September 16, 2008
Local Gas Prices on the Rise As Supply Issues Crop Up
By KATHY ADAMS
By Kathy Adams | The Virginian-Pilot
If you didn't buy that gas for $3.69 Monday, you might be kicking yourself when you pass the pump this morning.
Gas prices spiked 20 cents from Friday to Monday and might continue to rise throughout the week as Gulf Coast oil refineries assess the damage caused by Hurricane Ike and work to resume operations, local oil executives said Monday.
Supply is at the root of the rising prices.
"Supplies are tight," said Jeff Miller, president of Miller Oil Co., which operates more than 30 Miller's Neighborhood Markets in Hampton Roads. "It doesn't look as bad as it was with Katrina, but the jury's still out on it."
Uncertainty about the supply caused gas prices to fluctuate hour to hour and station to station this weekend and Monday, with a few local stations selling out of gas altogether.
The average cost of regular gasoline hit $3.68 per gallon in Hampton Roads on Monday, according to auto club AAA's Fuel Gauge Report. Posted prices ranged from $3.63 to $4.94.
Dodge's Store on Hampton Boulevard was charging $4.94 for a regular gallon of gasoline, down from $4.99 per gallon on Friday, which caused dozens of cars to line up at the Wawa across the street to fill up for about $3.55 a gallon.
"It was good for us," said Reggie Walker, Wawa's assistant manager. "I think Ike made people think they could run out of gas."
Wawa keeps enough inventory to insulate it from short-term shortages and price spikes, so its prices only went up a few cents over the weekend, he said. Dodge's station managers declined to comment.
In some regions, particularly the South, gas spiked to $5 per gallon, well above the national average of $3.842. In North Carolina, Attorney General Roy Cooper said he subpoenaed seven sellers who reportedly charged as much as $7.32 per gallon for regular fuel.
By Monday morning, drivers had drained every drop of gas at the Exxon on the corner of Virginia Beach Boulevard and Rosemont Road and at the nearby BJ's Wholesale Club.
Customers circled the closed-off BJ's station Monday, straining to read signs on the pumps that apologized for the inconvenience and explained that the station had run out "due to supply issues caused by Hurricane Ike."
The retailer does not know when it will receive another fuel delivery but hopes "to have the station open as soon as supplies are made available," spokeswoman Maria Fruci said in an e-mail.
At the Exxon on Monday afternoon, its price sign was blank and pumps empty. Station manager Buddha Sills said he was expecting a shipment of gas within a few hours, but none had arrived as of 6:30 p.m.
The Sheetz convenience store chain also said that more than two dozen of its stores from North Carolina to Maryland were without gas.
Gulf Coast oil production has been at a standstill for most of the past two weeks since Hurricane Gustav. Though preliminary reports showed that Ike wreaked less havoc on Gulf Coast refineries than Hurricanes Katrina and Rita in 2005, it still destroyed at least 10 production platforms and shut down more than 14 of those refineries, removing more than 20 percent of the nation's refining capacity.
Electricity slowly began returning to the Gulf Coast on Monday, allowing a few refineries to begin preparations to restart. But most remained closed, the U.S. Minerals Management Service reported.
As a result, it might be another few weeks before the nation's refining capacity is restored, industry officials predicted.
"This isn't like flipping on a light switch," Miller said. "It takes days to get a refinery back online." It won't be until later this week that the extent of the disruption will become clear, Miller said.
"It's preliminary to say there's a gasoline shortage in Hampton Roads, 'cause there isn't as far as I can tell ... the vast majority of stations have gasoline and are open for business," Miller said. "We just have to have a little patience and stay calm and see how this is going to shake out."
One bit of good news Monday for oil consumers: Crude oil prices fell to $95.71 a barrel on the New York Mercantile Exchange, the lowest settlement price since Feb. 15.
In the long-term, gas prices will probably sink back below pre- Ike levels because "negative economic news is going to continue to put downward pressure on the prices," said Ben McClenahan, general sales and marketing manager for Papco Oil Co., which supplies about 100 stations in Hampton Roads. "This is most likely going to be a short-term gasoline price issue and supply."
The Associated Press and Bloomberg News contributed to this report.
Kathy Adams, (757) 446-2583, [email protected]
bumpy road ahead
Supplies at local stations could be spotty for weeks and prices may vary widely as Gulf Coast refineries struggle to restart operations. Above, a Virginia Beach Exxon station is out of gas Monday. price of regular gas in Hampton Roads
A month ago $3.580/gallon
A year ago $2.613/gallon
Source: AAA's Fuel Gauge Report
Originally published by BY KATHY ADAMS | THE VIRGINIAN-PILOT.
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