.

Oh..I just realized that you mean the gearing in the pump (I was thinking gearing in the -sign-! d0h!). I can only think of one analog pump in the area here (old Gulf station - was $3.30/ga earlier).
posted by zerokey at 11:40 PM on September 1, 2005

ICNH - I know that in NC, they actually passed a law in the last few days to allow half gallon sales so that that the pumps can handle the price increase over 2.99

Regular Gas is going for about 3.19-3.49, a major increase as gas in Charlotte and the surrounding areas was at about 2.50 a gallon for regular the day before Katrina. Yes, the national average went up 30 or so cents and we've gotten nearly a buck across the board.

I live outside of Charlotte and our price increases haven't been so bad, rising to 2.90.

The main reason why there's such a panic in Charlotte is the fact that The Charlotte Observer, better known as The Disturber, published reports that we shouldn't panic, but it would be at least 2 weeks before gas would be delivered to Charlotte again. Of course, everyone reads that and panics.
posted by aristan at 11:50 PM on September 1, 2005

Report price-gouging, folks...

So is "gouging" illegal? How, exactly, is it differentiated from other pricing? Isn't setting the highest price you can get for your product the American way?
posted by pracowity at 11:58 PM on September 1, 2005

Here in Los Angeles I've seen a price range for regular of $2.90-$3.15. Premium running 20-30 cents higher. No lines.

I'm told by a friend in NJ that there are some lines there with people filling up cans (including him), and a friend in small-town Maine tells me the reg gas price jumped from $2.29 to $2.99 in two days, heating oil from $2.29 to $2.79.

It hasn't gone up that much here compared to other places, so I don't know if I'd call it gouging yet, but it's definitely opportunistic profit-taking... though in advance of potential shortages, I can see why a station owner would want to put some more in the war chest just in case.

I'm expecting $4 here by end of September latest. The Southeast is gonna get walloped harder sooner. It's the refinery capacity that will do the damage, as there will be enough crude to refine but not enough refineries to process it.

Another angle nobody seems to be mentioning is that most if not all of the people who work in the refineries along the damaged part of the Gulf Coast are now homeless refugees and may not even be within 100 miles of the facilities. I think there will be quite a bit of lag in restoring function there because they're going to be way understaffed for quite a while.
posted by zoogleplex at 12:42 AM on September 2, 2005

A bunch of people have said true things about America's cheap gas, and how it's not a human right.

I'm pretty damn anti-car. I like to bike. I like it a lot. If I had things my way it'd be 100x harder to get your license, SUVs would be taxed out existence or popularity and there would be heavy taxes on gasoline earmarked for mass transit and alternative energy implementations.

The reason why a lot of us here in the states are a bit jumpy about gas prices is because a lot of us are already on thin margins in a shitty economy. The difference of a dollar or so per gallon of gas will pretty much determine whether or not the bills will be met this month, and whether or not we'll make rent, or have wholesome food, or if it's going to be raman.

This isn't even counting or considering inflation for food, energy services, and goods.

We're not all wealthy yuppies or millionaire entreprenuers here in the US. Many, many of us - even skilled/degreed technical workers once known for having it easy - aren't doing too well, and have been on the edge for some time.

Yeah, there's people all over the world that are far worse off, and earn much less. But sometimes "earning much less" isn't always translatable when your compared local cost of living is 10000x more.

Yeah, there's unimaginably countless numbers of people in NOLA having a truly, genuinely tough time right now. But it's going to make it pretty difficult to donate money or do anything to help them if it suddenly gets to the point where a plain loaf of bread costs 8 bucks and the electricity gets turned off.

So, no. I'm not entitled to cheap gas, and I've never felt that way. I don't feel that the US is entitled to cheap gas or global imperialism to "secure its interests".

But I want to know what's possibly (and eventually and inevitably) coming so I can prepare now, and know which turnbuckles to tighten and which belts to add another notch to.
posted by loquacious at 2:39 AM on September 2, 2005

msjen: 3.97 sounds like OC. Guh.
posted by loquacious at 2:45 AM on September 2, 2005

The USA Today news segment that gets inserted into the local news this morning showed video footage of $6+ gas in the Atlanta area. Yow!

All of this has me wondering, what is the difference between 'what the market will bear' and gouging? At what point does the legal former become the illegal latter?
posted by kimota at 3:54 AM on September 2, 2005

Gas jumped to $3.59 here in Philly yesterday. It's a good thing that I only use 1 gallon a week zipping around on my '77 CB750f cafe racer. Haha, you car driving suckers!

BTW, if you didn't know already, 99% of you should never buy anything other than regular gas. Only use it if your vehicle originally ran on leaded gas or has a high compression motor.
posted by password at 4:22 AM on September 2, 2005

All of this has me wondering, what is the difference between 'what the market will bear' and gouging?

There isn't one. That's just unbridled capitalism for ya. Corporations have absolutely no duty to help the little guy. Their only duty is to make a profit.

Do you think Record labels are involved in gouging or 'what the market will bear' when they sell cds for £15.99 and are trying to up the price on itunes from the already exhorbant 75p per track?

Sure, they are testing what the market will bear but they are also just taking the piss.

Corporate America needs to get it's sense of humanity back. The response to this disaster has made that all too clear to me anyway.
posted by twistedonion at 5:05 AM on September 2, 2005

what is the difference between 'what the market will bear' and gouging?

That's what I'm wondering. And googling.

www.thefreedictionary.com:

Noun 1. price gouging - pricing above the market when no alternative retailer is available

H. R. 2944 (the 'Gross Overcharging Undermines Gasoline Economics Act'):

While consumers express concerns about being 'gouged' when prices spike at the gas pump, there is no legal definition of gouging. The Federal Trade Commission has never found a violation of Federal antitrust laws related to gasoline price spikes. An in-depth investigation of the entire oil industry is necessary to determine whether extra charges are driven by collusion among oil companies or simply by legitimate market influences.

Price Gouging vs. Price Volatility:

Given these complexities, what constitutes price gouging? Is it simply that more than a reasonable price is being charged for a product in someone’s view? Is it a price higher than consumers are used to? Frequently price gouging is spoken of in terms of profiteering, that is, pricing products or services unreasonably high during an emergency or disaster. States are beginning to address these issues by implementing new laws specifically aimed at price gouging during unusual circumstances...

posted by pracowity at 5:06 AM on September 2, 2005

In my small town in east central Illinois, the gas went from fro $2.99 a gallon to $3.19 a gallon (for regular, not the premium stuff) in an HOUR, on Wednesday between 4-5pm. That was after the Prez said he would open up the strategic oil reserves. Tell me how that price jump is even possible??? In an HOUR!?

(Unfortunately, I live in a rural area where I have to drive a half-hour to get to work.)
posted by cass at 12:34 PM on September 2, 2005