Growing Threat For Gas Shortages
Have you heard about the gas shortages in the Southeast? It doesn’t seem to be getting a lot of coverage in the Chicagoland area. However, the other night I was driving down some rural road outside of Burlington, Wisconsin, when a story came on the radio about some Atlanta woman who set her alarm clock for 2:30 AM in the morning just so she could get to a gas station and avoid any lines. No such luck. Even in those wee small hours of the morning, this motorist had to wait almost half-an-hour before she could access a pump. So, what exactly is going on here, and is there any danger of it spreading to other regions of the United States? CNN Money’s Brian O’Keefe talked about the situation last week and wrote:
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.
As I suspected, there’s more to this story. O’Keefe added:
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.
The CNN Money senior editor recently spoke to Matt Simmons, the chairman of Houston energy industry investment bank Simmons & Co. and chief spokesman for the Peak Oil movement, who said of the situation:
Our system is so fragile, all you need is a tiny change to go from ‘Oh, we’re in fine shape’ to an unmitigated disaster.
Simmons also warned:
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.
To which O’Keefe remarked:
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.
Good points.
Source:
“Gas shortages: get ready for more”
Brian O’Keefe
CNN Money, September 27, 2008
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