What's causing gas shortages in the Northeast?
New Jersey state troopers keep order as motorists line up to purchase gasoline at the Thomas A. Edison service area on the New Jersey Turnpike, Nov. 3, 2012, near Woodbridge, N.J. / (AP Photo/Mel Evans)
(MoneyWatch) While the price of gas is dropping across the nation, acute shortages across storm-ravaged sections of New York and New Jersey have pushed the cost up in those areas. With abundant fuel supplies elsewhere, frustrated New York and New Jersey residents wonder why they are waiting in gas lines for hours, and how long is the shortage is going to last.
The reasons for the shortage are many -- gas stations with no power, flooded tanks, an inability of fuel trucks to reach stations, and of course the panic-induced run on supplies.
The search for a gas station in N.J.
Aside from some scattered reports of gouging, the price of a gallon of gas in the New York metropolitan area is up by 3 cents to 7 cents. In the rest of the nation the price has dropped 7 cents in just the last week.
The price increase is due almost entirely to the number of retail outlets shutdown by superstorm Sandy.
Electricity, gas problems persist one week after Sandy
Even though the U.S. Energy Department reports 73 percent of gas stations in the New York metropolitan area had gasoline Sunday -- up from 62 percent on Nov. 3, that doesn't mean that they are all operational. The New Jersey Gasoline, Convenience, Automotive Association estimates that at least 75 percent of the state's gas stations were closed either because they had no gasoline, no power or both. You can go online to find stations that have gas -- for instance Hess lists all its stations and how much gas they have available
"There is a choke in the supply chain and the choke isn't in the amount of fuel that's in the region," says David Zahn, vice president of marketing for FuelQuest, which makes supply chain management software for the fuel industry. "It's the retail station -- if you don't have electricity you can't pump fuel."
Fixing NYC's subway after Sandy
Even stations with electricity are having difficulty staying supplied with gas because of damaged roads and difficulties coordinating deliveries from suppliers. Millions of gallons of gasoline are sitting in storage tanks, pipelines and tankers that can't unload their cargoes.
It may come as a surprise to people who have had to wait in line for hours to get gas, but demand for fuel in the storm-hit parts of New York and New Jersey is actually down. People are taking fewer trips because of damage to roads, cars, homes and businesses.
The lines are forming because there are so many fewer stations operating.
"Even if demand is curtailed it's being funneled to the select stations that do have fuel or do have access to supply," says Zahn. "You are going to have demand spikes that are going to cause run outs at those particular locations." It becomes a self-fulfilling prophecy -- fearful consumers rush to buy gas, which further reduces supply.
The gas shortage is pushing some seemingly desperate drivers in the state to go miles out of their way in search of fuel. One resident of the Queens borough of New York was reportedly arrested for stockpiling gas in Connecticut that he allegedly had purchased for local friends and neighbors. A representative with the Delaware County Chamber of Commerce in New York's Catskills region, about three hours north of New York, also said motorists in the popular resort region were buying gas that they intended to deliver to gas-starved areas near the city.
The long lines at the pump also appear to be leading to something else -- price gouging. New York Attorney General Eric Schneiderman said Monday that his office has received hundreds of reports of retailers marking up prices on a range of essential goods, including gas, during superstorm Sandy.
"We have contacted the targets as part of a preliminary inquiry and vendors are now on notice," he said in a statement. "While most retailers understand that customers are also neighbors, and would never think of taking advantage of New Yorkers during such disruptive times, emergency circumstances always require an extra sense of vigilance."
How long will this last? Unfortunately the answer to that may be, "Longer than expected." Although New Jersey Gov. Chris Christie and New York Sen. Charles Schumer (D-NY) both say the situation is improving, Zahn warns that this isn't just a case of getting power to all these stations. Some of the gas retailers likely now have fuel tanks contaminated by groundwater.
"If water's gotten into these tanks it's not just a matter of getting electricity to these stations," says Zahn. "It's a matter of pumping fuel out and making sure those tanks are now useable for gasoline, and that's not something that happens very quickly."
While Zahn says his company is hearing reports that more than 10 percent of stations are contaminated, the full extent of the problem won't be known for a while. "If it's a small percentage of stations that have groundwater contamination great," he says. In that case, the gas squeeze may be nearly over by the end of the week. If not, those lines may be around for a while longer.
Popular on MoneyWatch
- Reverse cell phone lookup service is free and simple
- Bernanke sends stocks, bonds skittering
- Bernanke holds the line on Fed monetary policy
- Why geniuses don't have jobs
- Stock market falls as traders fear stimulus cuts
- Top 10 professional life coaching myths
- Microsoft slashes Surface prices to lure buyers
- What questions should you ask at a job interview?
Hint, I'm not talking about LIBERALISM... but you'll spin definitions just so you can get off on it, so why should you be taken seriously...
But what about all those poor folks who couldn't afford the sky high prices that gas might spike to? Well, what are they doing now? Standing in lines for hours, or going without.
If I stand in line for two hours, is my time worth nothing? Would I be willing to pay an extra dollar a gallon to avoid the line? You betcha! Wouldn't you? I would just buy less. Maybe 10 gallons instead of 20, figuring that the prices would soon be falling, and confident that I wouldn't be forced to stand in line again.
Don't forget: you're burning gas (very inefficiently) all the time you're sitting in line. Or by driving all around looking for available gas.
Even if my wage is just $10 per hour, I'm still better off paying an extra $1 a gallon to avoid standing in line for an hour.
But we've made so-called "gouging" into a moral issue, that insures that EVERYBODY is worse off.
BTW: What is our time worth? Do we dictate how much we are worth or does someone else? So, what's hour hourly wage?
Hypnotoad72 -- You seem confused. You dictate how much your time is worth to you, and it may vary. Sometimes I have an hour to kill, yet other times I'd pay $100 to save 10 minutes (like if I'm late for a flight).
This is not to be confused with how much your time is worth to someone else, such as an employer. They dictate that.
BTW, your time is typically not worth anything at all to a government bureaucrat.
But what about all those poor folks who couldn't afford the sky high prices that gas might spike to? Well, what are they doing now? Standing in lines for hours, or going without.
If I stand in line for two hours, is my time worth nothing? Would I be willing to pay an extra dollar a gallon to avoid the line? You betcha! Wouldn't you? I would just buy less. Maybe 10 gallons instead of 20, figuring that the prices would soon be falling, and confident that I wouldn't be forced to stand in line again.
Don't forget: you're burning gas (very inefficiently) all the time you're sitting in line. Or by driving all around looking for available gas.
Even if my wage is just $10 per hour, I'm still better off paying an extra $1 a gallon to avoid standing in line for an hour.
But we've made so-called "gouging" into a moral issue, that insures that EVERYBODY is worse off.
No it is not that simple. Those tanks will have to be inspected also and just drawing a sample will do nothing. Take it from someone that is very experience in the aftermath of hurricanes. Being a Gulf Coast state resident, we go through this at least 2 times every year. And those are just the small Cat 1 or Cat 2 hurricanse.
No electricity means the gas pumps can't operate at the gas stations.
Mass transit being interrupted by damage means more people driving.
Stupid drivers, not knowing how to car pool mean everyone wastes more gas and time.
And on, and on, and on.
What's the Government got to do with all that? Sounds more like a safety issue (avoid explosions) and education of the mass of people that are too busy worrying about themseleves and can't see any reality.
The government can be a source of order.
So can a company.
It depends on the defined qualifiers (rules, regulations) and then if they commit to those regulations, or do end runs around them for personal gain while leaving the people who believe in the system out to dry. Those qualifies are not unimportant.
They're the ones getting in the way of gas stations raising their prices to reflect the new reality of gas being more difficult to supply than it was before the storm.
That means they're the ones causing the long lines. It's just like old Communist Russia -- the government sets the price too low (or in this case prevents the gas station owners from raising their prices) then all the idiots in the government and the media stand around scratching their heads wondering "gee, why are the lines so long?".
Be stuck in the middle of a crowded movie theater when someone screams "FIRE!!!" and see what happens.
It's easy to say "just go somewhere else". But if that's all that qualifies to be "intellectual", then I may as well say "lol" with the rest of them, even though I never truly would.
Let's consider the values and political beliefs of the oil producers and distributers. Consider next that it is our C- sitting president who is pushing for "alternative" energy and attempting to implement policies reflecting the shift away from fossil fuels; something the petrochemical industry does not want and will do anything to prevent....
I am not saying this is the case but it is not unreasonable for the more cynical among us to speculate that this is a contrived shortage, made up by those same petrochemical industry leaders, to make lives as difficult as possible for those living in the Sandy Zone - and then blame the whole mess on The Obaminator.