Q&A: Why gasoline supplies went south

The frustration of finding and queuing up for gasoline left metro Atlantans with a lot of questions in the past few weeks. Here are some answers:

Q. Why is it taking so long to return to normal supplies?

A. A one-two hurricane punch of Gustav, which hit the central Louisiana coast Sept. 1, and Ike, which struck Galveston, Texas, Sept. 13, flooded and shut down refineries that supply virtually all of Atlanta’s gas.

“A lot of people don’t understand that refineries aren’t like light switches,” said Jeffrey Pillon of the National Association of State Energy Officials. “Once they go cold, you have to go through a whole start-up process as you work through the refinery. And that could take a week to 10 days under normal circumstances.”

On top of that, it can take 10 days to move gas by pipeline to Atlanta. Meanwhile, panic buying exhausted some local supplies.

Supplies began returning to normal last week. The U.S. Energy Department announced early in the week that 13 of 15 closed refineries have resumed production; one of two pipelines serving Atlanta was pumping at pre-hurricane levels by Tuesday.

Q. How much less gasoline was delivered or pumped in metro Atlanta this September, compared with last year?

A. No one seems to know for sure. Even if they did, it might not settle the argument over whether the shortage was hurricane-induced or panic-driven or both.

Government officials and oil industry executives agree on the best gauge of gasoline use: collections from the state’s motor fuel excise tax, which assesses 7 1/2 cents per gallon of gas delivered to retail outlets.

Figures for this September won’t be available for another week or so, said Charles Willey, a spokesman for the state Department of Revenue. But collections were already trending downward this year, apparently because of high gas prices.

The state collected $5.7 million less from the motor fuel tax this August than in August 2007. That means Georgians used 75.2 million fewer gallons of gasoline, a decline of 14 percent.

Q. How does gasoline get to metro Atlanta?

A. This region’s entire gasoline supply comes from refineries in Texas and Louisiana via pipelines operated by two companies: Colonial Pipeline and Plantation Pipe Line, both based in Alpharetta.

Plantation’s 3,100 miles of pipeline originate near refineries in Louisiana and Mississippi and run through Alabama, Georgia (with a stop in Doraville), South Carolina and North Carolina before terminating in northern Virginia. The 5,519-mile Colonial system comes from the Houston area and follows a similar path up the Eastern Seaboard, ending at New York’s harbor.

Colonial actually runs two parallel pipelines: one for jet fuel, diesel fuel, home heating oil and similar products, the other only for gasoline. The company operates a massive tank farm in Cobb County. From there, it redistributes gasoline to two terminals from which trucks deliver fuel to individual gas stations and pipes send jet fuel to the Atlanta airport.

Q. Did North Georgia’s requirement for “boutique” gas exacerbate the shortage?

A. Yes. That’s because when the hurricanes hit, refineries and gas suppliers were switching from summer gas to winter gas, and inventories were lower than normal.

The difference between the two is in the way they are manufactured. To improve air quality in metro Atlanta and comply with the federal Clean Air Act, the state requires gasoline in 45 North Georgia counties to meet an extremely low volatility standard from June 1 to Sept. 15. Low volatility reduces fumes emitted when the gasoline is pumped, transported and stored. Volatility is not an issue in cold weather.

Throughout the year, suppliers to this region must also meet a low-sulfur standard to reduce smog. The standard — 30 parts per million of sulfur — is the national requirement. But it is an average and suppliers have less flexibility to deviate in the relatively small metro area. For other East Coast metro regions, suppliers measure the average in a zone that runs from Florida to Maine.

Q. What have been the results of federal waivers on clean air regulations to ease the shortage?

A. State Environmental Protection Division Director Carol Couch said the waivers allowed “some very small and modest amounts of gasoline” to get into metro Atlanta via tanker trucks from Indiana, Ohio and Pennsylvania.

Q. Why have some stations had gasoline more frequently than others?

A.Big oil companies — Shell, Exxon, BP and the like — deliver first to the stations that operate under their brand. Some other big gasoline retailers, such as

QuikTrip and RaceTrac, have contracts with multiple distributors, meaning they’ve been able to get deliveries sooner than most, said Jim Tudor, president of the Georgia Association of Convenience Stores. If one distributor is out, another might not be.

Independent stations were hit the hardest. Instead of buying gasoline from specific distributors, most purchase supplies on the open “spot” market. That market, Tudor said, is much more volatile; in essence, it consists of the gasoline left over when stations with distribution contracts have been served.

Q. Does Georgia have strategic reserves?

A. No. The National Association of State Energy Officials says it not aware that any state has reserves.

The state has about 400 underground fuel storage tanks that average 1,500 gallons capacity, according to the Georgia Environmental Facilities Authority. That supply is designated for state government operations but could be tapped for local government emergencies.

It would cost tens of millions of dollars to build reserve storage facilities to serve Georgia, state officials said. And that does not include the cost of the gas. Georgia consumes 19.2 million gallons of fuel on an average day, reports the facilities authority.

There are other problems with reserves, said Steve Baker, a spokesman for Colonial Pipeline. He said stored gasoline begins to degrade after about a year.

Q. How widespread was the shortage? Was metro Atlanta the worst?

A. AAA auto club thinks so, though its information is strictly anecdotal. Nashville ranked No. 1 early on, AAA officials said, but the situation improved there, while Atlanta’s gas lines grew longer.

“I think you took over for Nashville,” said AAA spokesman Randy Bly. “It just seems like the worst areas are still in Marietta, Buckhead, Norcross and Alpharetta.”

Gas shortages were reported throughout the Southeast but were spotty. Cities throughout Tennessee, in western North Carolina and in South Carolina and Florida reported panic buying, long lines at the pumps and service stations without gas.

Q. Why did this recovery take longer than the post-Katrina problem?

A. Atlanta experienced gas shortages and rising prices after hurricanes Katrina and Rita in 2005. But the region recovered more quickly because those storms were about a month apart, giving the industry time to recover. Also, the storms this year hit a wider area, shutting down refineries that produce most of the region’s gas.

“It’s the breadth of where the refineries were out, from Houston all the way over to Louisiana,” said Doug MacIntyre, senior oil market analyst for the federal Energy Information Administration.

Staff writers Alan Judd, Jeremy Redmon and Stacy Shelton contributed to this report.