Rising prices, supply considered normal after recent events

ROSWELL, Ga. (MCT) – Since Hurricane Ike struck the Texas Gulf Coast, “out of gas” signs have become common sights across the South. But the problem is not entirely caused by a reduction in gasoline, industry experts said. It is partly due to panic.

The storm hit two weeks ago, and major pipelines that transport gas from Texas to the rest of the country have operated at reduced capacity according to the Department of Energy. The department reported a 20 percent loss in U.S. refining capacity, resulting in the lowest supply since 1967.

Nowhere has the slowdown had such an impact as in the South. Barricades block the gas lanes at many stations, and frustrated drivers with their tanks almost empty, drive for miles looking for a station where the pumps are working.

In Nashville, gas at 85 percent of the stations dried up last weekend after a rumor of a shortage caused people to rush to top off their tanks. In suburban Atlanta, cars have followed gasoline trucks to the station. And at stations that do have gas, police and attendants have had to direct traffic that is sometimes a mile long.

Energy officials said the gas constraints could continue for the next few weeks as the refineries get back to full production. Meanwhile, Southerners will have difficulty filling their tanks.

In times of economic uncertainty – this one fueled by the mortgage crisis, the high costs of fuel and groceries and a massive financial bailout proposed by the government – fear can translate into panic at the gas stations, said Lars Perner, a marketing researcher at the University of Southern California’s Marshall School of Business.

“People are uncertain about their future, and if the financial system can go wrong, consumers feel that anything, including the gas system, can go bad. All of that contributes to a sense of anxiety,” he said.

Illinois has not had similar problems because the state gets much of its gas from five major refineries, including four in the state and one in Indiana, said David Sykuta, a spokesman for the Illinois Petroleum Institute. Gasoline prices, however, have remained slightly higher than the national average in Illinois and Chicago, according to the Automobile Association of America.

While less gas is flowing through the Colonial pipeline, which supplies fuel to much of the Eastern Seaboard up to New Jersey, it is not severe enough to cause the kinds of problems that are being experienced in Georgia and Tennessee, said Gregg Laskoski, a spokesman for AAA South.

The gas slowdown in the South, he said, has turned into a gas shortage.

“It’s a self-fulfilling prophecy,” Laskoski said. “When people are driving and they see bags over the gas nozzle, they might have a half tank or three-quarters of a tank and it makes them want to top it off, though they might be going to park it in the driveway.”

Industry officials said they were working to bring the gas supply black to normal, but the Department of Energy said it could take “a few more days” before there is any relief.

“What we are seeing – rising prices and constrained supply – is normal following events causing supply disruptions,” said department of energy spokeswoman Healy Baumgardner. “As refineries get back to full production and restoration efforts progress in the Gulf region, the market will balance.”