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Stations in Dallas, Houston out of gas

Dozens of service stations around Houston and Dallas, the heart of the U.S. oil industry, are out of gasoline after transportation problems resurfaced with the switch to a new anti-smog fuel blend using ethanol, suppliers said Friday.
/ Source: Reuters

Dozens of service stations around Houston and Dallas, the heart of the U.S. oil industry, are out of gasoline after transportation problems resurfaced with the switch to a new anti-smog fuel blend using ethanol, suppliers said Friday.

The shortages add to scattered supply outages on the East Coast that began last week due to the transition, prompting Maryland and Pennsylvania to request waivers from the U.S. Environmental Protection Agency that would allow them to sell a cheaper, lower grade of gasoline.

American drivers, heading into the summer vacation season, have already seen a spike of more than 40 cents a gallon in a month to an average nationwide pump price of $2.93 per gallon, tracking record crude oil costs.

“No one planned on how to get the ethanol into the city and be distributed,” said Jim Hay, of Dallas-based Contract Fuels, which distributes gasoline to retail stations.

Hay said the problem is more logistical than supply-related because of a change in transportation methods required for the replacement of MTBE by ethanol in reformulated gasoline. The additives are used to make reformulated anti-smog gasoline required at about a third of the nation’s pumps.

Oil companies are starting to use ethanol instead of MTBE for fear of lawsuits after the chemical, a suspected carcinogen, was banned in several states for polluting groundwater.

“We have had a few spot outages in the greater Houston area, but most have been short-lived,” said Stan Mays, a spokesman for Motiva, which is a joint refinery venture between Royal Dutch Shell Plc and Saudi Refining.

Mays said about nine stations out of about 400 total were still experiencing supply problems in the greater Houston area, down from the 60 earlier Friday, but Motiva expects to complete the conversion from storage of MTBE-based gasoline to ethanol-based gasoline this weekend.

Ethanol-based reformulated gasoline easily absorbs water, so it cannot be sent in pipelines to terminals and then trucked to gas stations like conventional gasoline. Instead, the gasoline and ethanol are sent separately to avoid water contamination and then mixed at the terminal.

Valero Energy Corp., the nation’s largest refiner, said about 80 of its gas stations were out of at least one grade of gasoline as terminals clean and drain tanks to accommodate ethanol.

“Coming this Monday, if all terminals do what they say they are going to do, and the drivers take us up on the bonus over the weekend, we should be in much better shape,” said Mary Rose Brown, a company spokeswoman.

This is the second time in April that Dallas has experienced shortages of gasoline.

“Unfortunately, there is little that can be done to alleviate the backlog because there are not a lot of excess trucks and drivers available to deliver product,” she said, adding that the need to truck ethanol from the railroads to the terminals has put a lot of stress on the trucking industry.

Last week, dozens of gasoline stations on the East Coast ran out of gasoline and two states, Maryland and Pennsylvania, requested fuel waivers from the EPA.

The gasoline shortages that have hit Maryland and Pennsylvania are “manageable and improving” going into the weekend, a spokesman for the U.S. Environmental Protection Agency said on Friday.

“Each of these isolated circumstances that we are tracking appear to be manageable at this point,” the EPA spokesman said. “So going into the weekend it looks like the situations are manageable and improving.”

The EPA is still mulling their requests for waivers, the spokesman said.

Terminal operator Kinder Morgan said this weekend is when they will complete their planned conversion to reformulated ethanol gasoline but that it has already seen a sizeable increase in liftings of product.

“Over the past two or three days, liftings by customers have increased 34 percent,” said Rick Rainey, a spokesman the company.