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Strategies & Market Trends : Aardvark Adventures
DAVE 210.06+3.0%Nov 25 3:59 PM EST

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To: ~digs who wrote (1415)9/4/2005 4:36:33 PM
From: ~digs  Read Replies (1) of 7944
 
Police cars and fire trucks escorted gasoline tankers down a highway on Friday in Marrero, Louisiana, just south of flooded-out New Orleans.

Instances of drivers who pump and run -- or fill up and drive away without paying -- an increasing problem all summer, have risen this week, according to the National Association of Convenience Stores.

Retailers at service stations across the United States worry about getting burned twice by 3 percent credit card fees when large vehicles fill up because their pumps are only programmed to sell $99.99 worth of gasoline in a single purchase.

Getting gasoline, the lifeblood of the U.S. economy, to drivers after deadly Hurricane Katrina has been full of strange occurrences, localized price spikes sometimes above $5 a gallon, and occasional stations running out of fuel.

But so far shortages have been few.

"There are isolated, scattered situations of stations running out (of gasoline) and lines forming, but it's nothing I would characterize as a region-wide or metropolitan-wide," said Geoff Sundstrom, spokesman for travel club AAA.

Police escorts of trucks full of gasoline are unusual, but not unprecedented. The same thing happened last summer when Florida was ravaged by hurricanes as motorists followed trucks to stations until police had to intervene, said Sundstrom.

Eight oil refineries are still shut after Katrina hit the gulf. Nearly all the crude produced from the Gulf of Mexico, home to one-quarter of all U.S. oil output, remains, while the major arteries that bring oil products from the Gulf to the U.S. Southeast and Northeast are still recovering.

The result: motorists ahead of the high-demand Labor Day weekend are paying an average of $2.867 per gallon for regular retail gasoline. That's a jump of 25 percent since just last month, according to AAA.

Parts of Georgia and South Carolina have experienced some of the highest U.S. prices because they are far from port and refining centers of the Northeast and Gulf of Mexico, said Sundstrom.

The U.S. price remains far below the price of gasoline in many other countries, as well as below average U.S. highs in the early 1980s of about $3.00 a gallon when adjusted for inflation.

Katrina-induced gasoline price gains come atop already huge increases this summer led by worries that the world is running short of the capacity to pump and refine crude oil. The concern has increased as Saudi Arabia, the only nation with substantial amounts of spare crude production capacity, struggles to meet rising demand from the United States, China and India.

"We've been hearing for several years now that the industry is operating on a razor's edge due to a small amount of refining capacity we have in the United States in relation to demand," said Sundstrom.

And with the rise in price has come a rise in demand. Exxon Mobil Corp. (NYSE:XOM - News) said in a statement on Friday that since Katrina, demand has doubled at its gasoline stations.

Now, in order to manage inventories, suppliers are putting retailers on allocation, limiting shipments to every store to spread fuel evenly throughout the filling station network.

Managing inventories this way has also caused the occasional station run out of fuel.

"You start dwindling the on-market supply, which complicates the situation," said John Eichberger, director of motor fuels and the National Association of Convenience Stores, whose members sell about 75 percent of U.S. gasoline.

To stop a shortage, NCS and AAA are urging drivers to avoid topping off their tanks every time they burn a little. "There's supply available, but we have to make sure we don't have a run on stocks," said Eichberger.

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biz.yahoo.com
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