Saturday, September 13, 2008

The Truth About Our Gas Shortage

As most of you know, my father and husband both work at a gas terminal in Knoxville. I grew up listening to shipment details, facts about oil products an the general handlings of a terminal. I was also employeed there. I am, by no means, an expert on the oil industry, but I know enough to say that yesterday's gasoline "shortage" was absolute crap.

It all started Thursday. Hurricane Ike forced crews to evacuate their oil rigs and shut down some pipeline production. For the record, any time there is a major storm in the gulf, people evacuate. It is for the safety of the workers. They don't like it any more than we do! So what made this evacuation any different from, lets say, the evacuations that occured with Gustav? The media.

Just so it is known, I do not have a problem with the media, in general. My first years in college were in journalism. I then switched to public relations and then to marketing. I love the media when those within the field take the time to get all the answers. This time around, most of our local outlets failed to do so.

Several different broadcast mediums attempted to get an interview with Dad on Thursday. He was not feeling well and had taken the day off. Rather than leave a message for a return phone call, reporters called not only his cell phone, but his home phone with persistance. Since he was out of the office, he had no information on the amount of product left. He declined to be interviewed.

That didn't stop WBIR from reporting that the terminal was out of gas. The following story appeared on the WBIR website Thursday night.

There are some indications a gas shortage in Knoxville may have a bit of staying power--a major terminal is now out of gas.
The Cummins Terminal has pumped the remainder of its supply. Its next shipment is expected Sept. 17.
Cummins supplies about a third of the stations in the Knoxville area.
Hurricane Gustav and now Hurricane Ike are slowing supplies.
Rick Davis, the vice president of Cummins Terminal, said there is about 30% less gas coming through the two pipelines that supply Knoxville. The storms have disrupted the pipeline system that feeds the Southeast. Refineries along the Gulf Coast remain down due to the lingering power outages from Gustav. Plants in Houston are shutting down for safety reasons in anticipation of Ike.
Davis said gas will be tight in the next few weeks. Some independent stations that don't have contracts or their own product will have a difficult time getting gas.

(Did you notice that their weren't any direct quotes? Paraphrasing is a handy way to twist someone's words to fit your own purpose.)

Once people heard this, mass hysteria insued. Cars were lined up outside every gas station, just waiting. Rather than filling up because they needed to get gas, they were filling up because they were afraid they might need gas sometime in the future. I did have to fill up. I even drove out of my way to find a smaller station so I could avoid the lines. To my dismay, I found this:

If everyone had filled up like normal, we would have had enough surplus to hold us until the next shipment was due. Instead, we gobbled it all up in one days time.

After panic took over every gas station within broadcast distance, WBIR printed this:

Pilot released a statement Friday morning indicating all travel centers in the Knoxville area have fuel but also said the company does not comment on its pricing philosophy. AAA said prices would be determined by supply and demand.
Most of all, AAA is telling drivers not to panic.
Don Lindsey said there is gas out there, and it's in the suppliers' interest to find gas and sell it. It might be in short supply now, but you should be able to find gas nearby.
Panic buying makes it worse, Lindsey said.
The written statement from CEO Jimmy Haslam is below:
All Pilot travel centers and convenience stores in the Knoxville area are operating normally and have fuel supplies for customers.
Pilot does not comment on its pricing philosophy but we are continuing to do all we can to keep an adequate supply of fuel available.
In the areas affected by Hurricane Ike, four Pilot Travel Center locations have been closed: two in Houston, TX; and the locations in Baytown and Orange, TX.
All Texas locations have ample inventory of both gas and diesel and will be ready to serve customers as soon as they re-open. Pilot has a team of transport drivers and trucks ready to move into the area to continue fuel deliveries to the travel centers when evacuation orders have lifted.

So what would have happened if the story had been reported to down play the so called shortage? Maybe something similar to this...

As Hurricane Ike slammed into the Texas coast Friday, drivers in East Tennessee say prices at gas stations have gone up 80 cents and more in a few hours time.
On Thursday, rumors began that gas prices would soar due to the hurricane. In Knoxville and other parts of East Tennessee, lines started to form at stations.
"My mother called and said apparently gas is supposed to go up $1.50 between now and sometime tomorrow so we decided it would be a good time to fill up," Luke Wilkerson said Thursday night.
Don Lindsey, with AAA of East Tennessee, said Hurricane Gustav forced the shutdown of a number of refineries along the Gulf Coast, reducing supply and driving up prices.
"Right now, the refineries are only operating at about 78 percent of what they normally do, normally they don't drop below 85 percent," Lindsey said.
Lindsey also said this part of the country appears to be hit harder with gas supply issues than other areas. That's because East Tennessee gets most of its gas through the Colonial Pipeline which comes from the Gulf coast of Texas.
According to Lindsey, this is an inconvenience not a crisis, but wild price fluctuations will probably continue, at least for the rest of September.
If Hurricane Ike causes a great deal of damage, the gas price fluctuations could extend into October, Lindsey said.
He urges drivers not to fill up unless they need to, thinking they'll beat a price hike. Lindsey said it may work now but it could also push prices higher later for everyone.
Once refineries are back up, Lindsey says prices should start to drop again at the pump.
Meanwhile, the state has received a waiver from the Environmental Protection Agency to help
ensure enough gasoline is available.

Oh wait! That was pulled from the WATE website! Doesn't sound so frightening does it?

After a long day, Adam and I sat down to talk about the "false crisis" and the insane prices. We laughed when we got to the subject of the fuel tax. Before Katrina, every gas pump had a sticker informing you of the exact amount of state and fedreal tax you are paying per gallon of gasoline. Today, they are nowhere to be found. They certainly are not sitting out in plain sight. So, in case you are wondering, here is Tennessee's Gas Tax breakdown according to the TDOT website:
For every gallon of gas we buy, 38.8 cents goes to taxes. Out of the 38.8 cents per gallon (cpg), 18.4 goes to the federal government. The other 21.4 cpg goes to the state of Tennessee, yielding an income of approximately $651.8 million per year. That $651.8 million is divided with approximately .7 cent, or $21.7 million, going to the State General Fund; Approximately 7.9 cents, or $240.4 million, goes to cities and counties; And, approximately 12.8 cents, or $389.7 million, going to TDOT.
It's no wonder those little stickers disappeared! That is $7.76 every time you fill up a 20 gallon tank! Next time you find yourself complaining about how high the cost of gas is, subtract out the taxes... The majority of the time, what is left is not much higher than acutal cost to the company. Those narrow margins pay for transporting gas across the southeast (fuel costs for the trucks, driver's salaries, etc.)and conveinience stores/ station maintenance. The high price of gas has slowed the amount of snack and drink sales. That is why places like Sams, Krogers and Wal-Mart have lower gas prices... They don't have convience stores to keep open.

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