[Texgreen] Consumers warned not to hoard gasoline

[Roger Baker]

Iowa refinery snags may raise gas prices

  http://tinyurl.com/24hekj
By DAVID PITT, AP Business Writer1 hour, 16 minutes ago

Refinery snags that left two Iowa storage facilities short of fuel =20
over the weekend are a reminder of how tight the U.S. gasoline market =20=

has become and why average prices could soon top $3 a gallon, experts =20=

said Tuesday.

While the gasoline supply shortages in Iowa City and Fort Dodge were =20
expected to be resolved by Tuesday night, the incident highlights how =20=

small the cushion of available gas supplies is as demand for motor =20
fuels keeps rising just a few weeks before the start of the peak =20
driving season.

Analysts say any further supply disruptions between now and the start =20=

of summer will likely cause U.S. pump prices, now around $2.97 a =20
gallon for regular, to jump higher. Retail gasoline prices have =20
climbed nearly 30 cents in the past month, while oil prices are =20
hovering above $64 a barrel.

"We're in big trouble," said Phil Flynn, an analyst at Alaron Trading =20=

Corp. in Chicago. He noted that inventories stand at 194.2 million =20
barrels =97 or slightly above the levels reported in the days after =20
Hurricane Katrina struck the Gulf Coast in 2005 =97 and he predicted =20
that that the average prices this summer will surpass the 2005 record =20=

of $3.06 a gallon.

To meet peak demand and have a comfortable cushion to offset =20
disruptions, Flynn said gasoline inventories will need to rise to 210 =20=

million barrels by Memorial Day.

"There's a fear built into the market that there won't be enough =20
gasoline for the summer driving season," said Eric Wittenauer, an =20
energy futures analyst at A.G. Edwards & Sons in St. Louis.

Industry insiders are less worried.

Charlie Drevna, executive vice president of the National =20
Petrochemical & Refiners Association described the Iowa shortages as =20
isolated incidents that do not represent broad supply problems. =20
"We've got a pretty sophisticated supply and distribution system in =20
this country," he said. "We're pretty good at adapting and getting =20
fuel to the areas where they need it."

A series of refinery accidents and outages, including shutdowns in =20
Texas, Indiana and Oklahoma, have contributed to the recent decline =20
in gas supplies. The Energy Department released data last week =20
showing an unexpected drop of 2.8 million barrels in nationwide =20
gasoline stockpiles, as refinery utilization declined to roughly 88 =20
percent of capacity.

Iowa is particularly susceptible to spot outages in times of shortage =20=

because it is at the edges of the nation's pipeline system.

The recent dearth of fuel was partly explained by a fire and =20
explosion Friday that temporarily shut a 50,000-barrels-per-day Gary =20
Williams Energy Corp. refinery in Wynnewood, Okla. Making matters =20
worse was the idling of one of the nation's largest refineries, a =20
420,000-barrels-per-day BP plant in Indiana, cutting supplies =20
throughout the Midwest.

"When there's not as much product refined and consumption rates are =20
historically high, outages are going to pop up especially in the =20
outer reaches of the pipeline systems," said Randy Lusby of Maryland-=20
based Oil Price Information Service.

As a result of the weekend incident in Iowa, truckers were called in =20
to drive to Illinois on Sunday to get gasoline before stations began =20
running out, said Dawn Carlson, a spokeswoman for the Petroleum =20
Marketers & Convenience Stores of Iowa.

"My recommendation," Carlson said, "is that consumers do not panic or =20=

get too concerned. Any type of hoarding or topping off tanks will =20
make matters worse."

Bruce Heine, a spokesman for Magellan Midstream Partners, said the =20
Iowa City and Fort Dodge storage facilities were expected to receive =20
the gasoline they need by Tuesday night. But, he added, some other =20
terminals in Iowa and Nebraska could experience temporary outages =20
over the next couple of weeks. Magellan operates an 8,500-mile =20
refined products pipeline system that includes 47 storage terminals.

The pipeline transports gasoline and diesel fuel from refineries in =20
Oklahoma, Kansas, the Texas Gulf Coast region and from the =20
Minneapolis area.

Lucian Pugliaresi, an analyst for the Energy Policy Research =20
Foundation Inc., said that while the situation appears to be =20
improving, "a combination of a lot of different things have gone bad =20
in the last couple of months."

For example, a 170,000-barrels-per-day plant in McKee, Texas, is in =20
the process of restarting after shutting down for a month and a =20
470,000 barrels-per-day plant in Texas City is operating at less than =20=

half capacity. And a ConocoPhillips' refinery in Sweeny, Texas, was =20
partially shut down Saturday due to power outages.



__._,_.___=