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Page added on September 29, 2008

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Gasoline Shortages: Our Inventory Problem

I am writing this article from Atlanta, one of the places hardest hit by gasoline shortages. A person can drive for miles without finding an open gas station.

One of the major reasons for gas shortages is that fact that inventories were not very high going into the hurricanes. Then when not one, but two, hurricanes hit, inventories dropped to the level where there wasn’t enough to go around. (In fact, the shortages started even before the second hurricane hit.) How could this happen? Isn’t there anyone who cares about gasoline inventories?

We hear a lot about the strategic petroleum reserve and its intended role in preventing shortages. Yet when there have been gasoline shortages, in 2005 and this year, the problem was that refineries were out of commission for long periods of time–almost a month at this point in time. Getting more crude oil wouldn’t really solve the problem. What we really needed was more gasoline in inventory, so we had some on hand, when the need arose.

Figure 2 shows a graph of the estimated impact of refinery shutdowns, start ups, and reduced runs, following this year’s hurricanes, based on Department of Energy data. The amount is really huge in relationship to the total amount we refine.

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