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Alert: Colonial Gasoline Pipeline Shutdown

Discussions about the economic and financial ramifications of PEAK OIL

Re: Alert: Colonial Gasoline Pipeline Shutdown

Unread postby Newfie » Fri 01 Sep 2017, 09:37:29

Hoarding works for the individual, not for the larger community.

It's when governments board, or encourage large scale hoarding that it's a big problem. Price controls discourage production, folks would rather see their neighbor starve than be cheated of their product.
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Re: Alert: Colonial Gasoline Pipeline Shutdown

Unread postby kublikhan » Fri 01 Sep 2017, 09:51:51

Cog wrote:Think Lowe's and Home Depot aren't going to increase the price of drywall and plywood shortly?

Newfie wrote:Hoarding works for the individual, not for the larger community.

It's when governments board, or encourage large scale hoarding that it's a big problem. Price controls discourage production, folks would rather see their neighbor starve than be cheated of their product.
Home Depot has a whole hurricane response plan in place to ensure stores are well stocked with supplies for the disaster and later rebuilding. It sounds pretty cool, I didn't know they actually went through all this trouble. Lowe's has a disaster response plan as well. Stocking supplies that works for the whole community, while turning a profit too.

Three days before Hurricane Harvey hit Texas, hardware retailer Home Depot received an alert from a weather service and activated its disaster-response plan to get supplies to those in the storm's path, while turning a profit, too.
Over the next three days—as Harvey gained power and made landfall early on Saturday—the world's largest home improvement retailer set up a temporary hurricane command center at its Atlanta headquarters. It told managers to freeze prices and move plywood, generators, chainsaws and other storm-related merchandise to the front of stores. By Aug. 31, Home Depot had sent about 700 truckloads of supplies to its Texas stores in the path of the hurricane.

In its response, Home Depot followed a plan honed over many hurricane seasons, which aims to minimize disruptions and ensure that it can continue to deliver essential materials and equipment to the affected areas. It is also designed to allow the retailer to capitalize on a surge in demand for its products once repairs begin. Before the hurricane season begins each summer, the retailer stocks everything from flashlights to shovels in dedicated centers. It pre-loads trucks so they can leave for stores as soon as a hurricane alert comes from a weather vendor. "As each natural disaster goes by, we hone our processes already in place so we can react quicker and faster the next time this happens."

Swift Response
Much depends on a quick response to big storms. By Saturday up to 200 employees drafted from merchandising, logistics, supply chain and human resources teams were marshaling people and goods from Home Depot's buzzing five-room command center filled with monitors tracking the storm and maps of the hurricane region pasted on walls. On Sunday, 80 employees arrived from Austin, Texas capital far from the danger zone, to stock stores in Corpus Christi, a coastal city hit by the storm and by Tuesday more workers from San Antonio were moving to Victoria, another affected city.
At the Corpus Christi store, Home Depot workers placed pallets of bottled water, flashlights, gas cans and batteries near the cash registers. One of those brought in, Bethany Grams, traveled 300 miles from Waco, Texas, to work 12-hour shifts. "It's been really heartening," she said, brushing back tears. "It's just good to get to help."

"They are a clear leader with disaster response and their strategic planning during such times is better than any retailer globally." While discount chains or department stores would bear the costs while missing out on revenue because of lost business, what Home Depot spent was an investment that would eventually bring "10 to 15 times more in sales."

Planning for Disaster
Home Depot's storm plan shows how preparing for natural disasters has become over the years an inherent part of the retailers' business. The company, with annual sales of $95 billion, first identified hurricane response as a strategic need after Hurricane Andrew, 25 years ago. It has refined its tactics since. Just over a decade ago it has established four distribution centers with hurricane-specific goods within easy reach of hurricane-prone coastal areas.

Rival Lowe's, which has its own disaster-response strategy, had closed 27 stores as of Monday, but by Wednesday had opened all but four. Lowe's has dispatched by Tuesday 700 trucks from warehouses around the country that can get goods to Texas in two days or less, diverting many directly to stores rather than distribution centers. Lowe's also is asking vendors to ship directly to stores, Neudorff told Reuters."Some stores are practically selling generators off the back of the truck because people have been waiting in the stores for the generators to arrive."
How Home Depot Braced for (and Profited From) Harvey’s Impact
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Re: Alert: Colonial Gasoline Pipeline Shutdown

Unread postby asg70 » Fri 01 Sep 2017, 11:40:55

The depressing thing about that story is how private industry is increasingly stepping in to fill the void caused by a lack of government action. I'm glad that some companies are civic-minded, but it really shouldn't have gotten to this point
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Re: Alert: Colonial Gasoline Pipeline Shutdown

Unread postby Outcast_Searcher » Fri 01 Sep 2017, 11:59:07

Cog wrote:Anti-gouging laws are perhaps one the worst thing ever passed into law by politicians. Causes shortages every time. The market knows what the price needs to be. Didn't prepare for an event? Sucks to be you. Go be poor somewhere else.

I'm told all the time on this very forum that the price of gasoline is too low and we should punish the consumer with high taxes on gas to reduce consumption. Well here is the chance to reduce consumption by letting the market set the price. Think Lowe's and Home Depot aren't going to increase the price of drywall and plywood shortly?

With respect, to be fair, it also depends on how the laws are managed (and they seem to vary by locality and I don't know all the details for sure).

So for example, if you have a normally volatile commodity like gasoline and you don't allow the market to function so that gas stations can make a NORMAL profit -- then you are just asking for major shortages (and all the problems those entail) after a disruption like we're having now (since prices will predictably rise after such an event).

OTOH, if 911 hits (hard for the public to intelligently plan for THAT), should rental car companies suddenly be able to charge triple or ten times the normal price for a rental car to boost the bottom line, taking advantage of that incident as an opportunity? How about where people had already reserved a car at price X? Should they be able to tell the (now stranded, as far as air travel) customer, that due to market forces they'll now have to pay ten times the price (or whatever the market will bear?)

It seems to me that there should be something in the middle for ordinary business. For example, if Home Depot incurs some extra costs due to its disaster planning which would cause fairly minor price increases in various emergency supplies -- but that lets them have LOTS of emergency supplies customers want and need, then I think that it should be fine and dandy for them to charge those minor surcharges (maybe up to 5% or 10% or something like that -- say for things like fast and unusual shipping). OTOH, they should not, IMO, be allowed to suddenly charge 400% markups for a chainsaw.

To me it's about balance. I think that's the intent of most of those laws, but I don't know how intelligently they're deployed.

I imagine we'll disagree, and that's fine. For one thing, there will be storms along the coast, and occasionally major storms. Thus, some planning is possible and in fact some planning (like flood insurance) is prudent -- but people don't want to pay the cost, even the heavily discounted cost of government provided flood insurance. And poor people lack the resources (which may be partially their own fault, but it's an issue) to do things financially that are no strain for, say, and upper middle class family. So there's that. It's a complex issue.
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Re: Alert: Colonial Gasoline Pipeline Shutdown

Unread postby GHung » Fri 01 Sep 2017, 12:10:28

OTOH, they should not, IMO, be allowed to suddenly charge 400% markups for a chainsaw.


Home Depot wouldn't do that anyway knowing it would hurt their brand in the long run. Most people know the difference in increasing prices for in-demand commodities and price gouging.
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Re: Alert: Colonial Gasoline Pipeline Shutdown

Unread postby Subjectivist » Fri 01 Sep 2017, 14:38:04

Outcast_Searcher wrote:
Cog wrote:Anti-gouging laws are perhaps one the worst thing ever passed into law by politicians. Causes shortages every time. The market knows what the price needs to be. Didn't prepare for an event? Sucks to be you. Go be poor somewhere else.

I'm told all the time on this very forum that the price of gasoline is too low and we should punish the consumer with high taxes on gas to reduce consumption. Well here is the chance to reduce consumption by letting the market set the price. Think Lowe's and Home Depot aren't going to increase the price of drywall and plywood shortly?

With respect, to be fair, it also depends on how the laws are managed (and they seem to vary by locality and I don't know all the details for sure).

So for example, if you have a normally volatile commodity like gasoline and you don't allow the market to function so that gas stations can make a NORMAL profit -- then you are just asking for major shortages (and all the problems those entail) after a disruption like we're having now (since prices will predictably rise after such an event).

OTOH, if 911 hits (hard for the public to intelligently plan for THAT), should rental car companies suddenly be able to charge triple or ten times the normal price for a rental car to boost the bottom line, taking advantage of that incident as an opportunity? How about where people had already reserved a car at price X? Should they be able to tell the (now stranded, as far as air travel) customer, that due to market forces they'll now have to pay ten times the price (or whatever the market will bear?)

It seems to me that there should be something in the middle for ordinary business. For example, if Home Depot incurs some extra costs due to its disaster planning which would cause fairly minor price increases in various emergency supplies -- but that lets them have LOTS of emergency supplies customers want and need, then I think that it should be fine and dandy for them to charge those minor surcharges (maybe up to 5% or 10% or something like that -- say for things like fast and unusual shipping). OTOH, they should not, IMO, be allowed to suddenly charge 400% markups for a chainsaw.

To me it's about balance. I think that's the intent of most of those laws, but I don't know how intelligently they're deployed.

I imagine we'll disagree, and that's fine. For one thing, there will be storms along the coast, and occasionally major storms. Thus, some planning is possible and in fact some planning (like flood insurance) is prudent -- but people don't want to pay the cost, even the heavily discounted cost of government provided flood insurance. And poor people lack the resources (which may be partially their own fault, but it's an issue) to do things financially that are no strain for, say, and upper middle class family. So there's that. It's a complex issue.


It is six of one half dozen of the other. An unscrupulous jerk could go in and buy up all the chainsaws at their cheap government controlled price, then sell them out the back of a pickup to desperate people at a massive markup. The same thing happens when popular concerts or sporting event tickets go on sale, scalpers will buy asmuch as they can get away with and resell closer to to deadline for use.
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Re: Alert: Colonial Gasoline Pipeline Shutdown

Unread postby AdamB » Fri 01 Sep 2017, 19:31:05

Subjectivist wrote: An unscrupulous jerk could go in and buy up all the chainsaws at their cheap government controlled price, then sell them out the back of a pickup to desperate people at a massive markup. The same thing happens when popular concerts or sporting event tickets go on sale, scalpers will buy asmuch as they can get away with and resell closer to to deadline for use.


The Commies (and Venezuela) never figured out the solution to this one either. Because it is really just Econ 101 in action. Nail down the price at one end, find a demand elsewhere that can't get to the place where the price is nailed down, and if you can charge a difference larger than the shipment cost, you win! If your supplier keeps the price the same, but has to scale back supply volumes, then the price for the thing goes up even higher at the far end, and you charge even more, and potentially make more on even less volume because your supplier doesn't get Econ 101 either!

The USSR never really had a chance. Now, the Chinese...well....they appear to be learning this lesson at least, although they have in store for them things of higher risk.
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Re: Alert: Colonial Gasoline Pipeline Shutdown

Unread postby ROCKMAN » Wed 06 Sep 2017, 15:52:56

"the entire Eastern Seaboard––from Maine to Florida––consumes only 5.0 million barrels per day, about 3.2 million barrels per day of which is finished gasoline, according to the U.S. Energy Information Administration (EIA). Colonial’s volume is about half of those numbers."

I wished I had researched this back when. A correction to the implication that the Colonial Pipeline supplies FL. As I just posted under the Irma thread it does not. Nor does any other pipeline: nearly all of FL gasoline is supplied thru it's ports by ships and barges.
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Re: Alert: Colonial Gasoline Pipeline Shutdown

Unread postby Cog » Wed 06 Sep 2017, 17:09:41

As I recall some of the Texas and Louisiana refineries were still shipping gasoline to Florida as soon as they cleared their port areas of debris. Those refineries that had shutdown production still had a considerable amount of stored gasoline and diesel ready to go.
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Re: Alert: Colonial Gasoline Pipeline Shutdown

Unread postby ROCKMAN » Wed 06 Sep 2017, 22:50:05

Cog - As I pointed out on Wednesday just after Harvey left Houston one of our big local fuel terminals had 700 tankers delivering 3 million gallons of fuel per day to local stations. But there's another reality the depots don't care to advertise: they tend to hold back deliveries when a hurricane is coming: tanks are less likely to be damaged if they are full.

And there was an additional problem moving fuel from Texas even after our ports clear as well as Louisiana ports that weren't shut down: the Jones Act, something the lobbyists for the domestic shippers don't like to advertise. From 6 September :

https://www.bloomberg.com/news/articles ... to-florida

"As long as Florida’s ports remain open, deliveries of fuels from so-called Jones Act tankers, or ships with permission to move supplies between two U.S. ports, will be key, James Miller, the Florida Petroleum Marketers and Convenience Store Association’s director of communications, said by phone from Tallahassee.

Last week, ships that normally move fuel from the Gulf Coast to Florida headed north to New York and Philadelphia to load from those ports instead. But even those supplies aren’t guaranteed: On Wednesday one of the Florida-bound tankers made a sharp turn to deliver into Virginia instead.

Only Jones Act tankers from refineries in Louisiana and Mississippi were able to make it to Florida after Harvey shut down Texas ports. The ships are a key to keeping Florida supplied and are now busier than ever before. Oil trader Mocoh SA diverted two European gasoline tankers to Florida from their original destination in Africa last week, but one of those has since been redirected to Quebec."
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Re: Alert: Colonial Gasoline Pipeline Shutdown

Unread postby ROCKMAN » Tue 12 Sep 2017, 14:57:00

Irma has not interrupted the Colonial Pipeline deliveries in Georgia or the Carolinas:

"If you head to a gas station to fill up there's a chance you could be out of luck, at least for the next few days. Georgia officials say there are reports of gas shortages throughout the state. But Garrett Townsend, Georgia's spokesperson for AAA, explained: "There is no shortage of gasoline. In the system there's plenty of gas. It's just delayed in getting to its distribution point."

Townsend said the fuel outages are because of Hurricanes Irma. Gas purchases spiked in Florida and some parts of Georgia as people filled up before heading north to get out of the storm’s path. That means some stations are having trouble getting new supplies of fuel as quickly as they usually do. State officials released a warning for people traveling south that there is no guarantee they'll be able to get fuel. “Stations in south Georgia are experiencing power outages and flooding of their tanks, preventing them from reopening,” said Homer Bryson, director of Georgia Emergency Management and Homeland Security Agency."
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