Price, supply leads to buying frenzy
Published 12:00 am Saturday, September 3, 2005
It's within the human nature to panic when things appear bleak.
However, state and local officials warn against pushing the panic button, just yet.
With foreign oil at a record-setting price of $71 per barrel coupled with reduced production in the major refining areas along the Gulf Coast thanks to Hurricane Katrina, prices at the pump have led to panic purchasing by consumers.
The price of regular unleaded gas hit $3.30 at most Roanoke-Chowan area stations on Thursday. Yesterday (Friday), another nine cents was added to the price, bringing regular unleaded to $3.39 per gallon locally. All totaled, that represents an 80-cent hike since Saturday and nearly a $1.40 increase since the same time last year.
When will this current price spike hit its peak? Do area gas and diesel distributors have enough supply? Is there a possibility of gas rationing, the same as witnessed back in the mid 1970's during the oil embargo?
These are the questions on the lips of area consumers.
For starters, local distributors admit they are unsure if the price will climb any higher.
"We realize people have concerns about pricing and supply, but we want to let them know we are open for business and ready to continue to serve their needs," Adam Coleman, Vice-President of Eastern Fuels, Inc. and Red Apple Markets said.
He continued, "We are just like a consumer. We buy from a supplier. We take steps to ensure that our supply of gas, diesel and other oil-related products continues to flow. But, if that supply is cut off before it reaches us, then that presents another situation."
Coleman said the price is "driven by upstream distribution costs." He explained that by saying the cost was "everything from the distributor backwards."
"I really hope we don't see anymore dramatic increases as witnessed this week," he noted. "I don't see anything as far as a shortfall in supply. For us, it's business as usual. We do not plan on closing any of our stations."
The uncertainty of stable supply and price led consumers on a panic buying frenzy on Thursday. Lines at gas stations throughout the Roanoke-Chowan area were reported.
At Brinkley Motors on Academy Street in Ahoskie, owner Sammy Brinkley was topping off the tank of a customer late Thursday afternoon while worrying if he had enough supply to carry him through the remainder of the day.
"I'm down to 500 gallons of regular unleaded," Brinkley said. "I'm thinking about closing a bit early and carrying that over ‘til tomorrow."
Brinkley said his supply of premium unleaded stood at roughly 2,000 gallons.
"If I run out of regular, I guess I'll sell the premium ‘til that tank runs dry," he said.
Brinkley said he had contacted his fuel supplier earlier in the day, informing them of his situation.
"When I asked when I could expect a shipment, I was told, ‘in the future'," Brinkley revealed. "When I ask what day was the future, I was again told, ‘the future.' Well, I guess I'll just sell what I have and wait for the future to arrive."
Part of the shortage lies with the Colonial Pipeline, shut down due to the hurricane. That pipeline runs from east Texas, through the Gulf Coast states and northeastward to New Jersey. It transverses North Carolina through the state's piedmont section. As it enters Virginia, one branch line turns towards the Hampton Roads region.
The Colonial Pipeline, headquartered in Atlanta, Ga., handles 95 million gallons of gas and diesel fuel daily.
North Carolina Gov. Mike Easley said Thursday that the pipeline, which supplies 90 percent of the state's gasoline, was operating at a limited capacity. He said the company hopes to increase its flow, operating at 30 percent of normal capacity on Thursday, over the weekend as electricity is restored at the pumping stations along its route where the hurricane hit.
Each day the pipeline is closed, supplies get backlogged and distribution centers must rely on reserves.
According to the N.C. Petroleum Council, North Carolina began receiving reduced gasoline deliveries on Thursday, the state's first since Hurricane Katrina made landfall.
"Citizens should not panic, but it is critical that we continue to conserve our fuel while Washington is developing a national strategy for this problem," Easley said. "During this temporary shortage, I urge all our citizens to conserve fuel by making smart choices such as carpooling when possible, taking the shortest travel routes and using their most fuel-efficient vehicles."
Katrina's powerful winds and deluge of rain forced oil manufacturers to close more than a tenth of the country’s refining capacity and a quarter of its oil production, which sent gasoline prices surging.
Some industry experts are predicting the price will reach as high as $4 per gallon in some areas of the country. However, they are quick to point out the shortages and price spikes may be short lived, if the refineries and pipelines quickly get back up to full speed.