More Than Just Supply & Demand – What Causes Fuel Shortages?

Justin Christensen |

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When it comes to fuel shortages, one of the reasons you’ll hear in just about every news report or conversation is “supply and demand.” There will be a main cause—such as weather or political unrest in foreign nations—but there is much more to it than that.

Here are some examples of the reasons behind the reason:

Hurricane Sandy

This extreme storm caused more than 200 deaths and $65 billion in damage, ranking it second only to Katrina for costliest weather disaster in U.S. history. When the bad weather ended, the fuel shortage had just begun.

  • Many Gas Stations had no Electricity – this cut off access to underground tanks, reducing supply for the region and forced customers to other locations, burning gas en route and depleting other stations’ supply.
  • Wholesale Fuel Suppliers also had no Power – gas cannot be pumped into trucks for delivery without power, rendering inventoried fuel in storage, pipelines and tankers useless.
  • Insufficient infrastructure – even those who had electricity had difficulty accessing fuel due to damaged roads and inability to coordinate deliveries.
  • Panic Purchasing – not everyone drives around on a full tank of gas, but when there’s a fear of shortage, everyone rushes out to fill up and stock up, which can leave stations on E.
  • Turnaround Time – the average fuel station, equipped with a 10,000- to 12,000-gallon tank, almost has to empty before restocking, as a truckload is about 7,500 to 8,000 gallons. When supply is depleted so quickly, distributors aren’t always able to meet needed delivery times and those temporary outages cause further panic.
  • Self Service – New Jersey and Oregon are the only two states with the mandated regulation of providing full service at their pumps. With an ongoing rush of customers, it’s difficult to keep staff available and slows lineups even further.
  • Contaminated tanks – service station tanks must be inspected before they can be refilled. If there is groundwater contamination, repairs will have to be made, which only prolongs the inability to deliver.
  • Refineries down – one third of the refineries in the New York/New Jersey areas were taken out during the storm. Power had been restored but flooding to sensitive equipment meant one facility was inoperative for several weeks and another took days before restarting.
  • Paperwork on Regulations – The government did not decide to raise temporarily the Jones Act, which prohibits any foreign vessels to transfer goods between U.S. ports until one week later, which created more delays in ending the gasoline shortage.
  • Safety Infractions

    An oil refinery in Regina, Sask., experienced four major incidents in as many years. In late 2011, an explosion in the diesel processing area slowed production for an Edmonton, Alta., plant that supplies hydrogen to Suncor in the Canadian oil sands. This caused diesel shortages across western Canada for weeks.

    A very different scenario in Sydney, Australia also caused fuel shortages. When a fuel tanker crashed and exploded, it was discovered the truck had a number of defects. Further inspection of the transporters’ fleet found that 91 of its 110 vehicles had roadworthy defects, 36 of which were major. The company was responsible for delivery to BP, Shell and 7-Eleven stations.

    When it comes to fuel supply, not all causes for shortages can be predicted or prevented. However, working with a reliable fuel distributor will keep you up to speed with the latest developments and ensure you will receive your product as efficiently as possible. Anticipating your needs with value added service is its business and when you succeed, it does, too.