Here’s how it worked. The Knoxville area has several bulk fuel storage depots. Some belong to the chain outfits, others are run by wholesalers that supply independent gas stations. In either case, they manage their storage levels to maintain a competitive retail price. When the price of gas is rising, they maintain a relatively full inventory. This means that on average the gas they store always costs less than the current spot price. On the other hand, when gas prices are dropping, they keep inventories low, so they aren’t holding a lot of gas that cost them more than the market price.
It’s the exact same thing you do to minimize how much you pay for gas. If the price is going up, you fill up in the morning before the price changes go into effect, and you fill the tank full. When the price is going down, you guy your gas in the afternoon, after the price changes, and you buy just what you need. The wholesalers and bulk storage facilities do exactly the same thing, except on a much larger scale. Gas prices have been plummeting lately, so all of the bulk storage facilities have been keeping their stocks low.
Then along came Gustav, which impacted the ability of refineries to deliver fuel to the regional and local bulk storage facilities. That hasn’t been a huge deal because they were drawing down their stocks anyway. But now Ike is headed for Galveston, and the pipelines are being shut down completely. And that is where the fertilizer hits the propeller. When you’re in a low stock condition, you are relying on a steady flow of gasoline to maintain smooth distribution. When that steady flow is disrupted, you’re only hours away from shortages.
It’s been more than a few hours, and shortages are already here.
So when a distributor runs out of fuel to sell because he didn’t stock up before a predicted storm would cut his supply he should, in theory, suffer a devestating loss because he has no ware to sell. Somehow I don’t think they’ll go under. I doubt they are really as destitute of product as they’ll claim.
Several gas stations in Tallahassee are closed down, with signs reading “No gas”. Others have higher prices, one station went up to $5.49. The Commissioner of Agriculture is looking into charges of price gouging.