Thursday, September 25, 2008

The Great Gas Panic of 2008 Continues

Bagged gas pumpThe media says things will ease up tomorrow. And theoildrum.com suggests it gets worse for the next 2–3 weeks. Frankly, this is worse than Katrina, at least from a supply standpoint — it’s like living in an early episode of FAR Future! If it gets any worse, and I mean any worse, the South will come to a standstill next week.

When a gas station gets a shipment in, people start calling around to tell their friends and relatives, everyone rushes in to fill up, and then they’re out again. We got a phone call this morning, and I took the Civic in to get half a tank (my last $20 of gas money). But except for the occasional fistfight, people seem to be taking it in stride. They’re blaming oil companies, politics (yeah right, like Bush-league would hose his party’s base in an election year), whatever, but otherwise they shrug and line up. I explain what’s really happening: oil production in the Gulf is still only 1/4 normal; refineries in Texas are restarting more slowly than anticipated (see link above); and this all went down at a time when inventories were well below normal to begin with.

I figure it’s highly unlikely to happen, but here’s a few lessons we could learn if we really wanted:

1) Seeing as a similar situation happened 3 years ago, this isn’t a once in a lifetime thing. Or even a once in two terms thing. In a world of tight oil supply, we need to understand this is going to happen again. And again.

2) Our leadership needs to, um, lead. Planetary Governor Bok-Bok could have done more than wag his finger at gouging (necessary, but not sufficient). What he should have done was told us, “Look, supplies might be tight for a few weeks and we’ll all have to work around it. I’m asking gas stations to place a $30 limit on purchases through the end of the month, and reduce that to $20 per purchase if necessary. I call on employers to let people work at home where possible. All citizens should avoid making unnecessary trips, and use carpools or transit when they can. If you have to drive, take the most fuel-efficient vehicle you can."

3) When you have to haul a work crew and gear around, using a big SUV is smart. For solo commuting on highways, the same vehicle is not so smart. Maybe the Magic Drill Fairy will put some oil under our pillow in 5 years or so, but if people insist on driving barges to work, it’s not going to make a difference. We need to discourage that behavior, by whatever means necessary: from huge surtaxes on huge vehicles not used for construction work, to just pointing and laughing. If it gets the gas hogs off the road, it works.

4) A good regional passenger rail system would be good for tourism, business, and citizens — and be fairly immune to gasoline supply glitches.

I don’t have a whole lot of faith that people will do the right thing, though, until they can’t do anything else.

17 comments:

  1. Hey Far! Gee, am I gonna have to go down there and hold your hand! heh! ha! A freeze up in the South next week? I can't (don't want to believe) the fuel situation down there.

    I like your ideas. However, as I precieve it, this Nation is broke. We've got to get through this financial crisis first, before anything can happen...

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  2. The bailout? Yes, it is so, but the lessons here wouldn't cost anything to implement.

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  3. It's so strange, Farf - our gas prices continue to drop to levels we haven't seen in months. So why does Idaho have tons of cheap (well, relatively speaking) gas, while the South has none? Not that I'm complaining, mind you - it's just baffling that the South is having this crunch while we're just fine up here...

    Get on that bike and come on up! I'm sure we could spare a tanker or two for FAR Manor...

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  4. Beth, you're on a completely different distribution system from ours -- we get our fuel from the Gulf, you get yours from Canada & Alaska, I think, and they don't get that many hurricanes up that way. :-)

    People are using less fuel now, and it's an election year, which is why prices keep dropping.

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  5. Hey, thanks for the clarification, Farf. I've been scratching my head at this...it STILL seems stupid that there's a glut in one part of the country, and not enough in the other - why can't we just all play nice together? I'm sure that's an economics lesson in itself...

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  6. One word: pipelines. There aren't any that go across the Rockies, to my knowledge, so the west is pretty much isolated from the rest of the country as far as oil products go. Trucking gasoline is a short-haul job; they pick it up at the pipeline terminus & drive it to the stations. It's not economical to truck it long distances.

    Speaking of glut, Mexico has had to shut down like 20% of their oil production because the refineries they usually ship to are in Texas & haven't re-started yet.

    Oh, and I almost forgot — they switch over to winter blends this time of year, which are cheaper anyway.

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  7. It's bizarre that things in the south are so different from other parts of the country. I hope that it gets better soon, Far.

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  8. Hey Far! It just comes down to perspective, doesn't it?

    Thanks, yooper

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  9. Boran, I'm just taking pictures of gas lines and empty pumps. Might be good graphics for a presentation some time.

    Yooper, I might post part of an email I got from one of my sinnertors [sic] regarding the bailout. Short version: he's for it, with some oversight, a few regulations, and other conditions. Probably as good a deal as we'll get.

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  10. Hey Far! I really like your answer to Beth, couldn't have explained it better myself. I really believe that once refineries get back on line, so will production in the South, in the short term. However in the long term, as Cantarell fields decline, so might the avialability of product, there...

    I suspect when gas is in the $5 to $7 range this will suppress demand even more and supply should rise.

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  11. (peeking in from a Hotel in Iowa)

    Wow FAR, I had no idea the price of gas was that high anywhere. Ours got up above $4.00 very briefly in April but went down pretty quickly.

    I'm so sorry.

    But, I am with Beth -- and glad to hear about why things are so different in the various regions of the country.

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  12. Thanks, Yooper. I'm trying to get a coherent description down to an elevator pitch (250 words) for explaining the situation in gas lines and the like.

    KB, it's about 20 cents on either side of $4 here right now. We had some initial gouging (by the distributors, who fed their branded stores first and hose the indies) but that's either gotten fixed or the indies are eating some big losses. Personally, I think we'll have another week of this.

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  13. There's a magic-drill fairy??? What!?!?! Why don't we just all give it our teeth and instead of cash get some gas? Would that work? I mean, you know... considering the "rednecks" down here don't really have teeth anyway... if you can't beat them, join them... especially if the Magic Drill fairy will give us gas!! I mean come on! It's ingenious!....

    Haha, J/K.

    &heart; DD

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  14. There's a magic-drill fairy??? What!?!?! Why don't we just all give it our teeth and instead of cash get some gas? Would that work? I mean, you know... considering the "rednecks" down here don't really have teeth anyway... if you can't beat them, join them... especially if the Magic Drill fairy will give us gas!! I mean come on! It's ingenious!....

    Haha, J/K.

    ♥ DD

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  15. Ah-HA! That's why we don't have any gas: there's no teeth to give the Magic Drill Fairy!

    DD, thanks for the insight!

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  16. Hey FAR, and assembled crowd!

    I was wondering if this was still going on down your way when I saw a quick news piece on the shortages last week. You just confirmed it for me ... glad you still have the Civic and the bike to conserve for you.

    Though things are nowhere near like that up our way, it's expensive (they're not yet asking for first born child ... on that one we'd be seriously SOL!), but thankfully our Vibe sips lightly and only needs a drink every few weeks. I shudder to think what we'd be paying if we still had the truck!!!

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  17. IVG, if it *does* come to that, I'll loan you The Boy. With his band. They'll say "keep him." Then you can send him back.

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