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Southeast gas shortage squeezes small retailers

A fuel shortage in the Southeast is pinching independent stations that rely on gas sales to lure customers who also buy snacks, soda and other incidentals.
Gas Shortage
Chester McClendon, a 38-year-old mail carrier finally reaches the gas pump after he waited in line at a gas station in Sandy Springs, Ga., for about 40 minutes. Kate Brumback / AP
/ Source: The Associated Press

Ralph Sheffield's tidy gas station has stayed open around the clock for 13 years, keeping the lights on even during lonely Christmas mornings and the slow holiday season.

But the streak ended last week after he went eight days without receiving gas, forcing him to close early each night. Despite the crowds that crush the station when it does have fuel, Sheffield estimates his gasoline sales will drop by 30 percent this month.

The fuel shortage that has drivers across the Southeast scrambling to fill their tanks is pinching independent stations that rely on gas sales to lure customers who also buy snacks, soda and other incidentals.

"It's a panic," Sheffield said. "And we are frustrated."

At least one analyst says major oil companies are supplying their branded stations and cutting off independent retailers. Experts say it could be weeks before the region again has a steady supply of gas.

Major oil companies own fewer than 5 percent of gas stations. Most are owned by small retailers like Sheffield.

The shortage has illuminated the tough spot those retailers are in as they face higher prices for their own supplies — when they can get shipments — and scattered accusations of gouging.

Stations pay tens of thousands of dollars for each shipment before they see a cent. Eventually, many make only a few cents on a gallon of gas, a margin that can disappear when credit card fees are added in.

At many stations, it's the convenience store that makes money. Gas is seen as a loss leader, something a station sells to attract people who might buy higher-profit-margin items like coffee and sandwiches.

These days, pushing soda and beef jerky is harder than usual.

"Gas lines actually hurt inside sales because no one can take the time to go inside because the parking lots are so crowded," said Edward Holmes, owner of North Carolina's Holmes Oil, which operates 23 stores under the Exxon and BP brand.

"So those people who do have gasoline, it's kind of a positive and a negative in that they can sell lots of gas ... but they can't get people in the stores."

Politicians, gas station owners and analysts have warned that the nation's supply network is not equipped for the type of panic buying that's swept parts of the Southeast, where people wait in line to top off half-filled tanks.

Despite warnings from Gov. Sonny Perdue, who said the panic was "self-induced," Georgia drivers continued to flock to gas stations across the state. Many were out of fuel.

Trade associations that represent gasoline retailers in Florida, Tennessee and Virginia said Thursday that supplies were still below normal, but the situation had improved.

The refineries that make gasoline also are reporting encouraging news.

A handful of the 14 upper Gulf Coast refineries that halted operations as Ike approached remained shut down Thursday, though at least two prepared to resume making gasoline and other products. Altogether, the region accounts for about 20 percent of the nation's petroleum refining capacity.

Pump prices also continued falling across the country Thursday amid the nation's economic doldrums and dwindling demand. A gallon of regular unleaded fell 1.5 cents overnight to a national average of $3.70, according to auto club AAA.

But prices topped $4 a gallon in some places. In Georgia, the statewide average for regular fell less than a penny overnight to $3.962 a gallon, but prices in Atlanta and Athens averaged about $4.04 a gallon.

Some analysts suggested the gas shortage could continue for weeks, particularly among independent gas stations struggling to restock.

"Making matters worse, major oil companies are cutting off unbranded accounts so they can keep branded marketers supplied," wrote Ben Brockwell of the Oil Price Information Service. "Even unbranded marketers with contracts are being shut off."

Sheffield said he can only hope things will turn around next month.

His in-store sales have remained surprisingly steady, and a stream of customers stopped by Towne Lake Amoco on Thursday morning to grab snacks even though there was no gas.

Dennis McDonald, a 50-year-old landscaper, picked up a lone can of Coke after spending $90 at two other stations to fill his pickup truck's tank halfway.

"It's scary out there," he said.