The Sky is Falling

[07XL0027]

Hate to cry wolf but I just went to two gas stations in Austin and both were out of fuel. The third one had half the pumps down. I am assuming this is because the refineries are closed due to Harvey and deliveries have been stopped. You may want to keep your everyday vehicles full of fuel until the refineries come back online.

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[GTED]

Hard to believe the supply would be severely impacted so quickly.... Harvey has impacted the region 4 days. Surely there are way more inventory/reserves than that. I say the industry is gearing up for some price gouging here....

Good point to fill up the DD.

Ed

 

[07XL0027]

It maybe nothing. I am sure that there is hundreds of millions of gallons stored around the country. Just seemed strange that two stations at the same intersection were not selling fuel.


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[twobjshelbys]

We were told to expect a $0.50/gal rise over the next few days. Vegas gas comes from mostly from CA.

 

[ChipBeck]

Not So.

Hard to believe the supply would be severely impacted so quickly.... Harvey has impacted the region 4 days. Surely there are way more inventory/reserves than that. I say the industry is gearing up for some price gouging here.... Good point to fill up the DD.

Ed

Ed,

Not true at all. Those huge fuel tankers you see running down the road hold just under 10,000 gallons of gasoline/diesel. That's enough fuel to last my Phoenix station about 22 hours. Modern stations have automated fuel ordering with (Chevron in my case) oil companies monitoring fuel levels of every grade in all of my tanks and dispatching tankers to each station every day. When deliveries stop or slow for any reason stations run out of fuel within 48 hours or so depending on how much volume they do. When a station runs out of fuel that income stream drops to ZERO and store income drops 80+%. Daily station expenses don't drop at all. Employees must still be paid, mortgage, property taxes, and a ton of other stuff totaling $2000+ per day must be paid and nobody gives a damn whether or not any income is coming in. "The industry" doesn't gear up to price gouge as in many cases they don't raise wholesale prices at all even though the cost of delivering fuel is skyrocketing with a ton of refineries shut down. When dealers like me are told that we wont get another delivery for days and know we will run out of gas within 24 hours we increase prices to slow demand but this only covers a fraction of the losses we incur when we shut down. Situations like Harvey crush gasoline retailers as we operate on really thin margins. Many stations make less than 10 cents a gallon and credit card fees eat up over half of that.

Everybody loves "supply and demand" when everything is working well and everything is cheap. But when things go south and supply dries up with demand staying constant prices will rise and it has nothing to do with price gouging. All the best.

Chip Beck
Owner/Operator
Team CB Petroleum Properties, LLC

 

[ChipBeck]

I am sure that there is hundreds of millions of gallons stored around the country. Just seemed strange that two stations at the same intersection were not selling fuel.

Gentlemen,

There are still over 40 different blends of regular unleaded gasoline made for different markets because those states or counties require them. 15 years ago there was over 100 different blends. Different blends cant be legally sold in other markets even if it was possible to waive a magic wand and get that fuel there. And there is no "huge reserve" of gasoline sitting around waiting to be used if refineries shut down. Fuel production and delivery is "just in time" like every other manufacturing process these days. A majority of states (like Arizona where I operate) don't contain a single fuel refinery and rely on the states that do like Texas, California, and Louisiana. When there is a problem in those states the whole country can be, and often is, impacted.

Chip

 

[GTED]

Hi Chip

Now I understand better. I didn't realize gas stations, generally, only have a day worth of supply on hand and since many roads are flooded, hence no delivery. That certainly explains why those 2 gas stations had to shut the pumps down as indicated in the pix. Good to have insights from someone who is in the business.

Ed

 

[twobjshelbys]

Add to this - and Chip has written an excellent discussion of this - the local and regional blends. So the Texas refineries are heavily biased to the blends used in that reagion, plus to a lesser extent the areas further away... Southern CA handles CA and Southern Nevada (Vegas), and probably some Arizona. The chances those blends meet the requirements of Texas means existing supply can't just be moved there to relieve the shortages. This is one huge reason that the number of vanity blends should be reduced or eliminated, or at least waived during these kinds of circumstances.

 

[Button]

Chip knows his stuff in the industry. A lot of ink has been spilled on price gouging, large portions of it are complete BS. If prices were not allowed to rise and fall with demand, we'd see severe shortages lasting weeks if not months when changes to the market are applied.

Price fluctuations are normal and ultimately lead to stability quicker than would be allowed otherwise.

 

[GTED]

Hi Chip

There's a question relation to operations of gas stations I've been wondering for sometime. I'd be interested to hear your thoughts. In my town, there are 2 Union 76 stations that are located within the same block and kitty-corner from each other. One of these 2 has always (years) priced its gas $0.20 to $0.30 higher, in all grades, than the other. Any thought as to why would the operator of that station consistently and willingly put the station at a disadvantage? The traffic flow on both direction is similar and both stations offer full shop-service.

Sorry for hi-jacking the topic, but the inquiring mind wants to know, and I figure to ask our in-house expert.

Thx

Ed

 

[Xcentric]

^^^ The guy doesn't want to sell fuel. May be a dispute between the owner and the operator over contract terms. Obviously, his business doesn't depend on fuel sales.

Alternatively, the profligate wealthy drive only on his side.

 

[07XL0027]

CNBC is reporting that the CEO of Exxon is confident that they can produce an adequate fuel supply. So that is good news.


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[Ed Sims]

California is usually short on water but not fuel!

Ed

 

[07XL0027]

And so "The Great Gas Shortage of 2017" begins!

Many service stations completely out of fuel in Austin. I would imagine Houston is far worse.
I couldn't fit all the cars waiting in this picture.

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[nota4re]

If fuel was $2.49/gallon at a station in SoCal, you'd have a line like that year round!

 

[twobjshelbys]

Gas went up here about 15c today.

 

[Simon]

WTF?

Look at this genius:facepalm::willy

 

[2112]

WTF?

That guy needs psychiatric help.

Too bad that when it goes "viral", he will be associated with Ford products.

 

[07XL0027]

I felt bad about putting 4 gallons in my GT last night.


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