Gas Nozzle Narratives

Published in CSP Daily News

Southeast supply crisis varies from city to city, station to station

By  Abbie Westra, Editor-in-Chief, Convenience Store Products

GOLDBORO, N.C. -- For every retailer and jobber in the Southeast, there is a varying story of the struggle they have faced in light of the gasoline shortages affecting the region. For every story of improved supply, there is one of panic buying. For every word that a pipeline is now flowing with petroleum, there is another, it seems, of a pipeline still sucked dry.

John Strickland Jr., president of Wayne Oil Co. and Hasty Mart Stores, Goldsboro, N.C., has been sending his transport fleet extra far to get product. He has been filling the regular tanks with premium if it is all that is available. [image-nocss] And he is not holding his breath that the gasoline crisis in the Southeast will subside any time soon.

"Just reading the tea leaves.… it won't be like it was 60 days ago for probably another 90 days. And that's just the limitations of the infrastructure of the system," Strickland told CSP Daily News yesterday. "That pipe is only so big; you're not going to put more through it, particularly if you don't have it to put in there in the first place."

Wayne Oil, with 15 company-operated stores and 45 dealer sites within a 150-mile radius of Goldsboro, is lucky enough to have its own transportation company, helping to maintain at least some gasoline at each location. "We are only getting a certain amount of product available to us from our provider-partners because they don't have it. We are making 'milk runs' to each location to drop off as much as we can—but not too much—to carry us to the next allocation period," Strickland said.

Eastern North Carolina, where Wayne Oil is located, is fairing much better than regions farther from the coast. Strickland points to school districts that have closed because there is not enough gasoline for bus service. "There are some municipalities that are saying if something catches on fire, we cannot guarantee [the fire department will have] the fuel to get there," he said.

Strickland said his company has fared better than some of his local competitors because Wayne Oil has attempted to ration the amount of gasoline each store receives daily. "We've been able to manage through it, but we've squeaked by on most occasions," he said. "I'm afraid, as good of a job as we have done, we are really getting close to falling off the beam."

Wayne Oil's margins have shrunk due to increased runs—with partial runs once a day to each store compared to the typical full load every two to three days—and longer distances to obtain gasoline from coastal barges. "Where we generally run 20 miles to the terminal, we're going to Norfolk, Va., and Wilmington, N.C., now to pick up product," he said. "That disrupts our whole supply chain, and it goes downhill from there."

And while retail costs might curtail demand a bit, Strickland is doubtful it would solve the shortage. "In the aggregate it will, but in the micro I don't know that it would," he said. "I think there is a relationship between how scarce the product is relative to what people would be willing to pay in certain geographies."

Yet smaller chains such as Wayne Oil may experience more pain than larger retailers with conceivably more buying power. Officials with Atlanta-based RaceTrac, for instance, believe the situation to be "short lived and expect gasoline supply to return to normal in the next few weeks."

Phil Gura, general counsel and vice president of RaceTrac's legal department, told CSP Daily News, "We have worked diligently with our gasoline suppliers and common carriers to purchase and distribute as much product as we possibly can, given the current challenging circumstances."

And despite the buying resources of a chain like RaceTrac, which supplies its company-operated network of 250 RaceTrac sites and an additional chain of 275 independent operators flying the RaceWay flag, it did experience outages over the past couple of weeks at sites throughout the Southeast.

"Gasoline has been in short supply since Hurricane Ike, [which] had a material impact on the industry, shutting down both refineries and pipelines," Gura said. "Because the effects of Ike followed closely on the heels of Hurricane Gustav—which impacted Louisiana refineries [a couple of weeks before]—and took place just as RVP (Reid vapor pressure) conversions were starting, we had the makings of a perfect storm."

Inventories were lower than normal because refineries had to convert product formulations to meet seasonal, government requirements. So the hurricanes, both the resulting damage and the preemptory shutdowns, combined to put stress on supply beyond what most had expected.

"At RaceTrac, we have certainly felt the effects of this shortage," Gura said. "[However], based on feedback we have received from our customers and the local media, [our] efforts have been acknowledged and appreciated."

For more on RaceTrac and its low-price, high-value formula, see the October issue of CSP magazine.Photos by Leita Cowart.

By Abbie Westra, Editor-in-Chief, Convenience Store Products
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